Covid-19: Award of Contracts

Neale Hanvey Excerpts

Wednesday 5th January 2022 Commons Chamber

[Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)]

While this debate is ostensibly about covid contracts, it is essentially about honour and the old-fashioned values of integrity, responsibility and prioritising the needs of those who we are elected to serve, making them our primary focus. I will look at three distinct areas of contracting where we as a Parliament find ourselves with this Government. First, I will consider the early contracting for personal protective equipment. I will then look at how hollow the Government’s “build back better”, “level up” and “take back control” slogans sound to the domestic diagnostics industry, which has been utterly abandoned and betrayed by the Government. Then I will consider the implication of the Government’s reluctance to take the advice of their own former vaccines taskforce chair, before considering where that places the UK in the context of the prevailing international strategic landscape.

The first issue is PPE. In 2020, I led a cross-party letter to the Prime Minister about the crisis engulfing the NHS as a consequence of inadequate supplies of PPE. It took until November 2020 for the signatories to receive a response. Throughout that time, the NHS remained in the grip of a shortage of PPE, and the National Audit Office conducted and published its investigation into the contracts for the provision of PPE during the early stages of the covid-19 outbreak. As a result, I submitted written questions to the Secretary of State asking which companies had been awarded contracts after being introduced through the alleged high priority lane. The response from Government asserted:

“The cross-Government PPE team considered that leads referred by Government officials, Ministerial private offices, Parliamentarians, senior National Health Service staff and other health professionals were possibly more credible and needed to be initially reviewed with more urgency. This was commonly referred to as a ‘priority’ or ‘VIP’ channel.

At the point of being prioritised these offers went into exactly the same…process”.

Sadly, that was wrong. According to Transparency International UK’s “Track and Trace” report, critical safeguards designed to prevent corruption were suspended. They identified 73 contracts worth more than £3.7 billion, equivalent to 20% of covid-19 contracts, between February and November 2020 that raised concerns about possible corruption.

By July 2021, all of the Government’s assertions would be for naught. When questioned by Members, the then Chancellor of the Duchy of Lancaster, the right hon. Member for Surrey Heath (Michael Gove), responded with the claim that

“every single procurement decision went through an eight-stage process”.—[Official Report, 8 July 2021; Vol. 698, c. 1060.]

That assurance was a fiction. That same week, the Government revised their position, admitting that the eight-stage procurement process was not in place until the end of April 2020, and that contracts awarded before that date had avoided such scrutiny.

There are many outstanding questions for the Government in that regard, some of them subject to legal action that remains sub judice, so I will observe the rules and leave such matters to the courts. But I repeat a request I have made before. If the Government have nothing to hide, why do they not submit to a full independent public inquiry that could exonerate them?

On testing, Operation Moonshot was heralded as a means to create a world-leading and largely home-grown testing capacity, but the programme failed to launch, never mind get to the moon. In late 2020, Moonshot was subsumed into another costly fiasco—NHS Test and Trace, which was set up in May 2020 with an opening budget of £22 billion, with a further £15 billion, totalling £37 billion, over two years. What of the UK testing capacity? To date, I know of only one UK company that has been able to navigate the ever changing maze of validation. Yorkshire-based domestic diagnostic firm Avacta Life Sciences is just one of the many UK diagnostic companies that claim to have a world-beating product that is certified for use in Europe but not in the UK. Omega Diagnostics in Alva, Scotland was one of the two companies publicly promised contracts. On 15 March 2021, in a now infamous tweet to UK firms Omega Diagnostics and Mologic, Lord Bethell, then Innovation Minister in the Department for Health and Social Care, publicly promised diagnostics contracts, with the hundreds of jobs necessary to fulfil them. Those UK companies were subsequently abandoned without explanation.

The Government must explain to the domestic diagnostics industry, including to those who made investment decisions based on Lord Bethell’s public commitment, how that was allowed to happen. What action has been taken to address that disgraceful, damaging and market-distorting behaviour from a UK Government Minister? It is beyond comprehension that regulatory barriers have since been erected to further frustrate the ambitions of domestic providers while simultaneously ensuring continued UK dependency on companies based in China.

