A company linked to peer Baroness Mone and her husband Doug Barrowman has been ordered to pay £122m in damages after a judge ruled it breached a government contract for the supply of personal protective equipment (PPE) during the Covid pandemic.

The Department of Health and Social Care sued PPE Medpro over claims the medical gowns it supplied did not comply with relevant healthcare standards.

The High Court ruled Medpro failed to prove whether or not its surgical gowns, which were to be used by NHS workers, had undergone a validated sterilisation process.

Chancellor Rachel Reeves said it was beyond her powers for Baroness Mone to be stripped of her peerage.

But speaking to Matt Chorley on BBC Radio 5 Live, Reeves said: “I hope she won’t be back in the House of Lords.”

Peerages can only be removed by an act of Parliament. While a life peerage cannot be relinquished, Baroness Mone could choose to resign from being a member of the House of Lords.

Reeves said she would “do everything” in her power “to get that money back” and that the money belongs “in our schools, in our hospitals and in our communities”.

During the outbreak of the Covid pandemic in 2020, the government scrambled to secure supplies of PPE as the country went into lockdown and hospitals across the country were reporting shortages of clothing and accessories to protect medics from the virus.

In May that year, PPE Medpro was set up by a consortium led by Baroness Mone’s husband, Doug Barrowman, and won its first government contract to supply masks through a so-called VIP lane after being recommended by Baroness Mone.

The judgement said the government later ordered 25 million sterile gowns from Medpro, which were delivered in August and October 2020, after being manufactured in China.

However, just before Christmas that year, the Department of Health served the company with a notice rejecting the gowns and asking for a refund.

The judgement said the government decided it was “not satisfied that the gowns were contractually compliant” after inspecting them, and claimed subsequent tests conducted found “a number of them were not sterile”.

Paul Stanley KC, representing the government, told the trial that of 140 gowns that were tested, 103 failed.

It led to the government launching legal action in 2022 through the High Court, claiming the gowns did not comply with the agreed contract.

Medpro, however, argued it had complied with the contract and that the gowns were sterile.

Having previously denied gaining directly from the contracts, Baroness Mone, a former Conservative peer and lingerie tycoon, admitted in December 2023 that she stood to benefit from tens of millions of pounds of profit.

She also admitted to the BBC that she and her husband lied about their involvement with Medpro to avoid “press intrusion”.

The court found firm’s director Anthony Page called on his “big gun” – Baroness Mone – during negotiations in order to secure the gown contract.

In the court ruling on Wednesday, Justice Cockerill said the contract between Medpro and the government was “complex”, but found that the company did in fact have to demonstrate it had undertaken a “validated sterilisation process”.

“That was not complied with by Medpro,” she said. “It followed that Medpro had breached the contract.”

The ruling also said the gowns lacked the “notified body number” required to mark them as sterilised, and that Medpro had provided no evidence such a process had taken place.

Medpro had also argued that the government could have sold the gowns if it no longer wanted them, or repurposed to be used as non-sterile or isolation gowns.

During the case, the company said any lack of sterility or valid sterility marking “did not prevent the said gowns from being used within the NHS or from being sold to third parties outside of the EU”.

Justice Cockerill said there were problems with that argument, including the fact that the NHS did not need any more isolation gowns.

However, she noted that the DHSC did not effectively reject the gowns within a reasonable timeframe, and also dismissed the government’s claim for £8.65m in storage costs over lack of evidence.

The judge ruled the company must pay £121,999,219 in damages, plus interest, however, it remains unclear how Medpro will pay the fee, with the company appointing administrators the day before the court decision.

Its last set of accounts said it only had £666,025 of shareholders’ funds.

The court said the firm had until 15 October to pay the damages to the government.

Speaking after the judgement, Chancellor Rachel Reeves said the government was working with administrators and “all different authorities” to try and claim the money.

In response to the ruling, Baroness Mone said it was “shocking but all too predictable”.

“It is nothing less than an Establishment win for the Government in a case that was too big for them to lose,” she said in a social media post.

A spokesperson for Mr Barrowman described the ruling as “a travesty of justice”.

“[Mrs Justice Cockerill’s] judgment bears little resemblance to what actually took place during the month-long trial, where PPE Medpro convincingly demonstrated that its gowns were sterile,” the spokesperson added.

Baroness Mone was once described as one of the UK’s most successful businesswomen, creating the gel-padded Ultimo bra in the late 1990s.

In 2015, then-Prime Minister David Cameron made her the government’s “entrepreneurship tsar”, and shortly after she became a Conservative peer.

The next year she announced she was in a relationship with Mr Barrowman, a billionaire businessman who founded The Knocks Group of Companies and was a director of Aston Management Limited.

In December 2022, Baroness Mone sought a leave of absence from the House of Lords.

Neither Baroness Mone nor Mr Barrowman appeared in court for the decision.

A separate National Crime Agency (NCA) investigation into Medpro was launched in May 2021, into suspected criminal offences committed over the procurement of PPE.

An NCA spokesperson said on Wednesday its investigation was ongoing.