Rachel Reeves: Labour would oversee radical insourcing of public services

A Labour government would launch a radical programme of “insourcing” to bring public services back under democratic control, the frontbencher Rachel Reeves will say as she accuses Boris Johnson of handing £2bn of Covid contracts to Conservative “cronies”.

The shadow cabinet office minister and close ally of the party leader, Keir Starmer, has repeatedly highlighted the failings of private sector contractors, most recently by urging the government to “sack Serco” from its role in tracing the contacts of Covid cases.

Reeves will use a speech at Labour’s London headquarters on Monday to attack the government for spending lavishly on contractors throughout the pandemic, without adequate oversight.

Labour claims more than £2bn of taxpayers’ money has been spent on products and services provided by firms with a financial or personal connection to the Conservative party.

Contracts highlighted by the party include those awarded to Randox, the testing company that has employed the Conservative MP Owen Paterson as a consultant, and Hanbury, the political consultancy whose founders included the senior Vote Leave figure Paul Stephenson.

“This current Tory party is rife with conflicts of interest. It’s all cheques and no balances,” Reeves is expected to say.

Normal rules for tendering public contracts were suspended early in the pandemic to allow ministers to move quickly in securing necessary supplies – but Reeves will accuse the government of using the fast-track system favour firms of friends or donors or with other links to the party.

“This government has eroded not only our public services to the brink of collapse, but so much of what it means to be an honourable and transparent government,” she is due to say.

And with Starmer’s top team facing internal criticism about the failure to set out concrete policy, Reeves will also outline what a Labour government would do differently. She will say the party would launch the biggest wave of “insourcing” in a generation, bringing contracts back under the control of central and local government.

Labour would also extend the freedom of information act to public services provided by private companies, to allow journalists and campaigners to scrutinise taxpayer-funded contracts.

And Reeves will promise the creation of a new integrity and ethics commission to “guarantee standards in government”.

“While this Tory government has denied key workers in our public services a pay rise, they paid 900 management consultants at Deloitte £1,000 a day to work on test and trace,” she is to say.

“The beating heart of our country is the key workers who have kept us going through this last year. That’s why we applauded them. Children weren’t banging pots and pans for management consultants. They were clapping our key workers.”

An investigation by the National Audit Office found the government had not always made available sufficient documentation to allow scrutiny of procurement decisions made during the pandemic.

“The lack of adequate documentation means we cannot give assurance that government has adequately mitigated the increased risks arising from emergency procurement or applied appropriate commercial practices in all cases,” the NAO said. “While we recognise that these were exceptional circumstances, there are standards that the public sector will always need to apply if it is to maintain public trust.”

As a backbencher, Reeves chaired the business select committee’s inquiry into the chaotic collapse of the construction firm Carillion, which held more than 400 public sector contracts.

Her speech comes as Labour councils urge the government to hand more powers to local authorities to tackle unemployment and kickstart their economies, instead of relying solely on the private sector.

Analysis by the Local Government Association Labour group suggests 5.4 million people are either furloughed or claiming jobseeker’s allowance in England. More than 1.1 million of those are in the capital, with other hard-hit areas including Birmingham (140,000), Leeds (76,000) and Manchester (68,000).

The chancellor, Rishi Sunak, is expected to extend the furlough scheme in next month’s budget, but as Covid restrictions are lifted and the scheme unwound in the coming months firms will have to decide whether to bring staff back into full-time employment.

The LGA Labour group’s leader, Nick Forbes of Newcastle city council, said: “Councils want to do everything we can to fire local economies and create opportunities. From test and trace to PPE we’ve seen government make the wrong calls throughout this crisis because they have repeatedly refused to trust local communities to take decisions that work for their area.

“We have the local knowledge, the networks and the on-the-ground understanding and up-to-date information you need in a crisis – that’s why government should give us the space we need to fight for local jobs.”

A Conservative party spokesperson said: “Throughout the pandemic British businesses have worked with our public services to help in the fight against coronavirus by delivering a wide variety of support, including PPE, hand sanitiser and ventilators.

“Yet at every turn throughout the pandemic, Labour have tried to play politics and score political points.”