Covid-19: PPE Procurement

Wednesday 30th November 2022 Lords Chamber

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Thursday 24 November.

“Sourcing, producing and distributing PPE is, even in normal times, a uniquely complex challenge. However, the efforts to do so during a pandemic, at a time when global demand was never higher, were truly extraordinary. Early on in that pandemic, our priority was clear: to get PPE to the frontline as quickly as possible. All of us in this House will remember that moment, and how desperate we all were to see PPE delivered to the frontline.

During the course of the pandemic—nearly at its peak—400 staff were working on sourcing protective equipment, and tens of billions of items were sourced. We worked at pace to source new deals from around the globe, and we always buy PPE of the highest standard and quality, and at the best value for money. Over the course of the programme, due diligence was done for over 19,000 companies, and over 2,600 companies made it through that initial due diligence process.

With huge demand for PPE all across the world, and with many countries introducing export bans, our risk appetite had to change. We had to throw everything behind our effort to protect those who protect us and those who needed it most. We had to balance the risk of contracts not performing and supplies being priced at a premium against the crucial risk to the health of frontline care workers, the NHS and the public if we failed to get the PPE that we so desperately needed.

As well as due diligence checks, there was systematic price benchmarking. Prices were evaluated against the need for a product, the quantity available, how soon it was available and the specification. Many deals were rejected or renegotiated because the prices initially offered were not acceptable.

There are always lessons that we can learn from any crisis, but we must not lose sight of the huge national effort that took place—I thank the officials who worked on it—to protect the most vulnerable while we tackled one of the greatest threats to our public health that this nation has ever seen.”

15:54

[Baroness Smith of Basildon (Lab)]

My Lords, I have raised the issue of fraud in PPE contracts previously. Apparently, PPE Medpro was awarded contracts via the VIP lane amounting to £200 million, despite it not even existing when Ministers were first contacted. Then, just over a year ago, the noble Lord, Lord Bethell, then the Health Minister, admitted that the department was engaged in ongoing

“discussions (potentially leading to litigation) in respect to 40 PPE contracts with a combined value of £1.2 billion covering 1.7 billion items of PPE.”

The following January, the noble Lord, Lord Agnew, resigned, criticising the Government’s track record in countering fraud across government. In relation to the PPE contracts of £1.2 billion, will the Minister update the House on how much of that money has now been returned to the taxpayer? Can he say what amount is outstanding, either where negotiations continue or where legal action is now being taken or is pending? If he does not have that information immediately to hand, will he commit to write to me and place his letter in the Library?

[The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Markham) (Con)]

I thank the noble Baroness, and I commit to write with the precise figures. To put it into context, we should remember that this was at a time when unprecedented action was required. Of the 38 billion PPE items ordered, 98% were delivered and just 3% were unfit for purpose. Within that, clearly there is action that needs to be worked on and action is being taken to pursue those damages. I will put those in writing, so that the noble Baroness can understand them all. As I say, it is good if noble Lords recall that the priority at the time was clearly getting equipment to help protect and save lives, and that was what was done. Were mistakes made? Of course. Are we seeking to address those now by going back to take action against those people? Yes, of course we are, but we need to keep it in the context that the undoubted priority was to buy PPE and protect lives.

[Baroness Brinton (LD)]

My Lords, from these Benches we echo the questions that the noble Baroness the Leader of the Opposition has asked. We note that at least 71 PPE deals were awarded to firms, of which at least 46 were put into the VIP lanes by Conservative Ministers and officials during the Covid pandemic, as well as by some MPs and Peers, before a formal eight- stage due diligence and checking process was put in place. There were also deals made not for PPE during that period, including for testing and some non-health ones.

I think we all agree that the wastage and profiteering should never happen again, but we warned from these Benches, as did other Members across the House, in the early stages of the pandemic that all the right contracting arrangements, protocols and scrutiny needed to continue. The Minister has said that the pandemic posed problems, so will he push for a separate, independent-led inquiry able to examine the whole procurement process, including the VIP lanes, and analyse forensically the bids, profits, wastage and catalogue of links to Ministers, MPs, Peers and others who had influence on them?

