A landmark study has uncovered corruption “red flags” in government Covid contracts worth more than £15bn – representing nearly one in every three pounds awarded by the Conservative administration during the pandemic.
The analysis, billed as the most in-depth look yet at public procurement during the crisis, warns that systemic bias, opaque accounting and uncontrolled pricing resulted in vast waste of public funds on testing and personal protective equipment (PPE).
The review of more than 5,000 contracts across 400 public bodies identifies 135 high-risk contracts with a value of £15.3bn where investigation is merited due to the identification of three or more corruption red flags, which include a lack of competition, delays or failure to release information on procurement, and conflicts of interest in the award of contracts. The report by Transparency International UK finds:
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At least 28 contracts, worth £4.1bn, went to those with known political connections to the Conservative party. This amounts to almost a tenth of the money spent on the pandemic response.
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Fifty-one contracts, worth £4bn, went through the “VIP lane”, a vehicle through which certain suppliers were given priority, of which 24, worth £1.7bn, were referred by politicians from the Conservative party or their offices.
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£1bn was spent on personal protective equipment from 25 VIP-lane suppliers that was later deemed unfit for use. The VIP lane was found to unlawful by a high court judge in a 2022 ruling.
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Eight contracts, worth £500m, went to suppliers that were no more than 100 days old.
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The UK government awarded more than £30.7bn in high- value contracts without competition – equivalent to almost two-thirds of all Covid contracts by value.
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The Department of Health and Social Care wrote off £14.9bn in public money over a two-year period – equivalent to the government’s total spend on personal protective equipment.
In response, a spokesperson for the Conservative party pointed to a National Audit Office report that found that ministers had properly declared their interests.
“Government policy was in no way influenced by the donations the party received – they are entirely separate,” he said.
The Labour chancellor, Rachel Reeves, has said she will appoint a Covid corruption commissioner to examine an estimated £7.6bn worth of Covid-related fraud, with particular focus on the billions wasted on useless PPE.
The National Crime Agency (NCA) is investigating PPE Medpro – a company led by Douglas Barrowman, husband of the Conservative peer Michelle Mone – which was awarded government contracts worth more than £200m. Barrowman and Lady Mone deny any wrongdoing.
But researchers warn of a potential higher cost to the public purse than that acknowledged by Reeves as a result of the previous administration’s widespread and “often unjustifiable” suspension of procurement checks and safeguards.
Of the £1tn-worth of contracts signed in the three years from February 2020, government data shows that £48.1bn was spent in relation to the pandemic, largely on Covid testing and PPE, and a third (32%) of that spending raised serious concerns.
The report, entitled Behind the Masks, acknowledges that there had been a need to act quickly as Covid took grip, but the authors claim there was an unjustifiable disregard for publishing the details of contracts and an unhealthy reliance in government on uncompetitive procurement even as the impact of the crisis on the health system subsided.
Almost two-thirds of all high-value Covid contracts by value lacked competition. A year into the pandemic, UK contracting authorities were still frequently making awards without competition even as countries in the EU such as Italy were reverting to competitive bidding.
It is claimed that the so-called VIP and high-priority lanes – which triaged offers of assistance that came via officials, MPs, members of the Lords and ministerial offices – enabled unqualified politicians to fast-track the reviewing of offers from PPE and testing suppliers – a practice said to be unique to the UK’s pandemic response.
About 2% of all offers – about 500 – went through the VIP lane. Of these, 51 suppliers were successful, representing a 10% success rate, compared with the 0.7% rate on other routes, while the prices paid were on average 80% higher.
The report estimates that Covid contracts boosted some suppliers’ profit margins by as much as 40%.
Of the 135 contracts identified as being high risk, the report’s authors write: “The most common red flags were delayed publication of contracts and those awarded uncompetitively. However, most of these contracts exhibited red flags across multiple areas of risk – including those associated with the supplier profile, the procurement process and the contract outcomes – and often spanning all three. Some contracts displayed as many as eight red flags.”
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A Treasury spokesperson said: “The chancellor has been clear that she will not tolerate waste and will appoint a Covid Corruption Commissioner to get back the money that is owed to the British people.
“The commissioner will report directly to the chancellor, working with the secretary of state for health and social care, and their report will be presented to parliament for all members to see.”
The findings have been published on the day that public hearings examining the impact of the pandemic on the healthcare system are due to start. Transparency International UK, as part of the UK Anti-Corruption Coalition, has core participant status in the proceedings.
Joe Powell, a Labour MP and the chair of the all-party parliamentary group on anti-corruption and responsible tax, said: “The scale of money lost to the taxpayer is staggering. Amid a cost of living crisis, it is simply unacceptable that so much money could have been lost to cronyism and human error. Public money must be accountable.
Daniel Bruce, the chief executive of Transparency International UK, said there had been a collapse in the normal checks and balances, and that a slew of changes in procurement was necessary to rebuild confidence in the system.
He said: “The scale of corruption risk in the former government’s approach to spending public money during the years of the Covid pandemic was profound.
“That we find multiple red flags in more than £15bn of contacts – amounting to a third of all such spending – points to more than coincidence or incompetence.
“The Covid procurement response was marked by various points of systemic weakness and political choices that allowed cronyism to thrive, all enabled by woefully inadequate public transparency. As far as we can ascertain, no other country used a system like the UK’s VIP lane in their Covid response.”