A company linked to the Conservative party donor and former treasurer Lord Ashcroft has been awarded a contract worth £350m by the government to provide laboratory staff for the Covid-19 testing operation.
The contract, awarded to Medacs Healthcare plc, which has an ongoing contractual “framework agreement” with the Department of Health and Social Care (DHSC) and provides locum doctors, nurses and other staff to the NHS, is one of the largest awarded to any company throughout the pandemic.
Medacs Healthcare plc is owned by the Impellam Group, a company chaired by Lord Ashcroft, which provides staff for healthcare and a range of industries in the UK and other countries, including India, Australia and New Zealand.
In its most recent annual report, for 2019, Impellam declared global revenues of £2.25bn, saying it was the largest provider of locum doctors to the NHS and “the largest supplier of specialist healthcare managed services outside of the US”.
Ashcroft is the non-executive chairman of the Impellam Group, which owns Medacs, and he personally owned more than half of Impellam’s shares until 2010. He transferred a majority of shares from his personal ownership in April 2010 to Lombard Trust, which now owns 56%. According to the announcement made by Impellam at the time, Ashcroft’s children and grandchildren were the Lombard Trust beneficiaries.
The DHSC contract with Medacs, which started on 18 December, is for the provision of “laboratory worker personnel for the NHS test and trace programme”. It is stipulated to run for two years, with the maximum payable, depending on demand for Medacs’ staff, £350,402,831.
Medacs is an existing contractor to the NHS under a framework agreement agreed in 2015, which runs until 7 February this year. The agreement approves 64 suppliers, including Medacs, to provide doctors, nurses and other staff to the NHS. Framework agreements enable the government to carry out due diligence on suppliers in advance, enabling individual contracts to be agreed without a competitive tender each time.
The government has spent billions of pounds during the pandemic under existing framework agreements or emergency regulations that have waived the requirement for competitive tenders. Questions have grown about the connections some companies awarded contracts have had with the Conservative party.
Ashcroft has longstanding connections with the party; a former treasurer and deputy chairman, he donated more than £11m to the Tories up to 2010. He then paused his financial support, but resumed again recently, contributing £100,000 last year to the Tory candidate for the London mayoral election, Shaun Bailey.
Made a life peer in 2000, Ashcroft was the subject of a political storm when he confirmed that he was still a “non-dom,” meaning his permanent home was not in the UK, so he did not pay UK tax on overseas earnings. He remained in the House of Lords until 2015, then resigned his seat, but kept his peerage.
Ashcroft’s spokesman said that he was not involved in the negotiation of Medacs Healthcare’s £350m contract with the DHSC, and did not know about it until after it had been awarded. The spokesman declined to answer any questions about Lombard Trust, or Ashcroft’s current residency arrangements, saying they are irrelevant to the award of the DHSC contract to Medacs Healthcare.
Elizabeth David-Barrett, professor of governance and integrity at the University of Sussex, said it was good practice for the government to have framework agreements with companies, and they could ensure good value for the public. However, she argued that improved processes were needed to manage the perception of potential conflicts of interest.
“The public has good reason to ask whether the current system for regulating conflicts of interest is fit for purpose,” she said. “We can ask whether a major Conservative party donor should be able to benefit from winning business from a Conservative government, and the government should provide clear assurances that those connections played no part in any contract award.”
Impellam said the company “has not benefited from any connections that any non-executive may hold,” and that the value of the contract includes wages of scientific and support staff who will be delivering the services. “The non-executive directors do not have any involvement in the award of contracts or the operational, day-to-day management of the company.”
A DHSC spokesperson said that the framework agreement was concluded with Medacs Healthcare after a full open market competition, saying: “Proper due diligence is carried out on all government contracts.”