[Lord Markham (Con)]

I thank the noble Baroness. My understanding is that there have already been three NAO reports and three PAC reports on this, so it has been covered in depth. I think people have accepted that mistakes were made and that the high-priority lane, so to speak, should not have been on the basis of referrals but more burden of proof should have been put on the applicants, so we could get more information and sift it that way. Again, to put it all into context, there were 19,000 applicants at the time. This was led by officials, and they put the high-priority lane in place to try to sift those. Also, of the 430 that went into the high-priority lane, only 13% actually ended up in contracts. Are there lessons to learn from this? Of course, but the NAO and PAC reports have outlined those lessons.

[Lord Browne of Ladyton (Lab)]

My Lords, experience tells us that the best deterrence against fraud and corruption are the twins of transparency and accountability; in the absence of such transparency and accountability, the reporting of the saga of PPE Medpro risks tainting others by association. So, for transparency if nothing else, will the Minister agree that relevant correspondence between PPE Medpro or its representatives, and Ministers or their officials, should be published and placed in the House of Lords Library, perhaps soon after the current investigations are concluded? Also for transparency, surely the public are entitled to understand what due diligence was conducted on this company and other similar ventures that emerged, apparently from nowhere, during the initial stages of the pandemic?

[Lord Markham (Con)]

I thank the noble Lord. As I am sure we are all aware, this is subject to a criminal investigation at the moment, so in terms of paperwork we need to let that take its due course. What I can talk about is what we are doing as a department on that, particularly in terms of the contracts for gowns which were defective, and it is in that area that we are in dispute with them. We have made a claim and put in place a process so that we will take it to court, and we will pursue that if we do not come to a negotiated settlement which is satisfactory.

[Lord Alton of Liverpool (CB)]

Can I take the Minister to the present rather than the past, and to two Written Answers which he gave to me yesterday on the 120 million items of PPE which are currently still stored in the People’s Republic of China and costing taxpayers £770,000 every single day—three-quarters of a million pounds, daily? I asked the Minister how much this has cost to date, but in telling me that the cost has been £16.3 million, he simply took the period of April to September. I would be grateful if he could produce a more complete set of figures and say how much longer we are going to go on paying £770,000 every day to companies linked to the People’s Republic of China, to the Chinese Communist Party, and to goods that have been made by slave labour in the Xinjiang region.

[Lord Markham (Con)]

I will happily provide those updated figures in writing; I thank the noble Lord for his question because it sparked a number of inquiries on my front. As he will be aware, I am only two months into this job. But one of those very questions—a hard question for us to think about—is the cost of storage versus, dare I say, scrapping it, because we have tried to donate all we can from it, and, God forbid, having to buy it again if there is another pandemic. In many cases it is cheaper right now to scrap it and buy it again at current prices. Of course, you cannot be certain whether prices could then get inflated again, but I hope your Lordships can tell from this answer that I am very much looking into the cost-benefit of the best approach.

[Baroness McIntosh of Pickering (Con)]

My Lords, will my noble friend pay tribute to Industrial Textiles & Plastics of Easingwold which, together with Barbour and Burberry, submitted an application to the Cabinet Office for a number of gowns, and are still waiting for a reply? They donated these gowns free at the point of use to local hospitals. I believe that they should have had a contract from the Government and am at a loss to understand why they did not. Is there any reason that the Cabinet Office failed to reply to them?

[Lord Markham (Con)]

I do not know why they did not reply. What I do know is that there were many companies like the ones mentioned who wanted to do their bit. They stepped up to the mark and provided all sorts of goods and services, sometimes at no cost and for no profit, because they all wanted to be part of the wartime effort. I will find out why they did not get a response.

[Lord Allan of Hallam (LD)]

My Lords, there is considerable public interest in understanding whether businesses were stepping forward at a time of crisis, sourcing PPE helpfully and passing it on to the NHS, with a minimum mark-up to cover their costs, or rather seeking to maximise profit. Will the Minister agree to publish sufficient information about the distribution of profit margins made across the community of suppliers for us to make that determination?

[Lord Markham (Con)]

I do not believe we could possibly have that information; obviously, we would need to know the cost base of these companies to supply it. I am afraid that I do not believe we can do that. Further to my last reply, some companies supplied things at a very reasonable margin and did a great job, but unfortunately, as we have seen in some of the examples, others were not so publicly spirited—let me put it that way.