Labour demands answers over £2bn handed out in “crony contracts”

Elliot Chappell
© T Salci/Shutterstock.com

Labour has demanded that the government disclose details of meetings between companies and government ministers, MPs and special advisers concerning £2bn of contracts handed out over the course of the pandemic.

Following a judicial hearing on Monday that exposed influence from both Michael Gove and ex-adviser Dominic Cummings on public procurement, Rachel Reeves has written to cabinet secretary Simon Case.

The hearing forms part of a legal challenge brought by the Good Law Project against the government, after it awarded a £500,000 contract to Public First to provide focus group information and support for communications last year without tender.

The firm is run by associates of Gove and Cummings. Cummings denied on Monday pushing for the contract to be given to “friends”, but Jason Coppel QC told the judge that “no thought was given to seeking offers from any other provider”.

Labour’s shadow minister for the Cabinet Office argued today that “nearly £2bn has been spent on public sector contracts going to companies with links to the Conservative Party” in the Covid crisis, including to party donors and friends of ministers.

She highlighted a report published in November, which found that half of all Covid contracts, worth £10.5bn, have been handed out without a competitive process and that applicants with political contacts were ten times more likely to be successful.

The National Audit Office investigation 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 letter follows numerous stories on public contracts. The Good Law Project reported in October that special pathways outside of the usual procurement process were set up at the height of the pandemic to help “VIPs” win contracts.

Labour has criticised 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”.

Select committee chair Meg Hillier warned last year that ministers 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”.

The demands issued to the Tories today follow Reeves’ speech on public services delivered last week, in which she discussed the billions spent on contracts outsourced to the private sector during the crisis.

The shadow minister for the Cabinet Office argued: “99% of the government’s contracts in response to Covid have not gone out to competitive tender. The taxpayer has paid well over the odds, even for defective stock.

“Labour’s own analysis of government data today shows almost £2bn of public contracts have been awarded to businesses with clear links to the Tory Party without any tender at all…

“Labour in government will clean up cronyism in contracting through greater transparency, accountability and citizens’ rights.”

Angela Rayner has also written to Conservative chair Amanda Milling calling on the party to urge firms to publish profit margins on contracts in order to “demonstrate to the British people that taxpayers’ money is being spent wisely”.

Rayner explained in the letter that the opposition party has written to the ten highest beneficiaries of government contracts handed out during the health crisis identified through publicly available data on contract finder.

The deputy Labour leader argued the information is “vital in maintaining public trust” and warned that the “lack of transparency is compounding fears of growing ‘cronyism’ at the heart of this government’s pandemic procurement”.

Below is the full text of the letter sent by Reeves to the Cabinet Secretary.

Dear Simon,

I am writing to you in relation to ongoing concerns surrounding the Government’s procurement practices.

There have been growing concerns about a lack of transparency around government contracts, in particular around the Cabinet Office’s “VIP” high priority procurement lane, which was highlighted by the National Audit Office in its report Investigation into government procurement during the COVID-19 pandemic.

This report made it clear that companies referred through this lane are ten times more likely to be awarded contracts. The government so far has declined to publish full details of the companies who won contracts through this lane.

Last week, Labour highlighted what appear to be the ten highest beneficiaries of Covid-19 contracts ascertained through publicly available data on Contracts Finder (see appendix).

I am writing to you today to ask you to provide details of any meetings that have taken place with these companies from the Cabinet Office or other departments either in the context of procuring contracts or within any other context over the last 12 months.

I am also writing to ask if you would kindly send the details of all people present at those meetings (virtual or otherwise), including government ministers, members of parliament, special advisors, civil servants, Conservative Party staff members, consultants and any other attendees.

As outlined, to restore transparency and public trust, this information is extremely important.

I look forward to receiving your response.

Best wishes,

Rachel Reeves MP
Shadow Chancellor of the Duchy of Lancaster

Below is the full text of the letter sent by Rayner to the Tory Party chair.

Dear Amanda,

I am writing to you in relation to ongoing concerns regarding the Government’s procurement practices.

As my colleague Rachel Reeves MP, Shadow Minister for the Cabinet Office, outlined on the 8th February 2021, nearly £2bn has been spent on public sector contracts going to companies with links to the Conservative Party, including Conservative Party donors and companies owned or run by close friends and family of senior Conservative Ministers and members of parliament.

This new figure follows months of stories where concerns have been raised regarding the lack of transparency around the awarding of contracts, and the revealing of the government’s “VIP” high priority procurement lane for companies with close personal ties to Ministers and the Conservative Party, which was highlighted by the National Audit Office in its report Investigation into government procurement during the COVID-19 pandemic.

This report made it clear that companies referred through this lane are ten times more likely to be awarded contracts, but the government so far has refused to publish the details of all the companies who won contracts through this lane and the source of those referrals.

This lack of transparency is compounding fears of growing “cronyism” at the heart of this government’s pandemic procurement, with taxpayers’ money seemingly handed out to companies with close links to the Conservative Party, or companies who have donated money to the Conservative Party, with no discernible track record and in many cases a failure to deliver for the public.

Given the National Audit Office have established the government paid well over the odds with taxpayer money for PPE at the start of this crisis, it is in the public interest that the British people are able to scrutinise properly how the government has been approaching procurement spending and how taxpayers’ money is being spent.

As the government has not been forthcoming with these details, Labour have written to what appear to be ten highest beneficiaries of Covid-19 contracts ascertained through publicly available data on contract finder. (See appendix)

These letters ask for them to share their profit margins for contracts awarded in 2020 and the overall profit from these contracts.

I would urge the Conservative Party to encourage these companies to publish their profit margins for contracts awarded by the government in order to demonstrate to the British people that taxpayers’ money is being spent wisely and effectively and to enable taxpayers to scrutinise how their taxes are being spent by Ministers.

In addition, I am writing to you today to ask you to provide details of any Conservative Party staff members, MPs, Ministers, special advisors, consultants or individuals that otherwise have links to the Conservative Party who have been present at any meetings – virtual or otherwise – with any of the ten companies listed in this letter, either in the context of them being awarded those contracts or in any other context over the last 12 months.

As outlined, to restore public confidence and address repeated concerns of cronyism, coming forward with this information is vital in maintaining public trust.

I look forward to your response.

Yours sincerely

Angela Rayner MP
Deputy leader and chair of the Labour Party

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