Wakeham `gave bank big contract'

Lord Wakeham, the former Cabinet minister whose appointment to the board of N M Rothschild has aroused controversy, personally awarded a hugely valuable Government contract to the bank when it was not the lowest bidder, the Nolan Committee on standards in public life will be told this week. Stephen Byers, Labour MP for Wallsend, will tell Nolan that based on a parliamentary answer he has received, he believes Lord Wakeham, when Secretary of State for Energy, awarded to Rothschild the contract to advise the Government on the future of the coal industry - despite the bank not having tendered the lowest price.

He will ask the committee to examine how the bank won the contract, which continues.

Mr Byers said yesterday: "The inquiry should also look at the potential conflict of interest, with Lord Wakeham awarding the contract and then sitting on the board of the company which is still working on it and profiting from it."

Lord Wakeham said yesterday: "There has long since been a policy in public purchasing that you don't always have to take the cheapest, you take the best value for money. The cheapest is not always the best way forward."

Lord Wakeham, who resigned from the Government last year when leader of the House of Lords and joined Rothschild 10 days ago, said he could not remember if the bank was not the lowest bidder. He said the contract, paving the way for the coal sell-off, was awarded after consulting Government officials.

When his appointment to Rothschild was announced, controversy raged around the bank's role in electricity privatisation. Coal was largely ignored - mainly because as the pits are now sold, Rothschild's work was widely assumed to be over.

However, Mr Byers' parliamentary answer makes it plain Lord Wakeham's new employer is still advising the Government. This was confirmed by the Department of Trade and Industry, which said that now the pits had gone, the bank had moved on to dealing with the properties and buildings left above-ground, and redundant equipment. The bank is not expected to complete the job until the spring of next year at the earliest.

In his answer to Mr Byers, the Energy minister, Tim Eggar, said the decision to appoint Rothschild had been taken by Lord Wakeham "after receiving recommendations from an inter departmental panel of officials".

Asked if the contract was awarded to the lowest tenderer, Mr Eggar skirted the point and said Rothschild had won the contract, for which there were seven other bidders, because it offered "the best value for money" - Whitehall code usually meaning not the cheapest.

A DTI spokesman said Mr Byers' answer "means what it says". Asked if "best value for money" meant lowest, he said: "It means best value for money." He refused to elaborate and would not name the other contenders or say what the contract was worth.

A Rothschild executive said it was possible that although a company offered a higher price, the Government could take a view it could do the job better and award it the contract. That, he said, would constitute "value for money".

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