Labour would claw back money spent on failing Covid contracts, Reeves pledges

Shadow chancellor also promises “biggest wave of insourcing in a generation” if party wins next general election
Rachel Reeves gives the keynote speech at the Labour Party Conference 2021 in Brighton. Photo: Julie Edwards/Alamy Live News

A Labour government 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 those that did not deliver, shadow chancellor Rachel Reeves has said.

In a speech at the Labour Party conference in which she also promised to deliver the “biggest wave of insourcing in a generation”, Reeves said where contractors have fallen short, “we expect that money back”.

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

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

During her speech, Reeves promised that under Keir Starmer, the party would “carry out the biggest wave of insourcing in a generation”.

She gave few details of what this would look like, but noted that £2bn in government contracts had been awarded to “friends and donors” of the Conservative Party.

Controversial deals include two waste-disposal contracts awarded by NHS Wales to Topwood Limited, in which Matt Hancock, who was health secretary at the time, owned shares. Hancock's sister Emily Gilruth is a director and part owner of the company, according to the latest register of MPs’ interests.

In another example, 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 coronaviru 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.

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