One in every six public procurement contracts issued by the government over a five-year period were won by businesses with connections to a tax haven, analysis has found.
The companies behind the taxpayer-funded deals were owned by firms that were at least partly domiciled in one of 27 tax havens around the world, including the British Virgin Islands, Panama and Jersey.
The contracts, with a combined value of £37.5bn between 2014 and 2019, cover sectors including health, transport and infrastructure, according to the Fair Tax Foundation. The figures raise questions over the government’s public procurement process.
Labour’s deputy leader, Angela Rayner, accused the government of handing billions to its “offshore cronies” as a result of the contracts process and pledged reform if Labour takes power.
In her party conference speech on Sunday, Rayner will open with a pledge to “end the Tory procurement racket” with new guidelines to make sure contracts are awarded in the national interest.
Labour will promise to reward businesses that create local jobs, skills and wealth, treat their workers fairly and pay taxes responsibly, making social value mandatory in all contracts.
Small business would be helped by the guarantee of a place for a small or medium-sized enterprise (SME) on shortlists for all smaller contracts. Labour will pledge to get tough on suppliers who repeatedly fail to deliver on their contracts by clawing back public money and striking off failed providers.
The party will also promise to oversee “the biggest wave of insourcing in a generation” and guarantee more transparency for taxpayers about how companies are performing with their contracts.
Rayner noted that the Conservative government had to write off nearly £10bn spent on personal protective equipment during the pandemic that was either substandard, defective, past its use-by date, overpriced or undelivered.
“Labour is calling time on the Tories’ procurement racket run at the expense of British taxpayers,” she said. “Our value for money guarantee will ensure every penny of public procurement spend will be guided by the national interest to support the return of local jobs, skills and wealth-building and give small and medium enterprises a fair chance to benefit.”
She said the Conservatives had built “a legacy of sleaze, cronyism and corruption, with the British people left to pick up the bill”.
A government spokesperson said: “The government has high standards and expects that public sector suppliers will pay the tax they are obliged to.
“Non-payment of taxes is already an exclusion ground and this feature is maintained in the procurement bill. We’ve led the world in tackling tax avoidance and evasion and in improving tax transparency, spearheading global initiatives to help tax authorities uncover income and assets held by their taxpayers.”
