Cabinet Office urged to review crown representative role after Carillion failings

Written by Mark Smulian on 31 May 2018 in News
News

MPs ask David Lidington to explore whether beefed-up powers and more resources are required as a matter of urgency

Cabkinet Office minister David Lidington Credit: PA

Two parliamentary committees have called for an immediate review of the roles of crown representatives after they failed to spot the perilous state of Carillion before its January collapse.

The move follows last week’s publication by the Public Accounts Committee of risk assessments of Carillion made by representatives last year that did not reflect the company’s plight.

Frank Field and Rachel Reeves, respectively chairs of the work and pensions and business, energy and industrial strategy committees, said their report earlier this month on the fiasco had found that assigning 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”. 


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They have now asked Cabinet Office minister David Lidington to immediately review the role and responsibilities of crown representatives and decide whether giving them more resources to liaison with strategic suppliers would provide better value. 

Crown representatives appeared to know little about contracts held by strategic suppliers outside of central government, even where they might affect a company’s ability to deliver on government contracts, the two chairs noted.

They asked: “What consideration has been given to widening the scope of the risk assessments to include broader range of risks to the strategic supplier, including contracts with third parties?”

Public contracts outside central government should also be assessed by crown representatives, they said, noting that in 2016 Carillion reported revenue from the UK government of £1.7bn, yet the crown representatives’ risk assessments referred only to £377m because they omitted contracts such as large hospitals where central government was not a direct participant.

“Do you agree that such risk assessments should factor this exposure into the overall rating?” they asked Lidington.

Crown representatives also appeared to have used out of date financial information while the Cabinet Office failed to act promptly on a recommendation to designate Carillion as “high risk”.

A Cabinet Office spokesperson said the government had been clear that its priorities in relation to the collapse of Carillion had been to ensure public services continued to run smoothly and safely. 

“The plans we put in place ensured this,” they said. “We are grateful to the committee for their letter and will respond in due course.”

 

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