FREEDOM of information law would be dramatically extended to all public sector contracts under plans unveiled this week by Scottish Labour.

The party’s manifesto, which is launched on Wednesday, will promise to extend FoI to the £9billion of work given each year by the state to private providers in Scotland.

Many details of contracts signed by government, councils, health boards and other bodies are off limits on the grounds of commercial confidentiality.

Labour says it would use a new public procurement bill to change the rules on contracts and usher in greater transparency.

Besides the master document behind each deal, the public would be able to request information about how private firms subsequently delivered on contracts.

Scottish leader Kezia Dugdale said revealing performance measures would allow the public to follow how their taxes were spent.

“We would extend freedom of information law to public contracts. I want as much transparency and accountability as possible. More scrutiny over these deals would help restore confidence in the relationships between government and companies that benefit from public contracts.

“If we’re talking about public cash being used at any stage in that relationship between government and business, that should be subject to freedom of information.”

The SNP manifesto published last week promised “all possible steps to ensure... companies engaging in unacceptable practices like blacklisting, exploitative zero hours’ contracts or tax evasion, do not benefit from public procurement”. Tax evasion is illegal.

Dugdale said Labour would also deny public contracts to firms engaged in tax avoidance, which can be legal even if morally questionable.

She cited the case of Stagecoach, founded by SNP donor Brian Souter, which last month lost a legal battle over an £11m tax avoidance scheme dating from 2011.

Jim Harra, director general of business tax at HMRC, called it “clear tax avoidance... an attempt to manufacture losses to deny the public purse the tax due”.

Dugdale said: “They wouldn’t be in receipt of any public money from a Labour government. Not because they’re Stagecoach, but because they’ve avoided their taxes.

“This is about the message we send using the power of public procurement. The public want an example to be set but also to be sure public money is being spent on the public good.”

Dugdale said firms would not be stripped of existing contracts for acting badly, but deals would not be extended, and they would be frozen out of future work.