MPs call for greater transparency on profits from public contracts

Margaret Hodge, chair of the cross-party committee in parliament on tackling corruption, has called for new legislation to compel companies profiting from public contracts to publish accounts in the wake of procurement scandals during the pandemic.

At present there is no obligation to file profit and loss statements. Hodge has said in a letter to the business secretary and head of the National Audit Office that this made it difficult to work out how much money is being made in providing essential equipment and services, including personal protective equipment (PPE) during the pandemic.

She said legislative changes could ensure that the public was getting a fair deal. “In the wake of huge government spending in the pandemic, it would also allow us to see if the inflation of PPE prices was due to genuine competition or unscrupulous profiteering,” she said.

Hodge was writing in her capacity as chair of the all parliamentary committee group on anti-corruption and responsible tax, a cross-party group co-chaired by Andrew Mitchell, Nigel Mills, and Rupa Huq.

The call from the Labour MP comes in the wake of a series of scandals in which businesses were able to win contracts for PPE during the pandemic without competition, and in some cases with personal links to government ministers. 

Last year, the National Audit Office found that normal standards of transparency had been set aside in the scramble to secure supplies to deal with the crisis, and that firms recommended by MPs, peers and ministers’ offices had been given priority.

In the letter to Kwasi Kwarteng, business secretary, Hodge said the government spent £15bn of taxpayers’ money to buy PPE in England during 2020-21 from various suppliers, “often at very high prices”. 

She said it was important to assess whether the taxpayer obtained reasonable value given contracts to provide equipment were given out at speed during the pandemic — often without any competition and to small companies with limited records of accounting. Hodge is the former chair of the public accounts committee.

Hodge pointed to the example of Ayanda Capital, a family investment firm that won a £252.5m contract to supply masks to healthcare workers. “There is a strong case for requiring fuller accounting when earning public money generally. However, this is especially the case with Covid contracts — like that to Ayanda Capital,” the letter said.

Hodge wants ministers to change section 444 of the Companies Act so that all companies which receive public contracts must file profit and loss statements. Small companies are already required to prepare these statements but there is no obligation to file them. 

The letter said: “This is a matter of transparency and value for taxpayers’ money.”