Boris Johnson came under fire at Prime Minister’s Questions today after the National Audit Office (NAO) found ministers set aside normal standards of transparency as they scrambled to secure £18bn of supplies and services in response to the coronavirus crisis.
The public spending watchdog found firms recommended by MPs, peers and ministers’ offices were given priority as the Government raced against the rest of the world to acquire personal protective equipment (PPE).
One Yorkshire firm which gained a contract was Hotel Logistics Ltd, based in Huddersfield.
The business, which on its website is said to “represent the world’s largest producer of carpet, tile and rug into the global hospitality market”, had net assets of just £20,664 in accounts filed with Companies House in April 2020, which covered the period up to May 31, 2019.
Also in April a notice for compulsory strike off was recorded for the firm, which would have led to the business ceasing to exist.
But this was then rescinded and in the same month it was awarded a £3.6m Government contract to provide gloves for healthcare staff working with coronavirus patients.
This was followed by further contracts in June, bringing the total value of contracts awarded to Hotel Logistics Ltd to £5.3m.
All were awarded without going out to tender due to the emergency situation of the pandemic.
And although Companies House lists the firm as providing “wholesale of pharmaceutical goods”, there is no mention of this on the company’s website, however on the LinkedIn page of director Douglas Campbell it said: "Following a merger with Haima Corporation of China, we represent a myriad of diverse interests within group in textiles, medical services, PPE and pharmaceutical goods."
The Yorkshire Post contacted Hotel Logistics, as well as Mr Campbell directly, for comment via various methods but did not receive a response.
Leeds East Labour MP Richard Burgon has demanded a full public inquiry into the handing out of these contracts.
He said: “Today we have again seen how vast sums of public money spent on Covid contracts have not been accounted for.
“The stench of cronyism is growing stronger every day.
“It’s appalling that this is happening at a time of deep national crisis.
“There must be a public inquiry into why so many government Covid contracts have gone to failing private companies - many with links to top Tories. This is the only way of restoring public confidence.”
There is no suggestion that Hotel Logistics Ltd has any connection to the Government or the Conservative Party but Sheffield peer, Liberal Democrat Lord Scriven, asked in the House of Lords how firms with no proven track record of providing PPE could be given contracts.
Responding, Health Minister Lord Bethell said: “We are enormously grateful for the very, very many people who stepped forward to offer help during this time.”
He said when the Prime Minister made an appeal for those who could assist to come forward “in that list, there were great many people who had extensive experience in their area, [and] there were people who were new to the game, there were have a go heroes, there were multinational companies, and there were also those whose intentions were not as pure as one would hope”.
But he said: “We approached each and every on their merit. There are official guidelines in order to guide the procurement processes and we stuck to those guidance every step of the way.”
The Prime Minister also defended the awarding of contracts during PMQs.
Labour leader Sir Keir Starmer demanded a “cast-iron” assurance from Mr Johnson that future Government contracts would be subject to the proper processes.
Mr Johnson responded by labelling Sir Keir “Captain Hindsight”, and defended the Government’s efforts to secure personal protective equipment (PPE).
Mr Johnson said Sir Keir initially urged for the removal of “blockages” in the procurement process to secure PPE, adding: “We were facing a very difficult situation where across the world there was not adequate supplies of PPE. Nobody had enough PPE.
“We shifted heaven and earth to get 32 billion items of PPE into this country. I’m very proud of what has been achieved.”
Mr Johnson said 70% of PPE is capable of being made in the UK now, although Sir Keir noted: “This week he is effectively defending the paying of £21 million on a contract with no oversight.”
Sir Keir pressed further on Covid-19 contracts and highlighted the NAO report, adding £10.5 billion of contracts were handed out without competitive tender and “suppliers with political connections were 10 times more likely to be awarded contracts”.
He said: “Can the Prime Minister give a cast-iron assurance that from now on all Government contracts will be subject to proper process, with full transparency and accountability?”
Mr Johnson replied: “All Government contracts are, of course, going to be published in a due way and are already being published.”
The Prime Minister criticised Sir Keir’s remarks, thanked suppliers and highlighted recommendations from Labour which, he said, included a football agent seeking to supply ventilators.
He went on: “It is absolutely absurd Captain Hindsight is now once again trying to score party political points by attacking us for moving too fast.”
The NAO report found:
– By July 31 more than 8,600 contracts with a value of £18bn had been awarded, including £10.5bn without any competition process.
– A “high-priority lane” was established for firms referred to the PPE team by officials, ministers’ offices, MPs, peers and senior NHS staff, with about one in ten companies going through this route getting a contract, compared with one in 100 for those in the “ordinary lane”.
– Contracts were awarded retrospectively after work was carried out, including a £3.2 million agreement with Deloitte to support the PPE team and an £840,000 deal with Public First for focus groups.
– There was “inadequate documentation” in a number of cases on how risks, including potential conflicts of interest, had been managed.
– Many of the contracts awarded were not published in a timely manner.
NAO chief Gareth Davies said: “At the start of the Covid-19 pandemic in the UK, Government had to procure large volumes of goods and services quickly whilst managing the increased risks this might entail.
“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.
“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.”
Cabinet Office Minister Julia Lopez said: “We have been dealing with an unprecedented global pandemic that has posed the biggest challenge to the UK in a generation.
“As this report rightly recognises, we needed to procure contracts with extreme urgency to secure the vital supplies required to protect frontline NHS workers and the public and we make no apology for that.
“We have robust processes in place for spending public money to ensure we get critical equipment to where it needs to go as quickly as possible, whilst also ensuring value for money for the taxpayer.
“It is important to maintain the public’s confidence in how we manage their money, and we welcome the NAO’s scrutiny of our processes and recommendations on how they can be improved.”