Rachel Reeves criticises amount of public money spent with private firms

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Ministers are “addicted” to outsourcing Covid-19 contracts and wasting tax-payers money, Labour has claimed.

Rachel Reeves, shadow chancellor to the Duchy of Lancaster, has criticised the government’s use of the outsourcing firm Serco to deliver the government’s Test and Trace programme and other outsourced contracts in place of central or local government expertise.

Speaking at The House magazine’s Labour Connected fringe event Reshaping Britain: Economic Lessons from Covid, Reeves said too often the contracts have ended up in the hands of those with close links to the party.

“We’ve seen the impact of the hollowing out of the state over the last ten years with austerity,” she said. “And the government now respond to that by outsourcing public services. I think it’s a knee jerk reaction for them but this pandemic has taught us just how addicted this government is to outsourcing.”

“It is unacceptable that so many public contracts have been awarded without tender to Conservative party friends and donors. This government has redirected money away from local authorities and the NHS into the pockets of a few private providers.” 

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Serco has so far been awarded £108m for the Test and Trace programme, despite claims from those employed as contact tracers they were so under-used they were being “paid to watch Netflix”. 

The firm was forced to apologise after breaching data protection rules by revealing almost 300 email addresses of people who had been recently recruited to work on test and trace.

Health minister Edward Argar is a former Serco lobbyist and boss Rupert Soames is brother of former Tory MP Sir Nicholas Soames. Rupert’s wife Camilla donated £4,995 to the Conservatives in November 2019.

Firm Randox received £133m for Covid testing and also pays former Cabinet minister Owen Patterson as an adviser. Thousands of its test kits had to be recalled.

A £840,000 contract to survey public opinion about government and its Covid response went to Public First, a company owned by James Frayne, who has previously worked with Dominic Cummings and Rachel Wolf, former adviser to Michael Gove and who co-wrote the Conservative Party’s 2019 manifesto. It did not go out to tender.

This was justified by the government because of the urgency and speed needed in dealing with the coronavirus response.

Anneliese Dodds, the first female shadow chancellor, used her speech during Labour Connected on Monday to accuse the government of having wasted “enormous amounts of public money” through its outsourcing programme.

She said: “Just some examples; £130m to a Conservative donor for testing kits that were unsafe, £150m for facemasks that couldn’t be used by NHS staff, over £2.6bn to be handed over in so-called job retention bonuses, to businesses who were going to bring staff back to work anyway, outsourced contract after outsourced contract which has simply failed to deliver.”