Tory minister accused of cronyism after associate’s firm hired as adviser

A health minister has been accused of cronyism after a close associate became a £1,500-a-day adviser on the “40 new hospitals” programme, despite officials raising a series of detailed objections including perceived conflicts of interest.

Nick Markham helped to ensure that the Department of Health and Social Care handed a £137,460 contract to iDevelop, a management consultancy run by Nigel Crainey. In doing so, he overrode concerns from civil servants who had warned that the contract was not needed and did not represent value for money and also that the two men’s relationship meant that it posed “reputational risk” for the department and the NHS.

Asked by NHS England what the basis was for engaging iDevelop to be an “expert adviser” to Lord Markham, a senior official in the DHSC’s new hospitals team replied: “Because we have been told to.”

Detailed communications between the health department and NHS England, obtained under freedom of information laws, show that Markham appears to have ignored major disquiet among his own officials and insisted that the contract go to his associate. There was no formal tendering process.

Wes Streeting, the shadow health secretary, said the contract illustrated the government’s “waste, cronyism and corruption” and misplaced priorities over the new hospitals programme (NHP), the government’s vehicle for delivering the “40 new hospitals by 2030” promise, made by Boris Johnson in the 2019 general election campaign.

The programme was heavily criticised after the Observer revealed last year that only 10 of the promised hospitals had received planning permission. The cross-party public accounts committee said in November that it had “no confidence that the promised new facilities will be built” and that they might be “too small even if they are”.

One internal DHSC document shows that the panel of officials examining the contract raised several sets of concerns about it going to Crainey’s firm. Crainey, a chartered occupational psychologist, is iDevelop’s managing director.

In one section, headed “reputational risk”, the panel said: “This is one of the NHS’s biggest programmes and a key manifesto commitment. Can we justify that such a high-profile contract is to be awarded to a supplier without any formal competitive selection process?

“There is a risk of bad publicity relating to this contract via the HSJ [Health Service Journal] and/or external pressure groups.”

They then highlighted how the links between Markham and Crainey in particular risked creating a bad impression. Markham previously chaired London Continental Railways, the regeneration arm of the Department for Transport, while Crainey was its chief operations and transformation officer.

“The supplier’s main contact point is known to the minister and is currently on a honorary/pro bono contract with the DHSC,” the panel said. “How did we mitigate against the perceived conflicts of interest? How did we mitigate against the perception of the supplier creating a need for themselves to deliver?”

Steve Barclay, the health secretary when the contract for Crainey’s consultancy was being discussed in mid-2023, approved the contract despite officials’ objections, emails show.

Crainey’s firm were contracted to provide advice for typically three days a week for the six months between August 2023 and January 2024 at a day rate of up to £1,527.33.

On 12 June last year, an NHS England official asked “whether we have approvals in place for this appointment – I suspect not”. A counterpart in the department’s NHP team replied: “Yes we do, from [the secretary of state].”

In a scathing report last November on the NHP, the public accounts committee (PAC) said it was “over-reliant on consultants”. Consultants made up 62% of its team in February 2023, “creating risks of lack of continuity and capability at the heart of the programme as well as making it more expensive”, the MPs said.

The NHP spent £70m – 79% of its running costs – on consultancy services between April 2021 and March 2023. It told the PAC it planned to spend another £842m on consultants between 2023/24 and 2030/31.

The civil servants’ concerns disclosed in the documents cast doubt on the health department’s insistence to the HSJ last November that there was a “clear justification” for the contract.

Markham, a businessman and former ITV executive, responded to questions from the Guardian about his role in the contract by redirecting them to the DHSC “given this relates to government business”. The DHSC said general election rules meant that it could not answer.

A Whitehall source said: “The use of consultants on major government projects is standard practice, and those working on the NHP provide expertise on a range of subjects, including technical design and construction. The contractor had previously worked with the Department for Transport on major construction projects.”

Crainey declined to comment.

Streeting said: “No wonder the Conservatives have failed to deliver a single new hospital they promised. They are more interested in lining their mates’ pockets with taxpayers’ cash than they are in rebuilding the NHS. People are fed up with the waste, cronyism and corruption of this Conservative government.”