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Crown Reps “more Johnny English than James Bond”

14 September 2018

The Work and Pensions and BEIS Committees publishes the Cabinet Office's response to the final report of the Carillion joint inquiry, alongside a letter from the joint Chairs 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 Frank Field 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.”

Rachel Reeves, 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.”

    Further information

    Image: PA-Cabinet-Office