Carillion inquiry slams government inaction on supplier monitoring

The joint chairs of the Carillion inquiry have strongly criticised the government’s response to its final report.

They warned that the Crown Representative system it uses to monitor key suppliers is “more Johnny English than James Bond”.

The reaction came as the Work and Pensions and BEIS Committees published the Cabinet Office’s response to the Carillion joint inquiry’s final report.

The joint inquiry’s report had concluded that the government’s Crown Representative system was “semi-professional and part-time”, had provided little warning of the risks in Carillion’s case, and should be reviewed immediately.

In its response, Cabinet Office minister David Lidington said: “The Crown Representatives are senior, board level executives who work for the Cabinet Office on a part-time basis. 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 use correctly, then problems can of course arise.”

The joint chairs, MPs Frank Field and Rachel Reeves, urged the government to reconsider and resubmit its response. In a letter to the Cabinet Office, they said: “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.”

Commenting on the Cabinet Office response, Field added: “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.”

Reeves 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.”