Given the recent shortage of test kits, I welcome the wider interest in this matter today, but it is beyond comprehension that the Prime Minister should stand at the Dispatch Box and accuse anyone else of running down the UK diagnostics industry when that is exactly what his Government have been doing for two years. This is not just my opinion but that of many in the industry and their investors, who have looked on in disbelief at the Prime Minister’s comments this afternoon. It is the Prime Minister who does not have a clue what is going on. Not only do tests have to secure Medicines and Healthcare products Regulatory Agency approval, but they now have to pass the coronavirus test device approvals process while Chinese imports are completely exempt. It is an utter disgrace that the Prime Minister does not know this. If MHRA acceptable usage rules were good enough for overpriced imports at the start of the pandemic, why is not full MHRA approval sufficient for these domestic tests?

In the case of Omega and Mologic, test design and validation is not really the issue. They were contracted to manufacture lateral flow devices to the Department of Health and Social Care’s specification. It was the Department’s responsibility to supply a test design to Omega for manufacture and not to supply one for approval. That makes the Department’s betrayal of Omega all the more disturbing. What is going on? To add insult to injury, the Department is now pursuing Omega for £2.5 million because of its own failure to progress the contract. According to Omega, it would have had to capacity to deliver 1 million to 2 million tests per week had the contract gone ahead, and Mologic could potentially produce even more. Does the Minister accept that had the Government followed through with this contract as planned, we might not be so vulnerable to global pressure on tests and reagents? Does he agree that this must change, and change immediately?

Those who have been following this matter, most from beyond the Chamber, will know that I have been raising concerns about testing capacity and quality since July 2020, when we had a unique opportunity to get ahead of the curve. From my July 2020 questions to Professor Whitty about how we build capacity, to my repeated challenges to the then Health Secretary over inflated claims of the accuracy of lateral flow test devices, my concern has always been genuine. That concern is no better illustrated than in the words of Lord Bethell in an official letter of 11 December 2020, in which he stated:

“We are not currently planning mass asymptomatic testing; swab testing people with no symptoms is not an accurate way of screening the general population, as there is a…risk of giving false reassurance. Widespread asymptomatic testing could undermine the value of testing, as there is a risk of giving misleading results.”

That view was supported by the Government’s own evaluation, which found that the Innova lateral flow device missed 60% of infectious cases, including 30% of the most infectious, yet it was given unwarranted confidence by UK Government and the devolved Administrations.

UK industry insiders tell a sorry tale of ever-moving goalposts, and no clearer did that become than with the introduction of the coronavirus test device approvals regulations last year. This legislation protects underperforming imports and creates additional hurdles, barriers and costs for domestic manufacturers. In practice, it means that they can secure MHRA approval but only sell into Europe. The only conclusion I can come to is that the UK Government were, and still are, actively and deliberately sidelining their own industry and innovation in favour of cheap imports, with massive mark-ups for profits for middlemen.

It is not just the UK Government. The Scottish Government have bought into the whole debacle despite having Alva-based Omega Diagnostics on their doorstep. This has been a four-nation approach of abject failure. What about new technology beyond lateral flow devices? Lateral flow devices have a place in testing, but, like PCR, their use is limited and imperfect, and we need to plan for the future. We cannot afford to get this wrong. I have engaged with two artificial intelligence diagnostic firms, AI Diagnostics and MediChain, both developing state-of-the-art AI tests north and south of the border. Both are being ignored by the UK Government, but not by the rest of the world. How can it be that the rest of the world sees the value of UK domestic diagnostic products, both lateral flow devices and new tech, but not its own Government?

As a constituency MP, a fundamental part of my job is to bring investment, jobs and prosperity to my constituency, which I do actively and with growing success. Is that not the job of Government too, especially one whose stated objective is to build back better and take back control? The world is clamouring for lateral flow devices and the market has been cornered by countries with far deeper pockets and much more nimble politicians than the UK. Like Nero, however, the UK Government have fiddled while they burn the domestic diagnostics industry down. It is utterly shameful. If exceptional usage agreements could be found for completely discredited Innova tests, which the United States Food and Drug Administration said were fit only for the trash, why can the UK Government not provide approval for domestic diagnostics providers now to secure domestic production and supply capacity?

