Cabinet Office lacked ‘key information’ after Carillion collapse, says Lidington

Written by Richard Johnstone on 19 November 2018 in News
News

Outsourcing firms Capita, Serco and Sopra Steria to produce first three living wills for outsourced services within weeks, says Cabinet Office minister

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Cabinet Office minister David Lidington has admitted that the government did not have the “key organisational information” that was needed to deal with the collapse of outsourcing giant Carillion earlier this year, setting out progress on reforms.

In a speech today, Lidington will say that a host of government outsourcers has agreed to set out living wills that confirm how services could be managed in the event of a corporate failure.

Following the collapse of Carillion on 15 January, after months of speculation that it was unable to service its debts, the Cabinet Office put in place plans to maintain public services delivered by the firm.


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In June, Lidington announced a series of reforms in response to the collapse, which include increasing the range of suppliers to government as well as the creation of living wills to allow contingency plans to be rapidly put into place when needed, to allow government time to transfer the services safely to a new supplier or take them in-house.

In his speech, Lidington will set out more details of the development of living wills for major suppliers across government.

“Carillion was a complex business and when it failed it was left to government to step in – and it did,” he will tell the Business Services Association. “But we did not have the benefit of key organisational information that could have smoothed the management of the liquidation.”

“By ensuring contingency plans can be quickly put in place in the very rare event of supplier failure, we will be better prepared to maintain continuity of critical public services.”

Capita, Serco and Sopra Steria have been named by the Cabinet Office as the first three services firms that will produce the living wills in the weeks ahead.

Other moves to increase transparency of outsourcing contracts include officials are developing strategies “which will afford government greater insight into the financial stability of suppliers and markets”. A government statement earlier this month confirmed this would include additional financial information from companies. “We will be reviewing what financial information we should seek and what processes we should undertake in order to assess suppliers’ financial health both at the time of procurement and on an ongoing basis,” the Cabinet Office stated.

It was confirmed today that central government will shortly publish new data, not seen before, about the performance of critical contracts, such as response rates and if they are delivering on time.

By summer 2019, departments will also be required  to consider social values in their procurements, including helping access for small businesses and those owned by under-represented groups, increasing representation of disabled people in the workforce and reducing environmental impact.

About the author

Richard Johnstone is CSW's deputy and online editor and tweets as @CSW_DepEd

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