Shadow chancellor: ‘Labour government would carry out wave of insourcing’

Written by Beckie Smith on 29 September 2021 in News

Rachel Reeves uses party conference to pledge review of £2bn of contracts awarded during pandemic to ‘claw back’ money from underperforming suppliers

Credit: Parliament UK/CC BY 3.0

A Labour government deliver the “biggest wave of insourcing in a generation”, according to shadow chancellor Rachel Reeves.

In a speech at the Labour Party conference, Reeves (pictured above) also told attendees that, if elected, her party would would set up a team to review contracts awarded during the coronavirus pandemic to “claw back every penny of taxpayers’ money we possibly can” from suppliers that failed to deliver.

“To those who have secured covid contracts and have not delivered. I give you notice,” she said. “We expect that money back”.

She said the proposed team would “go through every line of every failed contract where value was not delivered” and recover public funds.

This would go alongside a major to return outsourced services to a model of in-house provision. While the shadow chancellor gave few details of what this would look like, she said that £2bn in government contracts had been awarded to “friends and donors” of the Conservative Party.

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Controversial deals include two contracts awarded by NHS Wales to document digitisation and disposal firm Topwood Limited – a company part-owned by the sister of former health secretary Matt Hancock, who also held shares in the firm.

In another example, research and policy specialist Public First, a company run by friends of prime minister Boris Johnson’s then top adviser political adviser Dominic Cummings, was awarded a contract worth more than £500,000 by the Cabinet Office without a competitive tender.

Reeves said Labour would instead embrace the “spirit of partnership” embodied by the coronavirus contact-tracing system introduced in Wales “not by outsourcing, but by working closely with local leaders and health experts”.

“We have a duty to pay careful attention to how public money is spent,” she said, adding that cash wasted on failing contracts should be spent on police, schools and the NHS.

She said if the Labour Party wins power at the next general election, it will enforce an “absolute commitment to value for taxpayers’ money for every pound we spend and policy we implement”.

A Labour government would also set up a new, independent Office for Value for Money to keep a “watchful eye on how public money is spent and equipped with meaningful powers so no government is allowed to mark its own homework”, Reeves said.

“I do not take lightly the responsibility to see that public money is spent wisely and our public finances kept under control,” she said.

“Let’s be honest. That will involve tough choices – for me and for my colleagues. We will not shrink from those choices, because growth, strong public services and social justice must be built on firm foundations.”

Reeves said ensuring public spending delivers value for money is a “question of respect”, adding: “I know how hard people work for their wages and how carefully they manage their money. They rightly expect government to treat money with that same respect.”

“And it is about respect for our public services. Because we know the difference they make.”

Reeves also criticised the government for scrapping former prime minister Theresa May’s flagship economic policy, the Industrial Strategy, “just when it was needed most, to shape the future of British industry after Brexit”.

She said a Labour government would “lead a new era of industrial strategy working hand-in-hand with trade unions and with businesses”.

The next Labour government will spend an additional £28bn of capital investment in the country’s green transition each year for the rest of the decade, Reeves said.

And she said that as well as growing high-tech industries like life sciences, electric cars and renewable energy – which were all targets of the industrial strategy – Labour would also focus on areas such as retail, hospitality and care.


About the author

Beckie Smith is acting deputy editor of PublicTechnology sister publication Civil Service World, where a version of this story first appeared. She tweets as @beckie__smith.

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