Covid-19: NAO Report on Government Procurement

Angela Eagle Excerpts

Wednesday 9th December 2020 Westminster Hall

[Bill Esterson (Sefton Central) (Lab)]

I am grateful to my hon. Friend for securing the debate. PPE Medpro was incorporated on 12 May and was awarded a contract for £122 million for single-use disposable medical robes, which it was going to import. The contract was not advertised, but the company had a link to a Conservative peer. By contrast, my constituents who own Florence Roby spent months trying to get a contract for multi-use medical robes, which can be used up to 100 times. They were given the run-around and, after months, they had to give up and lay off staff. Is that contrast not a perfect example of everything that the National Audit Office highlights as being wrong with procurement in this crisis? This is a missed opportunity to have environmentally sustainable production and value for money, with reusable, not single-use, equipment.

[Ms Angela Eagle (in the Chair)]

Order. Wind up the question, please.

[Bill Esterson]

This is a missed opportunity to support the local economy and workers. Instead, we have imports, not local jobs, and opportunism, with the use of fast-track access to the Government party.

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[Ms Angela Eagle (in the Chair)]

Order. I am not going to allow interventions that long in future. There are many people on the call list, and it is not fair to them.

[Dan Carden]

Thank you, Ms Eagle. I absolutely agree with my hon. Friend. Story after story has come forward in a similar vein.

Public procurement regulations are designed to safeguard public confidence in the spending of public money. On 18 March 2020, the Cabinet Office implemented emergency procedures for procurement to allow for extreme urgency, including directly awarding contracts to suppliers without competition. That guidance referred to the need to keep proper records of decisions and actions on individual contracts; to have transparency and publication requirements; and to achieve value for money—basic requirements that the report and other information in the public domain now show the Government failed to meet.

The NAO highlights that, remarkably, the Cabinet Office guidance failed to give direction on managing the risks that should be considered as a result of using direct awards. The usual Cabinet Office spending controls on contracts over £10 million were not applied to the procurement of personal protective equipment. A clearance board was later set up, with an eight-stage process to approve PPE contracts over £5 million, but we know that £1.5 billion was awarded in contracts before proper processes were in place and before any financial and company due diligence process was standardised.

By 31 July 2020, over 8,600 contracts, worth £18 billion, had been awarded, of which £10.5 billion-worth were awarded directly without competition. Under the cover of the pandemic, billions of pounds of public money was handed to private companies, including Tory-linked firms, without competition, transparency or accountability.

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[John Penrose]

On a point of order, Ms Eagle. It is important to note that ever since the role of anti-corruption champion was invented, it has, under Labour Governments as well as Conservative, always been held by an MP—sometimes a Minister—who is a member of the governing party of the day.

[Ms Angela Eagle (in the Chair)]

That was not a point of order.

[Dan Carden]

It remains completely inappropriate.

In the words of The Sunday Times authors,

“As the government mounted a war effort to combat Covid-19, it has instead resembled more of a ‘chumocracy’. This is a world in which ministers have turned to friends with links to the Conservatives.”

While the British public continue to make huge personal sacrifices, a privileged group of business people with close connections to the Government has turned huge profits from the pandemic. What is perhaps most remarkable is that Ministers actually created a VIP high-priority lane for companies bidding for contracts, which were put forward by Government officials, Ministers’ offices, MPs and Members of the House of Lords. It is not just a perception of cronyism; we now know that the system was rigged, with privileged access granted to companies with connections to top politicians. These favoured companies were 10 times more likely to be successful than those without political connections. This flies in face of one of the key principles of procurement: that suppliers should be on a level playing field. If this happened in any other country, we would call it corruption.

There can be no justification for the Government withholding the names of fast-tracked companies allowed to jump the queue, often at the expense of more proven competitors. Transparency is a fundamental principle; the public have the right to know how their money has been spent. The NAO’s investigation focused on 20 contracts, and its revelations could just be the tip of the iceberg. There must be a full independent investigation into Government contracts granted during covid-19.

More than 100,000 people have now signed a parliamentary petition calling for a public inquiry. The Government must, as a bare minimum, implement the NAO recommendations. They must end the VIP lane, if they have not already done so, and return to undertaking competitive procurement. They must publish the full details of the companies that pass through the VIP lane, and the sources of their referral. In a number of other countries, including Ukraine and Colombia, details about emergency covid contracts must be published within 24 hours. If they can do it, why can’t we?

The Government must embed open contracting systems into their procurement processes. Their forthcoming Green Paper is an opportunity to go even further, to rewrite the rules of procurement to prevent such flagrant conflicts of interest in the future. I will return to the Green Paper in a moment, but let me briefly talk about the advisory panel that is informing the Green Paper.

The Government’s procurement transformation advisory panel contains some voices that are welcome in shaping Government procurement policy—the University of Sussex’s Centre for the Study of Corruption, for instance, is one of them. However, there are serious concerns about other appointments to the panel, most notably Amazon. Amazon has already been awarded 82 central Government contracts, worth £225 million, in the past five years, and has a deal enabling local councils to buy supplies in one marketplace. The manner in which Amazon is embedding itself into national and regional public procurement is, in the words of Paul Monaghan of the Fair Tax Mark, “truly frightening”.

How can it be right that Amazon should be given such a position of influence over Government procurement policy, while raking in hundreds of millions in Government contracts itself? Considering Amazon’s record on meeting its tax obligations, why should a company that refuses to pay its fair share into the public purse be in a position to profit so handsomely from it? Can the Minister tell me by what process members of the procurement transformation advisory panel were appointed? What steps, if any, were taken to identify and address potential conflicts of interest, and will the minutes of the meeting be published?



