Government’s £21bn private Covid-19 deals

MORE THAN £20billion of coronavirus contracts have been awarded to the private sector by the Government as part of its pandemic response, with nearly half going on personal protective equipment (PPE).

According to data from public sector procurement specialist Tussell, the Government has so far handed out 2,500 contracts worth £21billion to the private sector, covering everything from PPE supplies to testing services to consultants.

PPE is the biggest single expenditure, with £9.2billion worth of orders going to companies. Tenders for the much-maligned test and trace system, headed by former Talktalk boss Dido Harding, are worth £7.5billion to business involved, such as Serco and Sitel.

In contrast, Tussell’s data shows that £3.1billion has been spent on hospitals and medicines, while £1.3billion worth of contracts went to businesses for other supplies and services. Although the bulk of the contracts were awarded during the early stages of the pandemic, most of the testing contracts were handed out in October, when the Government launched Operation Moonshot.

Tussell’s annual review of public sector procurement found that £101billion worth of work was given to the private sector in 2020, a fall of eight per cent on the previous year.

It said: “In 2020, private sector support was central to the Government’s Covid response. In 2021, it will be central to the UK’S economic recovery.”

On Friday, economists expect the Office for National Statistics to say GDP contracted by 4 per cent in November, making it highly likely the fourth quarter will be negative. As the economy is set to contract due to the latest lockdown, Britain is set for a double dip recession.

“The new, more transmissible Covid-19 strain means the new strict UK lockdown is here to stay for some time. This inevitably means a negative first quarter for GDP,” said ING developed markets economist James Smith.

“That said, the dip is unlikely to be as bad as the first lockdown,” he added.

Robert Wood, chief UK economist at Bank of America Merrill Lynch, said that while GDP is likely to shrink 6.1 per cent during the first quarter, there will be a strong bounce back afterwards.

However even with a strong recovery in the second quarter, Britain’s economy will not return to pre-pandemic levels until “well into 2024” as there will be a “fast initial rebound, then a long tail”.