Tory Covid contracts worth £15bn had ‘red flags’ of corruption, investigation finds

A groundbreaking investigation has revealed signs of corruption in government Covid contracts worth more than £15bn – representing almost one in three pounds awarded by the Conservative government during the pandemic.

The analysis, billed as the most in-depth look yet at government procurement during the crisis, warns that systemic bias, opaque accounting and uncontrolled pricing have led to massive waste of public money on testing and personal protective equipment (PPE).

The review of more than 5,000 contracts from 400 government bodies identified 135 high-risk contracts worth £15.3bn where investigation was warranted due to the identification of three or more corruption signals, including a lack of competition, delays or failure to disclose information about tenders, and conflicts of interest in the award of contracts. The Transparency International UK report concludes:

• At least 28 contracts, worth £4.1bn, went to people with known political connections to the Conservative Party, representing almost a tenth of the money spent on the pandemic response.

• Fifty-one contracts, worth £4bn, went through the “VIP lane”, a vehicle that gives priority to certain suppliers, of which 24, worth £1.7bn, were referred by Conservative Party politicians or their offices.

• £1 billion was issued for personal protective equipment from 25 VIP lane suppliers that was later deemed unfit for use. The VIP lane was found to be unlawful by a Supreme Court judge in a 2022 ruling.

• Eight contracts, worth £500m, went to suppliers no older than 100 days.

• The UK government has awarded more than £30.7 billion of high-value contracts without competition – equivalent in value to almost two-thirds of all Covid contracts.

• The Department of Health and Social Care has written off £14.9 billion of public money over two years, equivalent to the entire government’s expenditure on personal protective equipment.

In response, a Conservative Party spokesman referred to a National Audit Office report which found that ministers had properly declared their interests.

“Government policy was in no way influenced by the donations the party received – they are completely separate from it,” he said.

Labour Chancellor of the Exchequer Rachel Reeves has said she will appoint a Covid corruption commissioner to investigate an estimated £7.6bn worth of Covid-related fraud, with a particular focus on the billions wasted on useless personal protective equipment.

The National Crime Agency (NCA) is investigating PPE Medpro – a company run by Douglas Barrowman, husband of 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 potentially higher cost to the public purse than Reeves acknowledged as a result of the previous government’s widespread and “often unjustified” suspension of procurement checks and safeguards.

Government data shows that of the £1 trillion worth of contracts signed in the three years from February 2020, £48.1 billion was spent in connection with the pandemic, largely on Covid testing and personal protective equipment, and that a third (32%) of that spending raised serious concerns.

The report, entitled Behind the Masks, acknowledges that swift action was needed when Covid struck, but the authors argue there was an unwarranted disregard for publishing contract details and an unhealthy reliance by government on non-competitive tenders, even as the impact of the crisis on the health system eased.

Nearly two-thirds of all high-value Covid contracts were uncompetitive. A year into the pandemic, UK contracting authorities were still frequently awarding contracts without competition, even as EU countries such as Italy reverted to competitive bidding.

It is alleged that the so-called VIP and high-priority lanes – which channelled offers of help through civil servants, MPs, members of the House of Lords and ministerial offices – allowed unqualified politicians to fast-track the assessment of offers from suppliers of personal protective equipment and testing – a practice said to be unique to the UK’s response to the pandemic.

About 2% of all offers – around 500 – went through the VIP lane. Of these, 51 suppliers were successful, representing a success rate of 10%, compared to 0.7% on other routes, while the prices paid were on average 80% higher.

The report found that Covid contracts have increased some suppliers’ profit margins by as much as 40%.

Of the 135 contracts identified as high risk, the report’s authors write: “The most common red flags were delayed publication of contracts and contracts that were awarded non-competitively. However, most of these contracts displayed red flags in multiple risk areas – including those related to the supplier profile, the procurement process and the contract outcomes – and often encompassed all three. Some contracts displayed as many as eight red flags.”

A Treasury spokesman said: “The Chancellor has made it clear she will not tolerate waste and will appoint a Covid Corruption Commissioner to help get back the money owed to the British people.

“The Commissioner will report directly to the Chancellor, working in partnership 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 were published on the day that public hearings into the impact of the pandemic on the health system get underway. Transparency International UK, as part of the UK Anti-Corruption Coalition, has core participant status in the proceedings.

Joe Powell, a Labour MP and chair of the all-party parliamentary group for anti-corruption and responsible taxation, said: “The scale of money lost to the taxpayer is staggering. In the midst of 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 accounted for.

Daniel Bruce, chief executive of Transparency International UK, said normal checks and balances had collapsed and a raft of changes were needed in the procurement sector to restore confidence in the system.

He said: “The scale of the corruption risk in the previous government’s approach to spending public money during the years of the Covid pandemic was enormous.

“The fact that we are finding multiple red flags across more than £15 billion of contacts – representing a third of all spending – points to more than coincidence or incompetence.

“The Covid procurement response has been marked by several points of systemic weakness and political choices that have allowed cronyism to flourish, all enabled by woefully inadequate public transparency. As far as we can tell, no other country has used a system like the UK’s VIP lane in their Covid response.”