Source · Select Committees · Public Accounts Committee
Recommendation 2
2
Accepted
Set out how HM Treasury and Cabinet Office will support departments to maintain risk knowledge.
Recommendation
We are concerned that departments are not maintaining institutional knowledge relating to ‘at risk’ companies and sectors. HM Treasury monitors the health and resilience of the corporate sector as a whole and the Department for Business and Trade oversees industry and different priority sectors and has a role in responding to economic shocks. It is the responsibility of individual departments to monitor the health of their sectors, and those at the centre of government say they are not aware of any one sector that is more at risk than others. However, a high turnover of staff in government means that corporate knowledge held by departments, which may be commercially sensitive and therefore restricted to a small handful of individuals, is at risk of being lost. HM Treasury spending teams act as the filter for warnings from departments, but turnover of staff in HM Treasury is historically even higher. Recommendation 2: In the Treasury Minute response, HM Treasury and the Cabinet Office should set out how they will support departments to maintain a continuous level of knowledge about risks to companies and supply chains in sectors that are relevant to their departmental duties and objectives.
Government Response Summary
The government states it already supports departments through existing mechanisms, including commercial engagement on supplier risk, two-way intelligence sharing, Orange Book guidance, and Cabinet Office commercial teams providing regulation, guidance, and playbooks. Additionally, the DBT recently published a Critical Imports and Supply Chains Strategy to monitor and respond to supply chain shocks.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented Supplier and supply chain risk is a standing item for commercial engagement between the Cabinet Office and departments. The sharing of intelligence on supplier and sector risk indicators between Cabinet Office and departments is a ‘two-way’ process, which allows the Cabinet Office and departments to support each other in retaining corporate memory. Departments should escalate identified risk indicators within their own governance frameworks such that a record is maintained of decisions made in respect of each risk identified. Guidance on risk management is provided by the Orange Book. Commercial teams in the Cabinet Office support supplier monitoring activity by developing regulation and guidance, benchmarking performance, developing and supporting the implementation of playbooks, developing and attracting commercial talent, and monitoring strategic suppliers. Each of these functions supports departments in maintaining a continuous level of knowledge and improving their capability to identify and mitigate risk. DBT recently published the Critical Imports and Supply Chains Strategy which sets out actions for government to take with business and international partners to monitor, mitigate, plan, and respond to supply chain shocks. It describes how DBT uses trade data to identify where the UK is over reliant on a country for imports of a good. This data is available for departments to consider diversification options through DBT’s diversification dashboards. Where a potential shock is identified, or when an unanticipated event leads to supply chain disruption, a response model has been developed to cover emergency planning, response, recovery and risk assessment.