On vaccine procurement, I will focus on Valneva, the vaccine company based in Livingston, Scotland. The former chair of the UK vaccines taskforce, Dame Kate Bingham, set out in her evidence to the Science and Technology Committee just before Christmas that the UK Government’s decision to cancel the contract with Valneva was “short-sighted” and “problematic on various counts”. In her Romanes lecture on 23 November at the University of Oxford, she said that the decision was “inexplicable” and

“set aside the need to build resilience in the UK’s pandemic preparedness capability through a…flexible state-of-the-art manufacturing plant…able to manufacture vaccines to any format as might be needed”.

Dame Kate told the Science and Technology Committee that the aim of the contract was to provide the UK with “flexible, state-of-the-art manufacturing capability” that could give the UK the edge over other vaccines, given Valneva’s unique ability as a whole virus vaccine to readily adapt to emerging variants. She said:

“By cancelling the contract, we lose that capability.”

In her Romanes lecture, she also remarked:

“Some might consider this behaviour as acting in bad faith.”

The chief executive of Valneva, Thomas Lingelbach, said that the Government threw it “under the bus”. The Scottish newspaper the Sunday Mail’s reporting on the issue has been second to none.

What happened to Valneva is nothing short of a scandal. The contract was pulled just before the phase 3 trial results were published, causing the share price to halve, but the results showed the vaccine to be highly effective and safe. It is the only inactivated adjuvanted whole virus covid-19 vaccine candidate in clinical trials in Europe. Inactivated vaccines are a well established, tried and tested technology that has been used over the last hundred years to vaccinate billions of people, including for seasonal flu, hepatitis A, polio and rabies. The Valneva vaccine could therefore play a vital role in tackling vaccine hesitancy among certain groups concerned about novel vaccine technology. It is also cost-effective compared with existing alternatives.

At best, the decision to cancel the contract exposes the economic and public health incompetence at the heart of the UK Government’s covid planning. At worst, it shows an act of wilful and malicious economic vandalism that has placed the existing jobs of the Livingston workforce in the balance and put a potential further 200 jobs at risk.

This is a company that did everything it was asked to do by the British Government, and more, only to have the rug pulled from under it. If that was not bad enough, its integrity has been impugned by accusations of breach of contract which may, according to Dame Kate Bingham, be designed as a means to avoid paying costs incurred up to that point—costs incurred at the request and for the convenience of the UK Government. No wonder she concluded:

“Is this really, all in all, an example of industrial strategy of which the Government can be proud?”

Despite everything that has happened, the UK Government still have the opportunity to do the right thing. They can restore the contract, secure existing and future employment, and safeguard a cutting-edge state-of-the-art facility and manufacturing capability for the benefit of the people—not just in Scotland or the UK, but across the world.

One advantage of the vaccine is that it would allow the UK to meet its humanitarian responsibilities by supplying vaccines to COVAX without the need for a complex cold chain infrastructure. The European Commission, the Government of Bahrain and, more recently, Scottish Enterprise are in advanced discussions with the company to provide a grant of £20 million. They have shown faith in Valneva, and it is high time that the UK Government did the same.

In closing, I want to draw attention away from the mistakes of the past and on to how we conduct ourselves and how this Government must conduct themselves going forward. Covid now looks likely to be a permanent fixture. How we plan for that future has never been so important. It is not good enough to lurch from one crisis to another. We need to develop and build resilience. That means that we must be self-sufficient in testing, vaccination and treatment. We need a plan not for six months, not for a year, or even for five years, but for the next decade. Other countries are planning that far ahead and we must match them. Those who develop novel technologies that adapt will come out stronger. Those who try to get by making a fast buck on dodgy contracts will suffer, which is simply not good enough. We have a responsibility to develop the intellectual property and ingenuity to sell to the world and grow jobs and expertise here at home.

As I mentioned at the start of my remarks, the UK Government need to rediscover the values of integrity, responsibility and prioritising the needs of those whom we were elected to serve. They need to step up and support the PPE, diagnostics and biological science industries and build that capacity and capability across these islands in the coming years. Failure to do so will not be forgiven.

