Covid-19: NAO Report on Government Procurement

Rachel Hopkins Excerpts

Wednesday 9th December 2020 Westminster Hall

[Rachel Hopkins (Luton South) (Lab)]

It is a pleasure to serve under your chairship, Ms Eagle, and I congratulate my hon. Friend the Member for Liverpool, Walton (Dan Carden) on securing this vital debate. I would like to respond to the hon. Member for North East Derbyshire (Lee Rowley) by saying that many of us were not at the PAC 18 months ago because we were not in this place, and I am pleased to see so many of the new intake—at least seven of us—challenging the Government, as is our role.

The Select Committee on Public Administration and Constitutional Affairs, of which I am a member, has been looking at lessons learned from the covid response, including the appointment process of key figures in the UK’s response, and I was pleased that this point has been raised by Members. We found that there was a clear lack of due process, likely conflicts of interest, and potential cronyism. Lord Evans, chair of the Committee on Standards in Public Life, said only a couple of weeks ago during our inquiry that “urgent procedures” exist in times of urgent need, but added:

“Even if many of the people are exactly the right people, it is better if people know they are the right people because there has been proper, open competition.”

That is a key theme, whether those roles are paid or unpaid.

That theme has also come through in the NAO’s report, which is damning. It shows that contracts have been awarded without due diligence, with a lack of documentation, no clear audit trail or transparency. In some instances contracts were awarded retrospectively, for work already done. Hundreds of contracts have been fast-tracked for companies through the Cabinet Office’s VIP process, and while this may have been the same process as referred to earlier, many companies were referred by Ministers, officials, MPs and peers. The NAO found that firms in the VIP lane were far more likely to be awarded contracts than those that were not—a one in 10 chance, against a chance of approximately one in 100 for those outside the priority lane. That is disgraceful.

The sheer lack of due process has led to the waste of millions of pounds. I will not go through a list of the companies involved, because many have been mentioned already, but I just want to say that this angers me. In the public sector, we have many workers who have now faced 10 years of austerity, who cannot even justify getting Post-It notes from the store cupboard, yet this Government are mismanaging taxpayers’ money and are refusing to give public sector workers a pay rise. It is shameful.

--- Later in debate ---

[Julia Lopez]

I am afraid I am really short of time. Forgive me; I want to get through the content.

As I say, no PPE contracts were awarded by reason of who referred them. I remind colleagues that, ultimately, there was very little waste. Of all the product in question, so far only 0.5% of what was ordered was found to be unusable. That is not to say that we cannot improve. Admittedly, there was not an adequate stockpile, and the lack of a central stock control system made it very difficult to get a clear grip of the demand signals coming in through the NHS. That is an extremely important issue to rectify.

[Rachel Hopkins]

Will the Minister give way?

[Julia Lopez]

I am so sorry; I would really like to make progress.

We have also had to rapidly address a strategic over-reliance on China. We have now built up our national capability and resilience, with the potential for 70% of PPE to be produced in the UK. I hope that those lasting national enhancements will be bolstered by the work of the Department for International Trade’s Project Defend, which is looking at other areas where we are critically dependent on other countries for important parts of our manufacturing.

The NAO was absolutely right to identify delays in publishing documentation in relation to emergency procurement. The sheer pace of activity meant that documentation was not perfect. The result is that contracts have not been published online as quickly as they should have been, and it has been left to DHSC to piece together relevant paperwork from the different IT systems, partly because of the large team that had to be brought in from outside DHSC. I very much regret that that lag in our normal transparency timescale has created a sense of mistrust, but we are nearly there. At the time that the NAO did its scrutiny work, only 50% of required contract notices had been published. As of 3 December, it is now 96% of PPE contract award notices on Tenders Electronic Daily, which is the European journal, and 94% on Contracts Finder.

I have concentrated today on PPE, as that is a large focus of the NAO’s two most recent reports. However, the NAO also looked at communications contracts, which the hon. Member for Liverpool, Walton referred to, so I would like to spend a moment on that. For context, a number of external research agencies were engaged by the Cabinet Office’s comms unit to test the public reaction to Government messaging on public health. That was crucial to helping us understand people’s attitudes and behaviours during this time and refine public health messaging accordingly to drive behavioural change.

At the time I began my ministerial role, there were reports suggesting that some of those contracts for comms services had been improperly let, and naturally I was unhappy to hear that. Unfortunately, I cannot comment in detail on the specifics of those contracts because the Department is still working on a detailed defence and disclosure in the ongoing judicial review proceedings. However, I can say that following a preliminary internal fact-finding exercise, the Cabinet Office resolved to delve into that properly and commissioned an independent expert review, led by Nigel Boardman, who sits in the Department for Business, Energy and Industrial Strategy and is also a well-respected legal professional, to consider those findings and set out how we could improve, particularly looking at the processes and guidance that teams in the Cabinet Office have access to. The review and its results were published yesterday on gov.uk. The report is forensic in its analysis and hard-hitting in its recommendations. I am pleased to tell colleagues that we will take forward all 28 recommendations in full.

Before I close, I want to say a little about the wider civil service reforms that we are proactively pursuing to address some of the concerns beyond the NAO report. During this time of crisis, people have been concerned about the use of consultants. We are looking at how we can better skill-up civil servants, reduce our reliance on consultancy, and potentially have our own in-house consultancy. We are also consolidating the number of IT systems used across the civil service so that it is easier to move people around internally at speed, and for those systems to be compatible. As has been referenced, we will soon launch our procurement Green Paper. I very much encourage all hon. Members to engage with the consultation process, because once we leave the transition period our country will have an extremely important opportunity to look at these issues.

The proposals have long been in development and will include specific measures to strengthen transparency, making sure that we can have a choice of direct award and more competitive tendering during crises. At the moment it seems that we have either the full-fat procurement, which is much too slow in emergency situations, or direct awards, which lead to the kinds of concerns that we have debated this morning. I know that the hon. Member for Liverpool, Walton is particularly concerned about issues of company conduct in procurement. The Green Paper will include proposals to use exclusion rules to tackle unacceptable supplier behaviour, such as tax evasion, embedding transparency by default and developing faster review methods to speed up the court process on legal challenges to genuinely improper procurements.

There is a lot to say, so I am sorry to rush through it all, but I will end by saying that the public are absolutely right to demand that we spend their money with care. I hope the proactive and candid approach that I have set out this morning is reassuring. I remind colleagues that we were procuring for a purpose, and that purpose was to get us through the pandemic. We achieved sufficient PPE for the NHS. We now have 32 billion items of PPE, with no reports of outages, and we have established a four-month stockpile of PPE from November 2020 onwards. Given the extraordinary context, that is an extraordinary feat.

Finally, I pay tribute to civil service colleagues in the commercial function. They might not be on the frontline of the NHS, but they have done extraordinary things in a very difficult operating context. I thank them for all the work that they have done.