Health warning – crony-virus goes pandemic

Spending watchdog reveals PPE suppliers with Tory political connections 10 times more likely to be awarded contracts

Reading time: 8 min

This week, on the first anniversary of the UK’s first lockdown, UNITElive is featuring some of the top stories we have covered on the pandemic and our members’ contributions, concerns and achievements.

In December, UniteLIVE investigated how the government has rewarded its chums with lucrative private contracts throughout the pandemic. Find out more in our feature below.

It’s an ill wind which blows nobody good, as they say. But when the government is happy to reward their ‘mates’ with lucrative contracts, while at the same time refusing to give our public sector heroes a pay rise, something is surely wrong.

In November more evidence emerged of the government’s dubious use of public funds amid the pandemic, with new research from the main government spending watching dog revealing that PPE suppliers which had political connections were fast-tracked for government contracts.

In a damning new report, the National Audit Office (NAO) uncovered a special ‘lane’ for firms with direct connections to Tory politicians and officials, whose pitches for contracts were automatically considered – these suppliers, numbering almost 500, were 10 times as likely to win contracts.

Of those suppliers connected with politicians or officials who were referred to the fast-track channel, about 10 per cent were awarded a PPE contract, compared to just 1 per cent of suppliers which had no political links.

The NAO found that over £18bn worth of contracts were awarded in the first six months of the pandemic – and more than half, about £10.5bn, were directly awarded with no competition.

The spending watchdog said that in the case of contracts awarded directly, there was often no transparency about why these contracts were awarded to certain suppliers.

“For procurements where there is no competition, it is important that awarding bodies set out clearly why they have chosen a particular supplier and how any associated risks from a lack of competition have been identified and mitigated,” the NAO report highlighted. “This is to ensure public trust in the fairness of the procurement process.

“In a selected sample of 20 contracts, the NAO found examples where departments failed to document key decisions, such as why they chose a particular supplier or used emergency procurement, and failed to document their consideration of risks, including how they had identified and managed any potential conflicts of interest.”

It was also revealed that in many cases, work had already started on projects before contracts were even drawn up. In one example, social media agency Topham Guerin – which had worked with the Conservative Party before during the last election – was awarded a £3m contract by the Cabinet Office for Covid-19 messaging, which did not go out to competitive tender.

Topham Guerin, known for its misguided political stunt of changing the Party’s official Twitter handle to FactCheckUK during the election, began work for the Cabinet Office on March 17, but was not formally given a contract until May 7.

Commenting on the report, NAO head Gareth Davies said the government had failed to be transparent about many of its pandemic contracts.

“While we recognise that these were exceptional circumstances, it remains essential that decisions are properly documented and made transparent if government is to maintain public trust that taxpayers’ money is being spent appropriately and fairly,” he said. “The evidence set out in our report shows that these standards of transparency and documentation were not consistently met in the first phase of the pandemic.”

In addition to the NAO report, a BBC investigation also found that a Spanish businessman  was paid £21m in taxpayer cash to act as a go-between in securing PPE.

The BBC investigation revealed that early on the in pandemic, a Miami-based jeweller Michael Saiger had set up a business to supply PPE to governments using his previous experience working with factories in China.

Saiger was awarded nearly £200m in UK government PPE contracts, which did not go out to competitive tender.

Saiger hired Spanish businessman Gabriel Gonzalez Andersson to support Saiger with “procurement, logistics, due diligence, product sourcing and quality control” and was paid £21m for work on two government contracts for the NHS.

Saiger signed up for a further three more UK government contracts in June, which would have given the Spanish businessman a further $20m in consulting fees. At this stage, however, Andersson stopped doing any work, which led to delays in PPE delivery, Saiger claims in a US legal dispute. The BBC reported that it is not clear if Andersson received money for the second round of PPE deals.

Labour confronted PM Boris Johnson at PMQs about the latest revelations of government cronyism.

Leader Sir Keir Starmer told Johnson, “While the prime minister and chancellor won’t pay people enough to [self-] isolate properly, we learned this week that they can find £21m of taxpayers’ money to pay a go-between to deliver lucrative contracts to the department of health.

“I remind the prime minister that a few weeks ago he couldn’t find that amount of money for free school meals for kids over half term,” he added.

This isn’t the first time that investigations have revealed the government misusing public funds. In September, research from Labour produced a ‘file of failure’, which revealed over £130m was handed to Randox Laboratories – a firm that has donated to the Conservatives – for testing kits. But three-quarters of a million of these tests had to be recalled because they were deemed unsafe by the Department of Health and Social Care.

Meanwhile, at least £150m of a £252m contract for Ayanda Capital was wasted on face masks, as a huge proportion of these masks were deemed unsuitable for frontline NHS staff.

The government had by September handed outsourcing giant Serco and call centre firm Sitel £108m and £83m respectively to run a contact tracing service which had failed spectacularly.

Taeg Energy, meanwhile, was handed more than £43m to provide hand sanitiser to the NHS, despite the fact the firm had stopped trading in 2016 and has been listed on Companies House as dormant since 2017.

The government also faced fierce criticism for installing the Conservative Party-connected businesswoman Dido Harding as head of NHS Test and Trace and interim leader of the new body set to replace Public Health England (PHE), despite Harding having virtually no experience in the public sector. 

Commenting on these appalling revelations from the NAO report and the BBC, Unite national officer Colenzo Jarrett-Thorpe said, “Here we find yet more cronyism and chaos from the Tories who’ve shamelessly seen the pandemic as an opportunity to enrich their friends in high places.

 “If this were just some garden-variety Tory nepotism to throw the usual government contracts to their political connections, these revelations would still be deserving of further investigation to ensure those in power are held accountable. But that this corruption is happening with contracts over life-and-death necessities like PPE is truly beyond the pale — and warrants immediate action,” he added.

“The government has failed our vital NHS staff, many of whom have been left without adequate protective kit.  Over 600 NHS and social care staff have paid with their lives in this pandemic.

“We need the highest standards of transparency in any and all pandemic-related contracts going forward. We have lost trust and confidence in this government to do the right thing without robust oversight, when NHS staff and the population generally are suffering because of their cavalier approach to our health and safety.”

Unite will continue to expose the shame of this government’s ‘crony-virus’ payments – especially when, according to the Mirror, that the proposed pay freeze for 3.7m hard working public sector heroes would save just £3.4bn – a mere one fifth of what has been paid out in lucrative contracts to such ‘crony’ firms.

 By Hajera Blagg

This feature first appeared in Unite Works Winter 2020/21.

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