Reeves demands clarity on PPE contracts handed to tax haven companies

Rachel Reeves has declared that “taxpayers deserve to know their money is being handled with great care” and called for urgent clarity on government contracts handed to companies linked to tax havens during the coronavirus pandemic.

Based on analysis published by Labour this morning, the shadow Cabinet Office minister highlighted ten contracts worth over £470m given to companies either listed in tax havens or with a parent company listed in a tax haven.

The research from the party today highlighted contracts for personal protective equipment, each worth between £4m and £253m, secured by entities linked to Malta, Delaware, Jersey, Mauritius, Luxembourg, Dubai and the Cayman Islands.

Commenting on the public procurement this morning, Reeves said: “Taxpayers deserve to know their money is being handled with great care – and that any risks of its misuse through tax havens is carefully handled by this government.

“Despite evidence from the National Audit Office that taxpayer money was used to pay well over the odds for PPE, and that this government’s procurement process seriously lacks important transparency, we are seeing no real moves to increase clarity or trust.”

The Shadow Chancellor of the Duchy of Lancaster added: “This government cannot continue to brush worrying patterns like this off. They must commit to cleaning up their contracts now and be far more open to restore public confidence.”

The party has highlighted in its research that one company, which secured a government contract to provide personal protective equipment worth £23.3m and is registered in Malta, was also named in the Panama Papers scandal in 2016.

Another, Ayanda capital, is the company from which the government procured £150m of unusable face masks earlier this year. A total of £472,118,869 was handed out in the contracts secured by the ten companies identified by the party.

Labour has slammed the lack of transparency around government contracting processes and argued they have led to “increasing evidence of cronyism and ‘chumocracy'” with a “catalogue of contracts handed to Tory friends and donors”.

The comments from Reeves this morning follow reports earlier this year, from the Good Law Project, that special pathways outside of the usual procurement process were set up at the height of the pandemic to help “VIPs” win lucrative contracts.

A National Audit Office report last month found that half of all Covid contracts, worth £10.5bn, have been handed out without a competitive tender process and that applicants with political contacts were ten times more likely to be successful.

The NAO concluded that it could not “give assurance that government has adequately mitigated the increased risks arising from emergency procurement or applied appropriate commercial practices in all cases”.

The call from Labour today follows comments from select committee chair Meg Hillier on Tuesday, who hit back at the government after Health Secretary Matt Hancock dismissed concerns expressed about public procurement in the crisis.

The chair of the parliamentary committee and Labour MP warned the minister that ignoring the need for transparency in the pandemic is a “dangerous step” and has pointed out that the government was “licensed to act fast” but not “fast and loose”.

Labour last month also challenged the Tories over the amount of taxpayer money wasted buying unusable personal protective equipment in the health crisis after the Cabinet Office admitted it had bought 184 million items not fit for purpose.

Labour leader Keir Starmer highlighted the admission in a recent Prime Minister’s Questions session and accused Boris Johnson of “spraying public money at contracts” and called on the Tory leader to “stop wasting taxpayers’ money”.

The Cabinet Office has been contacted for comment.