In the same week the NAO report was published, the UN published its evaluation of the UK’s implementation of the UN convention against corruption, in which it calls on the UK to take a tougher approach to handling conflicts of interest—especially those at the top of Government. When we look at how other Governments across the world have responded, not only to covid but to procurement specifically, there is a lot for the UK to be embarrassed about. In Sweden, Slovakia, Estonia and Latvia, the number of contracts awarded using open competition went up during the pandemic.

The upcoming Green Paper is an opportunity to put in place measures that would begin to restore some trust in the system. The Government must now consider implementing end-to-end digital transparency for all Government contracts from planning through to tender, award, spending and implementation. The Government must establish an effective conflict of interest regime, including a publicly accessible database of conflict of interest declarations. To support that, they should extend the remit of the independent adviser on Ministers’ interests to give them independent statutory status, including the power to investigate conflicts of interest and to take action.

The Government should look to introduce conditions requiring companies bidding for contracts to meet the highest standards to ensure that they are providing real social value. Companies should receive public contracts only if they meet their tax obligations and environmental standards, and if they recognise trade unions.

This debate goes to the heart of a much wider malaise. For decades now, people have been steadily shut out of decisions affecting their lives. Wealth and power have become more highly concentrated in the hands of a few. Wealth translates to influence, and influence back to wealth. The revolving door between big business, media, finance and politics never stops spinning. The only way to counter that is by deepening democracy and accountability to the public at every level. The Government’s own anti-corruption strategy warns:

“Corruption threatens our national security and prosperity, both at home and overseas. Unchecked, it can erode public confidence in the domestic and international institutions that we all depend upon.”

The obscene profiteering and cronyism that has been the hallmark of the UK’s response to covid-19 has further eroded what little trust people have left in our political system. The need to challenge conflicts of interest, extend democracy and fight for a robust system of checks and balances to hold power to account has never been more pressing.

[Ms Angela Eagle (in the Chair)]

I shall begin by imposing a three-minute time limit on speeches, but I think it will have to go down to two before the end of the debate.

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[Jon Trickett (Hemsworth) (Lab)]

To listen to the hon. Member for North East Derbyshire (Lee Rowley), one would think everything was rosy in the garden—of course, it is not. The Government have adopted processes that abandon the decades-old traditions of checking value for money when spending in the private sector. How else can we explain that, for example, £95 billion of outsourcing resulted in a 20% increase in contracts, and the £14.3 billion of additional expenditure on contracts that had been let? How else can we explain that many contracts were let without tendering processes of any kind? Some £10 billion of taxpayers’ money was spent without any form of tendering at all. To rely on the process that the hon. Member for North East Derbyshire has just described simply does not convince. One billion pounds have gone to Tory chums—these are staggering amounts of money.

I know it is not the subject of the audit report, but given the facts that emerged when Carillion went bust—that the Government had abandoned any attempt whatever to monitor the delivery of the contract—it is extraordinary that no further steps have been taken to protect the public purse. This is taxpayer money being wasted on a colossal scale, and in an unjustifiable way. When we consider that outsourcing is costing each household in this country £3,500, the scale is extraordinary.

There is an old expression, is there not, about never wasting a crisis? The Tories have not wasted this one. They have handed over billions of pounds to their Tory chums in the private sector in a wasteful manner, with no real effort to monitor contracts or secure value for money. When people discover that it is costing each household £3,500, I think the general response will be that this is a massive rip-off—some would go further and suggest that our British standards of probity, which lasted for more than a century, have been abandoned and have become so corrupted as to no longer be acceptable. Whatever one’s view on that, it is hard to disagree that the Government are spending taxpayers’ money like confetti at a wedding—in a most wasteful and reckless manner.

[Ms Angela Eagle (in the Chair)]

I am reducing the speaking limit to two and a half minutes in order to get everybody in.

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[Helen Hayes]

I agree with my hon. Friend’s point. I repeat: with procurement happening so quickly, under emergency measures, the Government should have been creating more transparency, opening up to greater scrutiny, so that the public could have confidence in the pandemic response. Instead, the opposite appears to be the case. Again and again, the Government shrugged their shoulders at revelations of crony contracts and failed to make any commitment even to publish a full list of the companies awarded contracts under the VIP route.

I ask the Minister to answer the following questions in responding to this debate. When will the Government publish a full list of all the companies awarded contracts under the VIP route? Will she explain why the Government again and again failed to meet the requirement to publish contract awards within a timely manner during the pandemic? That was an obligation that was not relaxed by the emergency legislation. Will she explain why trusted British firms were bypassed in favour of companies with no track record of delivery? Will she commit to a full investigation of the extent of cronyism in procurement throughout the pandemic? Most importantly, will she set out what the Government now intend to do to rebuild the trust and confidence of the British public and British businesses in their broken approach to procurement?

[Ms Angela Eagle (in the Chair)]

Minister, please leave a couple of minutes at the end for the response.

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[Dan Carden]

Thank you, Ms Eagle, for chairing the proceedings, and I also thank colleagues across the House for their contributions. I do not think the issue will disappear. Too many millions of people have faced financial hardship and difficult circumstances over this past year, so there is anger out there among the public over what is seen as a chumocracy, cronyism or whatever we want to call it. We know that huge sums have been handed to close contacts of the Conservative party. Although I welcome the Minister’s reply and how she engaged with all the issues, she was not able to explain away the privileged access given to friends and chums of the Conservative party. Following this debate, we need a full public inquiry into covid contracts.

Question put and agreed to.

Resolved,

That this House has considered the NAO report on Investigation into government procurement during the covid-19 pandemic.

[Ms Angela Eagle (in the Chair)]

Will Members please leave promptly by the exit door on the left while observing social distancing?