Carillion inquiry slams government’s laissez-faire monitoring attitude to outsourcing

Crown representatives in Whitehall who are responsible for overseeing public sector suppliers like Carillion are “more like Johnny English than James Bond”, a committee chair has said.

The remarks have been after the Cabinet Office responded to the final report of the Carillion joint inquiry into the collapse of the former industry giant. The chairs of the inquiry has blasted the government’s complacency to outsourcing as Whitehall said there is no need to review how it monitors suppliers through its crown representative system.

This is despite the fact that there was no senior official overseeing Carillion for a period of three months last year as the firm battled with its dwindling finances. The inquiry has previously demanded there be more resources for monitoring deals made.

The Work and Pensions and BEIS committee chairs have stated it is “astonishing” that the government still shows no indication of any action to resolve its monitoring of suppliers. The heads of the inquiry are insisting the government reconsiders and re-submits its 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. 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 latest response comes after a letter from David Lidington, minister for the Cabinet Office, said the temporary vacancy for crown representative to Carillion during 2017 “did not compromise our ability to recognise Carillion’s problems and construct an appropriate response”.

In response to reviewing the role of monitoring, Lidington added: “While the representatives are very senior, experienced people, they can only react to information given to them by the company. If the information that the managers and directors we interact with have been given is incorrect, or if those managers fail to pass that on to us correctly, then problems can of course arise.”

Frank Field, chair of the Work and Pensions committee, has responded by saying: “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 added: “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.”