Rachel Reeves will announce on Monday that she has ordered investigations into more than £600m worth of Covid contracts awarded under the Conservatives as Labour struggles to get back on the front foot over questions of ethics.
After days of bruising allegations over donations, the chancellor will confirm that she will refer more than half of contracts for material such as masks to the incoming Covid corruption commissioner, after the previous government recommended dropping any attempt to investigate them.
The announcement is part of a fightback for Labour, which kicked off its annual conference in Liverpool on Sunday with Keir Starmer already under pressure over a range of issues including why he and senior ministers accepted thousands of pounds’ worth of gifts from donors.
The way in which lucrative Covid contracts were awarded through a VIP lane was an issue that dogged the last government, provoking criticisms of a “chumocracy”. The Guardian revealed last year that the Conservative peer Michelle Mone was one of those to benefit thanks to her involvement with PPE Medpro, which was awarded contracts worth £200m. The company is the subject of a long-running investigation by the National Crime Agency.
In her speech, Reeves will say: “Billions of pounds of public money handed out to friends and donors of the Conservative party. Billions more defrauded from the taxpayer.
“On entering government, we found £674m of [personal protection equipment] PPE contracts in dispute, where we inherited a recommendation from the previous government that contract recovery should be waived.
“So we are delivering on our commitment to appoint a Covid corruption commissioner. It could not be more urgent. And I have put a block on any contract being abandoned or waived until it has been independently assessed by the Covid commissioner.”
One of those understood to have been flagged by Labour is a contract handed to a cannabis research company for £33m worth of personal protective equipment.
Reeves will make her speech after a rocky start for the Labour leadership to its first conference as a party of power in 15 years, with many members unhappy about the decisions the government has taken and the scandals by which it is being dogged.
Union activists were on Sunday night organising a conference vote condemning Reeves’ decision to cut winter fuel payments to 10 million pensioners and calling on the government to overturn it. Though such a vote would not bind the government, it would be a high-profile embarrassment for the newly elected prime minister.
Many MPs and ministers are frustrated that they are having to defend the cuts while the party is also embroiled in a row over thousands of pounds’ worth of donations to senior members of the cabinet.
The Sunday Times revealed this weekend that Angela Rayner, the deputy prime minister, enjoyed a holiday in New York last Christmas at the $2.5m home of the Labour donor Waheed Alli.
Rachael Maskell, a Labour MP, tweeted on Sunday: “I have been sickened by revelations of ‘donations’ … Meanwhile pensioners are having their winter fuel payments taken, risking going cold.”
One minister said the party had spent too much time in government talking about its inheritance and not enough about what it will do with power.
“There’s a sense that there has been a bit much blaming the inheritance and not enough of anything else,” they said. “It’s all very well to say we need to fix the foundations, but people also want to know what the house will look like at the end of it all.”
There is also some exasperation at perceived political naivety in Downing Street over the handling of donations and Starmer’s argument that by attending football matches in a corporate box that he was saving the public purse in security costs.
“I hope it’s just teething troubles,” one person said. “But someone should have told people how this might look. When you’re prime minister you sometimes just have to not do things you want to.”
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One union official added: “There are a lot of people in No 10 who think they are very clever, but actually they are pretty stupid.”
Sue Gray, Starmer’s chief of staff who has been the focus of much of the briefing, is not attending the conference, instead staying in Downing Street to prepare for the prime minister’s trip to the United Nations in New York this week, as well as getting on with the business of government.
Polls suggest the rows are beginning to dent the party’s support, even among those who voted Labour two months ago. A new poll by Savanta has found that 28% of voters it classified as “Labour loyalists” say they would consider voting for the Green party if there was an election tomorrow.
Reeves’ speech will attempt to restore the morale of conference-goers, both with the promises of new investigations into Covid contracts and a promise of “no return to austerity”.
Labour officials say they will now refer just over half of Covid contracts that remain in dispute to the new Covid corruption commissioner, who is due to be named in the coming months.
They believe the commissioner is likely to refer some of those to either the National Crime Agency or the Serious Fraud Office, opening a potential path to prosecutions.
Reeves is understood to think that £2.6bn from waste, fraud and flawed contracts could be recovered.
On the bigger economic picture, she will attempt to inject a note of optimism into her previous doom-laden announcements on the state of the economy, including pushing back on suggestions that she is preparing to make significant public spending cuts.
“There will be no return to austerity,” she will say. “Conservative austerity was a destructive choice for our public services – and for investment and growth too.
“We must deal with the Tory legacy and that means tough decisions. But we won’t let that dim our ambition for Britain.