Labour responds to revelations on Public First contract links to Gove and Cummings; calls for urgent action on cronyism
Labour have today called for urgent action from the government to tackle cronyism, after a judicial hearing into a contract awarded to agency Public First revealed influence from both Michael Gove and the Prime Minister’s former special adviser Dominic Cummings.
During a judicial hearing brought by the Good Law Project today, it was revealed that, despite a previous denial, both Gove and Cummings were linked to the appointment of Public First to a major contract, without tendering and without a formal contract in the first instance. This was retrospectively awarded on 5 June 2020, four months after the initial “hand shake” agreement.
Labour have also written directly to the Chancellor of the Duchy of Lancaster demanding urgent answers on the revelations, and calling for the seventh time, for the government to reveal who won contracts through the Cabinet Office’s “VIP” fast lane for procurement.
Rachel Reeves MP, Labour’s Shadow Chancellor of the Duchy of Lancaster, responding to the revelations, said:
“Today’s findings are troubling and unsurprising, and a perfect example of how this government believes it is one rule for them another for the rest of us.
“It is appalling that the government not only dismissed these very credible claims of connections influencing this contract as ‘nonsense’ – but also that it took a judicial review to bring to light what should be publicly available information on how taxpayer money is being spent.
“This government’s contracting has been plagued by cronyism and waste and they must take urgent steps to address this now – by urgently winding down emergency procurement, releasing details of the VIP fast lane, and publishing all outstanding contracts by the end of the month. This cronyism must stop.”
Labour sets out Covid-debt plan to turbocharge British Business Recovery
Labour today sets out new plans to back British businesses, as it calls on the Government to help ease the Covid-debt burden faced by firms across the country.
Calling for the establishment of a British Business Recovery Agency, Shadow Chancellor Anneliese Dodds, says Labour’s priority is to “help businesses get back on their feet, secure our economy and get Britain on the road to recovery.”
British business is currently weighed down by £71 billion of Covid debt through Government-backed loans during the crisis – with the Chancellor encouraging banks to begin asking for repayments in March. New analysis by Labour reveals that 850,000 business are at risk of closure in the next three months, putting 2.4 million jobs at risk.
Labour’s plan would ease the debt burden on business, secure the economy and help British business to rebuild by:
- Converting the Bounce Back Loans (BBLs) scheme into a ‘student-loan style’ arrangement, so that businesses only have to start repayments when they are making money.
- Creating a new British Business Recovery Agency that would manage the Coronavirus Business Interruption Loans Scheme (CBILs) and Coronavirus Large Business Interruption Loan Scheme (CLBILs) in order to create terms that secure the future of businesses, including employee ownership, preference shares and subordinated debt
Announcing the plans, Shadow Chancellor Anneliese Dodds MP, warns that Chancellor Rishi Sunak’s approach risks “crushing British business and the recovery” under billions of pounds of unsustainable debt, leaving many cash-strapped and pushing others towards bankruptcy.
The Federation of Small Businesses (FSB) warned in December that the debt overhang could lead to tens if not hundreds of thousands of corporate failures in the first quarter of this year, with 40% of businesses reporting their debt as unmanageable.
The Office for Budget Responsibility (OBR) has also said that as much as £30 billion of public money will have to be written off if the Chancellor presses ahead with his current plans.
Dodds contrasts Labour’s approach with the Government’s sticking-plaster solutions. Her business-backing plan comes after a week in which Labour has called for business rate holidays and VAT cuts to be extended and for a smarter furlough scheme to last until necessary health restrictions are lifted. At Prime Minister’s Questions, Labour leader Keir Starmer MP, pushed the Prime Minister repeatedly on support for business ahead of the Budget.
Anneliese Dodds MP, Labour’s Shadow Chancellor, said:
“Labour would rebuild Britain by backing businesses and supporting families through the crisis and then putting Britain on the path to growth.
“The Chancellor simply offers a return to the same, old policies that left the foundations of Britain’s economy weakened before the crisis. His economically illiterate plans to demand repayments next month risk crushing British business and our recovery under a mountain of debt. He would leave taxpayers on the hook for billions and other firms cash-strapped for years – leading to less investment and fewer jobs.
“Instead of pushing business to the brink, Labour’s plans would protect small firms and give larger ones flexible options to manage debt. We would help businesses get back on their feet, secure our economy and get Britain on the road to recovery.”
Government declines for a sixth time to publish details of companies winning work through its “VIP” fast lane
In Cabinet Office Questions today, the Government declined for a sixth time to publish the details of companies who have won work through referral to a special “high priority” lane during the pandemic.
In November, the National Audit Office reported that hundreds of companies were referred through this route for contracts following tips from Ministers and MPs.
But despite growing concerns surrounding contract cronyism, and being asked by Labour six times, the Government have refused to publish more details of the companies awarded work through this route.
Labour also highlighted how the Government had previously denied the existence of the lane, despite it emerging in the Public Accounts Committee this week that &163;1.7 billion of procurement flowed through the channel.
Shadow Chancellor of the Duchy o£f Lancaster Rachel Reeves MP, who raised the issue during Cabinet Office Questions, said:
“With cronyism concerns continuing to mount, this government must urgently publish details of these companies to reassure the public that these contracts were awarded on the basis of what you know, not who you know.
“Waste, cronyism and inefficacy has marred this government’s pandemic procurement, but they seem in no hurry to change that.
“A Labour government would clean up this contracting and make sure procurement works for our public services and the British people.”
650,000 hospitality businesses at risk of collapse before lockdown ends as Labour accuses Ministers of economic negligence
More than a third of hospitality businesses – an estimated 650,000 – fear collapse in the next three months, it has been revealed, amidst reports of the current lockdown lasting until May.
New analysis underlines the cash crisis firms on the high street face, with more than a million food services and accommodation businesses saying they have less than 3 months of cash reserves, and Labour showing that grants for many firms forced to close will be worth half as much as in the March lockdown.
Labour has accused the Government of “economic negligence” if it fails to act – and is calling on the Business Secretary to “be the voice of business, not a mouthpiece for the Treasury” and back businesses in England by urgently outlining how he will support struggling hospitality and leisure businesses to survive the crisis.
Government advisers have recently suggested that businesses including hotels, pubs, hairdressers and beauty salons may remain closed for another three months to help tackle the spread of the virus, but there has been no update from Ministers on the economic support available since 5th January.
Under the current economic offer, the average hospitality or leisure business would receive £11,000 less during the third lockdown than it did during the first – despite being in a significantly worse financial position now.
Analysis by the Labour Party based on the latest ONS survey data suggests that more than 54,000 hairdressing and beauty businesses and more than 650,000 accommodation and food services businesses have little confidence they will avoid collapse, and more than a million will run out of cash reserves in the next three months.
Lucy Powell MP, Labour’s Shadow Minister for Business and Consumers, said:
“The Business Secretary needs to stand up for businesses in government not stand back and leave them to go bust. It’s his job to be their strong voice, not a Treasury mouthpiece.
“A million firms are struggling with a cash crisis threatening jobs and livelihoods just as the vaccine offers hope. The cost of business insolvencies and unemployment on this scale would take a wrecking-ball to our economy.
“If the Government fails to act on this latest evidence, and doesn’t bring forward an urgent, comprehensive plan, they’ll be guilty of economic negligence that will choke off the recovery, and damage our country for years to come.”