National Care Service: 'Serious questions' to answer over KPMG

 National Care Service: 'Serious questions' to answer over KPMG

The Scottish Government handed a £545,000 contract to a management consultancy firm it knew was “dishonest,” The Herald can reveal.

Ministers spent more than two years trying to keep details of the warning passed to them about KPMG secret, but were compelled to share after being carpeted by the Scottish Information Commissioner.

Labour said the “astonishing revelation” raised serious questions for the SNP.

• •KPMG withdraws from ScotGov contract bids after string of scandals
• •Calls to ban outsourcing of Scots National Care Service contracts
• •National Care Service Bill passes first stage at Holyrood

The external contractor won the tender to help develop the new National Care Service in December 2021.

The firm was tasked with designing the Target Operating Model to give a “high-level view” of how the reforms would work.

However, the decision came at a time when they were under intense scrutiny following a string of scandals.

Just months before, the UK’s accounting watchdog fined the firm £13m over misconduct in its work with bedmaker Silentnight.

They were accused of pushing the firm towards insolvency, to help private equity firm HIG Capital buy the company without the burden of its pension liabilities.

The Cabinet Office even threatened to ban the Big Four firm from bidding for public sector contracts.

News of this was shared with Scottish Government civil servants at a meeting on 25 November 2021 of the Government Commercial Function, a network of officials with responsibility for procuring goods and services for the UK Government and devolved administrations.

According to a note of the meeting, they were told that the Cabinet Office had “started a process” with KPMG and that the UK’s Financial Reporting Council had published a “ruling to say the entire firm was dishonest.”

They were then told that legal advice received by UK ministers showed that as this was “grave professional misconduct” it was “grounds for exclusion” from public sector tenders.

The minute of the meeting continued: “Process has been kicked off with KPMG with regards to this. We don’t have to exclude them and every contracting authority can make their own decision.

“They need to provide us with evidence to show they are on path to recovery.

“They are cooperating with this. A lot of bad news will come out in this space in the next couple of months.”

Just under three weeks later, on 13 December, the Scottish Government awarded KPMG the National Care Service contract.

Four days after that, on 17 December, KPMG took the unusual step of withdrawing from bidding for any more public contracts.

In early 2022, Nick Kempe, the convener of the Common Weal Care Reform Group, submitted a freedom of information request to the Scottish Government, asking for more details about the decision to award the contract for the National Care Service to KPMG and their due diligence.

Initially, they refused to provide any information, but after Mr Kempe appealed, the Scottish Government provided the first extract from a note of the 25 November meeting which stated “They [KPMG] need to provide us with evidence to show they are on path to recovery”.

Mr Kempe then appealed to the Scottish Information Commissioner in April 2022.

Earlier this month, they finally ruled that the Scottish Government was wrong to withhold the information, forcing them to reveal the warning about KPMG being “dishonest.”

The National Care Service has proved controversial with MSPs, councils, unions, charities, and carers’ groups expressing concerns over the flagship policy.

The massive reform - which has already been delayed until 2029 - will see the government set up new “care boards” directly accountable to Scottish ministers who will take on functions and staff that are currently managed and run by local authorities and health boards.

Mr Kempe said: “The released information is dynamite. It shows that the Scottish Government handed the design of the National Care Service to an organisation which it knew to be dishonest.

“This was not just a scandalous misuse of public funds, it suggests that the real intentions behind the Scottish Government’s proposals for a National Care Service were always deeply cynical, driven by the private sector rather than the public interest.”

Scottish Labour Health spokesperson, Dame Jackie Baillie, said “This astonishing revelation raises serious questions for the SNP government.

“It appears the SNP rode roughshod over the advice it was given in order to hand over hundreds of thousands of pounds of public money to a consultancy firm.

“This secretive and incompetent SNP government is incapable of delivering the National Care Service Scotland needs.”

(Image: PA)

Robin McAlpine, Head of Strategic Development, Common Weal said: “When a civil servant tells you an organisation is dishonest from top to bottom and that there is a very good reason not to give them a contract it might look like advice, but in effect it’s an instruction.

“In government civil servants can only overrule Ministers if the Ministers are acting illegally, but they can warn that a course of action is so much against the public good that it should not be taken.

“That is what has happened here, yet the government has gone ahead anyway.

“This really is a shocking decision and it is very hard to think of a justification for giving a contract to an organisation your own civil servants warned you was seriously dishonest.

“It seems to me hard to square that decision with the Ministerial Code which expects ministers always to act in the public interest and ensure probity in government.”

A Scottish Government spokesperson said: “We procured KPMG’s specialist services through appropriate procurement routes to advise us on how best to make sure that we remain focused on outcomes and people, whilst we establish the National Care Service.

“This contract did not involve designing or delivering any aspect of the National Care Service.”

KPMG declined to comment.

The firm started bidding for tenders again in 2022.

On Monday, it emerged that the UK government had awarded them a contract worth up to £223m to train civil servants.

The 14-month deal with the Cabinet Office, which is understood to be the second-largest public sector contract ever won by KPMG, will see the firm manage learning and development services across the civil service.

The contract was agreed prior to the general election in July and before Chancellor Rachel Reeves announced an efficiency drive across government, which included a commitment to cut down spending on external consultants.