Source · Select Committees · Public Accounts Committee
Recommendation 5
5
Rejected
Set functional standards for monitoring and responding to companies in distress across government.
Conclusion
The Cabinet Office has not assessed or coherently identified the skills and expertise needed for monitoring and responding to companies in distress. We have previously raised concerns about the level of commercial, risk management and corporate finance expertise in government amid increasing demand for these skills, all of which are important for monitoring and responding to companies in distress. Departments and regulators face the challenge of competing with the private sector for these high-in-demand skills. The Government Commercial Function, UK Government Investments (UKGI) and HM Treasury are having to do more work to support companies with restructuring. The UKGI special situations team has been involved in over 200 company distress cases in the last six years. HM Treasury acknowledges that having the right skills and capabilities in place is a critical lesson, but also that they are currently patchy across government. There are pockets of expertise, but no one has taken responsibility for assessing the varied skills needed for monitoring and responding to companies in distress. Recommendation 5: The Cabinet Office Commercial Function should set functional standards for monitoring and responding to companies in distress. As part of this process, the Function should write to the Committee within six months, explaining: • The skill requirement across government for monitoring and responding to companies or suppliers in distress; • The current level of these skills and expertise across government and where gaps exist; • How the Commercial Function plans to close the gaps identified; and • How the Commercial Function will ensure departments know where, how and when to access support.
Government Response Summary
The government rejects setting new functional standards, stating existing guidance and risk management strategies suffice. Instead, the Cabinet Office Commercial Function will collaborate with the Risk Centre of Excellence, UKGI, and HM Treasury to explore a more targeted approach for developing necessary skills across government.
Government Response
Rejected
HM Government
Rejected
The government agrees with the Committee’s recommendation. guidance regarding the monitoring of the supplier financial standing and identifying and responding to financial distress. This, together with the work by the Government Finance Function on developing the Risk Management Strategy to strengthen leadership and enhance credibility, collaborate across boundaries and enhance capabilities and drive professionalism precludes the need for setting new functional standards. The Government Commercial Function Learning and Development Programmes have a risk-based approach running through all commercial training programmes as well as dedicated sessions with this focus. Both training and guidance documents signpost departments to sources of further support, including sourcing of expertise such as UKGI as outlined in response to recommendation 4, and the Cabinet Office proactively engages with departments to identify gaps in capability with the commercial standards process benchmarking department performance. The Government Risk Profession was formally established in 2022. The core principles of the profession’s Risk Management Strategy include the need for risk management planning to be central to government planning, policy making, service delivery, monitoring, and reporting activities and that risks are best managed closest to source with professionals and skills embedded in departments at different levels. The Cabinet Office Commercial Function will work with the Risk Centre of Excellence in the Government Finance Function, UKGI and HM Treasury’s Special Situations Team to look at a more targeted approach to develop the skills required across government for monitoring and responding to companies or suppliers in distress.