The Committees are today publishing the Cabinet Office’s response
to the final report of the Carillion joint
inquiry, alongside a letter from the joint Chairs (attached)
insisting that the Government reconsider and re-submit this third
and final departmental response to the report’s
recommendations.
In the letter, the Chairs write: “There is no question that the
current system of monitoring suppliers was not able to identify
or prevent the precarious state of Carillion and its decline and
collapse. It is astonishing that there has been no indication of
any Government action to resolve this. Your letter acknowledges
that an increased number of Crown Representatives would allow
wider coverage of suppliers, but gives no commitment even to
examine—as we recommended—whether the current level of resourcing
should be increased…While we accept that there are limits to the
information a Crown Representative may be able to access for any
supplier, the relationship with Carillion and the surprise nature
of its profit warning does call into question their value.”
The report of the joint inquiry concluded that Government's
Crown Representative system—"semi-professional and part-time"—had
provided little warning of the risks in a key strategic supplier,
and should be reviewed immediately:
"The assignment of a Crown Representative to Carillion served no
noticeable purpose in alerting the Government to potential issues
in advance of company’s July 2017 profit warning. The absence of
one between August and November 2017 cannot have increased the
Government’s ability to keep itself informed of the direction of
the company during a critical period before its collapse."
The Government’s response appears to indicate that it shares the
committees’ view of the impact of the Crown Representatives in
the run-up to Carillion’s spectacular collapse: “The temporary
vacancy for Crown Representative to Carillion during three months
in 2017 did not compromise our ability to recognise Carillion’s
problems and construct an appropriate response.”
Following the report, the Committee wrote again to the
Minister for the Cabinet Office with further concerns at the
scope of the risk assessments carried out on the massive
public contracts Carillion was engaged in prior to its collapse
—limited to contracts directly involving central Government,
despite wider public contracts being key to propping up
Carillion’s balance sheet, and in its ultimate collapse—and based
on superseded accounts.
Commenting on the Cabinet Office response Rt Hon
MP, Chair of the
Committee, said: “This response
perfectly illustrates the complacency that got us, the public
purse and some key public contracts into this mess. The picture
the Cabinet Secretary paints of our Crown Representatives is more
Johnny English than James Bond, instilling little confidence in
their ability or capacity to defend the public interest in the
multi-billion pound world of Government outsourcing.”
, Chair of the Business,
Energy and Industrial Strategy Committee said: “The
Cabinet Office told us that Crown Representatives are an
important part of how it deals with the businesses that supplies
it. They also told us the absence of a Crown Representative for
the stricken Carillion wasn’t a problem. Both of these things
cannot be true at the same time. The reality must be that either
the Crown Representative system failed for Carillion or it has
never worked at all. Whichever is true, the Government urgently
needs to tackle the central issue which is to get a grip on its
suppliers and protect the interest of taxpayers and those who
rely on these businesses.”
