Concern over Govt business relations in wake of Carillion

The collapse of Carillion has raised 'significant concerns' about the Government's relationship with major suppliers, and the potential impact on the delivery of important public services, an MPs' report says.
By The Newsroom
Published 23rd May 2018, 07:00 BST
Updated 8th Jun 2018, 08:42 BST
Carillion had clear problems that were overlooked says MPs reportCarillion had clear problems that were overlooked says MPs report
Carillion had clear problems that were overlooked says MPs report

The Public Accounts Committee published Government risk assessments of its suppliers, taking into account stock market performance and financial statements.

Carillion had been rated at amber for months due to to performance on contracts with the Ministry of Defence and Ministry of Justice, but it was not until after the company issued a profit warning in July 2017 that it was downgraded it to red, said the committee.

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“It appears the Government was not aware of Carillion’s financial distress until this point,” said the report.

“In November 2017, officials recommended a provisional black rating for Carillion. However, following representations from the company, the Cabinet Office did not confirm the designation. Carillion collapsed less than two months later.”

Meg Hillier, who chairs the committee, said secrecy surrounded large contracts to deliver public projects and services.

“The strategic supplier risk assessments provide an insight into the relationship between Government and suppliers and give rise to many questions we want to pursue,” she said.

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“We recognise there are commercial sensitivities around that relationship. We are also alert to the potential impact on jobs and small businesses should certain information be made public.”

Equally, she said there was concern about the lack of transparency and its potential to create an environment where poor practice takes root.

“Taxpayers deserve to know where their money is going, that their investment is being managed wisely and that Government is providing effective oversight.

“The Carillion papers identify clear and compelling problems with the business in the months leading to its collapse. Government had the opportunity to deal with them.

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“Taxpayers, service users and people and businesses plunged into financial difficulty by Carillion’s demise deserve to know what happened.

“We want to look wider and better understand the relationship between strategic suppliers and Government.

“When a contract breaks down, Government is the provider of last resort. While it did not bail out Carillion - the company went in liquidation - it did inherit responsibilities and costs, ultimately borne by taxpayers, that would otherwise not be met.”

Related topics:GovernmentMPs