[The Paymaster General (Michael Ellis)]

I am very grateful to be speaking in this Adjournment debate on covid-19 contracts and I congratulate the hon. Member for Kirkcaldy and Cowdenbeath (Neale Hanvey) on his success in securing this debate.

As the hon. Gentleman will appreciate, covid-19 has presented this country with one of the most unprecedented challenges that we have faced since world war two. It has been imperative for us all to work together and to do so closely throughout the pandemic. This Government recognise the importance both of the key role of the devolved Administrations, and of our working together as one United Kingdom. It is thanks to that close collaboration and co-ordination that we have been able, as a United Kingdom, to achieve enormous success in, for example, our vaccine roll-out programme, where we are leading the world, and I hope that he will recognise that.

The hon. Gentleman mentioned personal protective equipment. The reality of the matter is that, since 25 February 2020, we have secured the production of more than 16.5 billion items of PPE, the majority of which have either been delivered or are on their way and enable us to meet the future needs of health and social care workers. Since 9 April 2020, more than 5.4 billion items of PPE have been ordered through the e-portal. We have also established a safety stockpile of all covid-critical PPE, with a tremendous contribution from UK manufacturers, to ensure that we can continue to provide an uninterrupted supply to the frontline. We have done so despite the fact that pressure from almost every country in the world put enormous strains on supplies of PPE. Therefore, we are working extremely hard to ensure that resilience and sustainability is built into long-term planning for UK manufacturers. The PPE cell, as it is called, has now developed a UK-based supply chain for PPE, and that is a complete turnaround from the situation before covid. We have been building UK manufacturing capacity and we have been doing so by signing contracts with more than 30 British-based companies for the provision of 3.9 billion items of PPE.

[Neale Hanvey]

rose—

[Michael Ellis]

I will just make some progress, if I may.

There has been an enormous effort and an enormous success, despite considerable international pressure, in establishing those routes and chains and developing them to supply the vast quantities that have been required by this country. We have done that with the assistance of more than 30 UK-based companies, which should be thanked for their work and their efforts.

There is a high-priority lane for PPE, and the high-priority mailbox was set up at a time when this country and our citizens were in need of urgent help. Many suppliers and individuals were rightly passing on offers of support direct to local MPs, both Government and Opposition MPs, and passing on their suggestions to healthcare professionals, civil servants and anyone they knew. They were right to do so to both Labour and Conservative MPs across the House, because they were seeking to assist the national interest in what was at the time a national emergency. They were keen that the Government procurement effort should know what was available.

The mailbox at the time allowed MPs, Ministers and senior officials to direct those offers to a dedicated location. The high-priority lane was simply one way of helping us to identify credible opportunities for PPE procurement, so that frontline workers received the protection they needed as fast as possible. It was in the national interest, it was a good thing to do and people should be thanked for their help in that regard.

Ministers were not involved in the decision to establish the high-priority lane; it was an internal process, if hon. Members would like to know, led entirely by officials. In order to demonstrate our commitment to transparency, we said on 17 November that the Government would publish, and we did publish, details of the suppliers identified through the high-priority lane and those who referred them through that route.

[Neale Hanvey]

I reflect on the comments the Prime Minister made to me during Prime Minister’s questions on 18 March 2020, when I asked him whether the priority should be the prize of beating covid rather than patents and profits. Does the Minister not share my concern that there have been significant mark-ups on a range of products, from PPE to lateral flow devices, so that companies that prior to the pandemic were in deficit now enjoy enormous profits—in the multi-millions of pounds—for doing little more than purchasing and passing on products to the UK Government and trousering significant profits? Does that not disturb him?

[Michael Ellis]

I do not recognise the hon. Gentleman’s characterisation of business as some sort of enemy of the people, which is what he is effectively saying. Profit is not a dirty word, except possibly to the extremists on the far left. The reality of the matter is that we have sought the support of UK companies and they have come good on that support. They have therefore assisted the British people and our national health service by supplying PPE when it has been needed, despite enormous international pressures and demands around the world for those supplies.

