Cabinet Office spokesman Lord George Young has said it is not “accurate” to compare Interserve’s situation with Carillion.
Lord Young also revealed Interserve is piloting a new intiative that could enable other firms to step in and take over contracts in the event of a business failure.
In a parliamentary session called to discuss the company, which recently announced it was in talks with lenders to refinance its business, Lord Young stressed that Interserve’s situation is “very different from Carillion”.
He said: “Interserve is now taking the action that Carillion ought to have taken – to restructure its balance sheet and improve its robustness – and, unlike Carillion, it does not need new money. It needs to turn debt into equity. It is not accurate to make a direct comparison between the two companies.”
However when questioned by Labour’s Lord Stephenson, he confirmed that the company had “volunteered to lead the way” as one of the first suppliers to design a ’living will’.
He said: “We have recently announced plans for all suppliers to draw up resolution plans in the unlikely event of a business failure, to ensure continuity of services and, where necessary, to enable another provider or the government themselves to step in.
“Interserve has volunteered to lead the way as one of the first suppliers to design one of these resolution plans.”
The company is one of five piloting the new arrangement outlining a contingency plan in new contracts with suppliers if the contract runs into difficulties, he said.
Lord Young added that the company had told the Cabinet Office that it is currently paying 90 per cent of suppliers within 60 days or less.
An Interserve spokesman said: “We have, together with other key suppliers, fully engaged with the Cabinet Office as the government has looked to improve the outsourcing process while mitigating risk.”