The Carillion joint inquiry has branded the government’s refusal to review the role of crown representatives that monitor major government suppliers as “astonishing”.
MPs on the select committees behind the inquiry criticised crown representatives, which oversee the relationship between government and strategic suppliers such as Carillion, in their report into the firm’s collapse.
The report condemned their inability to flag Carillion’s problems ahead of its July profit warning, and recommended the government “immediately reviews the role and responsibilities of its crown representatives”.
In a letter published today, Cabinet Office minister David Liddington refused to accept the recommendation – a move inquiry co-chairs Frank Field and Rachel Reeves described as “astonishing”.
“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,” the co-chairs wrote in a reply to Mr Liddington.
“It is astonishing that there has been no indication of any government action to resolve this.”
They added that “difficulties being experienced” by Interserve and Capita, both strategic suppliers, made a review “a matter of particular urgency”.
Interserve chief executive Debbie White revealed in June that the company had been given a ‘red’ rating by the government, meaning it had ‘significant material concerns’ about the business.
In his response to the Carillion joint inquiry, Mr Liddington did accept that crown representatives were vulnerable to being misled by supplier management.
He said: “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.”
In response, the inquiry co-chairs said this was “precisely what happened” in the case of Carillion, which made it “difficult to understand why you see no reason to look more closely” at the work of the representatives.
Commenting on Mr Liddington’s response to the inquiry, Ms Reeves said there was a clear need for the government to “get a grip” on its suppliers.
“The reality must be that either the crown representative system failed for Carillion or it has never worked at all,” Ms Reeves said.
“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.”
Mr Field added: “This response perfectly illustrates the complacency that got us, the public purse and some key public contracts into this mess.”