I am not going to get into any individual characterisation of any particular cases, because I do not have the facts that the hon. Gentleman contends available to me personally. As a general principle, however, we have sought assistance and we have received that assistance, and that has been in the national interest.

The hon. Gentleman mentions the National Audit Office report, for example. That report, “Investigation into government procurement during the COVID-19 pandemic”, which was published in November 2020, set out the facts relating to Government procurement during the covid-19 pandemic, covering the period up to 31 July. The report recognised that the Government needed to act with “extreme urgency” to procure large quantities of goods and services quickly, which of course is common sense, and

“frequently from suppliers it had not previously worked with”.

The NAO report that the hon. Gentleman mentions recognised that in a “highly competitive international market” we the UK had to deal with companies we had not previously worked with and we had to do so at speed, under considerable pressure. The NAO found “no evidence” of ministerial

“involvement in procurement decisions or contract management”,

so I hope he will read the report he has quoted.

I am conscious of the time, so I will make further progress. The hon. Gentleman talked about testing equipment. There is currently no shortage of lateral flow tests.

There is enough stock to meet demand across the range of distribution channels, but tests are made available via home delivery channels each day. If they are not available at a specific time, people are encouraged to revisit the site later as more become available. We are issuing millions of rapid tests per day via home delivery, with record numbers distributed in recent days. We must balance the demands on the delivery network carefully, as the hon. Gentleman will recognise, to ensure that PCR and lateral flow tests can be delivered to homes across the country. We have worked with Royal Mail, for example, to increase capacity for home delivery of testing kits to 900,000 a day in response to unprecedented demand, and to ensure that even more people can order PCR and lateral flow tests directly to their home. That is a monumental achievement, and the UK is leading the world in this area.

[Neale Hanvey]

That is not true.

[Michael Ellis]

I know that the hon. Gentleman wants to be critical, because he wants to be critical of the UK, but it is leading the world. One and a half million tests a day—we spent £37 billion on Test and Trace. We have increased deliveries by 100% from 120 million to 300 million in the month of December, and that is more than any other country in the world. We have tripled the supply for January and February from 100 million to 300 million a month, so the UK’s testing programme is the biggest in Europe, with over 400 million tests carried out to date—twice the number in France and more than four times the number in Germany. The split of the tests sent each day—PCR and lateral flow tests—varies according to demand for PCR tests.

[Neale Hanvey]

Will the Minister give way one more time?

[Michael Ellis]

I am conscious of the time. The hon. Gentleman had quite some time for his contribution, but I will give way to him a second time.

[Neale Hanvey]

I am grateful to the Minister for giving way again—he has been a great sport.

I have one short question about the volume of testing devices. Does he have any indication of what percentage of the test devices that he has touted as the greatest number in the world were manufactured here in the UK by domestic diagnostic companies?

[Michael Ellis]

In times of urgency, we wish to source from the most immediately available sources. I do not have the answer to the hon. Gentleman’s question, but no doubt it can be provided later in writing. It goes without saying that we would wish to do everything that we can to provide support, but also to deal expeditiously with urgent demand. As well as the rapid expansion in delivery capacity to people’s homes, the UK Health Security Agency has increased test availability at pharmacies and so on. We want to ensure that there is a reliable test supply over the coming weeks. That is the most important thing, and we are working to procure hundreds of millions more.

As I said at the beginning of my speech, what we have learned from covid-19 is how the UK Government can work strategically and at scale to save jobs and support communities across the UK. We are all on that side—that is what we want to do. I want to support people in the hon. Gentleman’s constituency, and I am sure that he would want to support people in constituencies around this country, working alongside the devolved Administrations to keep every citizen safe. That is our priority, and we want to support people no matter where they live in the United Kingdom. No part of the UK could have tackled this crisis alone. The Government have provided £400 billion of direct support for the economy during the pandemic to date. The United Kingdom has delivered, and is continuing to deliver.

I would say in conclusion that I am grateful for the valuable points raised by the hon. Gentleman throughout his remarks, but the Government are taking decisive action to reform the public procurement rules to create a system that is simpler, more open, fairer and more competitive. We are working on that alongside the full inquiry into the covid-19 response, which will take place this year.

Question put and agreed to.