Government's system of having crown representatives in the Cabinet Office to monitor the performance of contractors needs to be overhauled, say the joint chairs of the committee of MPs that investigated Carillion’s downfall.
The chairs of the Work & Pensions and the Business, Energy & Industrial Strategy (BEIS) committees have written to Cabinet Office minister David Lidington asking a series of questions over the way government carried out its risk assessments regarding the public contracts Carillion was engaged in.
Frank Field and Rachel Reeves tell the minister that there is ‘an urgent need to review the role of the crown representatives to ensure that issues with other strategic suppliers can be spotted and dealt with at an earlier stage’.
The committees published their joint report into Carillion on 16th May. In respect of the role of crown representatives, the report concluded: “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.”
It recommended that the government immediately reviews the role and responsibilities of its crown representatives in the light of the Carillion case. “This review should consider whether devoting more resources to liaison with strategic suppliers would offer better value for the taxpayer,” it said.
In their follow-up letter to the minister, the committee chairs ask about the failure of the system to respond to Carillion’s problems: “The September 2016 assessment is still quoting Carillion’s total revenue figure from the 2014 accounts despite the 2015 accounts having been published back in March 2016. Is this an isolated case or are all strategic supplier risk assessments based on out-of-date financial data?”