Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Acknowledged
Set out updated approach to evaluating company distress cases and sharing lessons learned.
Recommendation
It is vital that the government evaluates and shares the lessons from these cases on a timely and consistent basis, regardless of whether the case resulted in government intervention. We have previously found that much of government activity and spending is not evaluated robustly, or at all. Government interventions in distressed companies can involve significant amounts of taxpayer money, and yet it is not evident that these interventions are being evaluated consistently and transparently, or that lessons are being shared across government. There are also many cases where the government ultimately decides not to intervene, or finds other non-financial ways to support the distressed company or manage the situation. It is important that the government documents its rationale and learning from these cases too. The government does not appear to be routinely learning from other countries and their processes for intervening in distressed companies, although it has expressed an interest in doing so. A lack of institutional memory across government coupled with a lack of systematic evaluation puts government at risk of not learning what works for future cases. 8 Monitoring and responding to companies in distress Recommendation 6: HM Treasury should set out in its Treasury Minute response how it will update its approach to evaluating company distress cases (including those that have not resulted in government intervention), and how lessons are shared across sectors. Alongside its Treasury Minute response HM Treasury and UK Government Investments should also provide some examples of lessons learned reports or evaluations from recent cases. Monitoring and responding to companies in distress 9 1 Preparedness for company distress situations
Government Response Summary
The government acknowledges that evaluation of company distress cases has not been formalised and will work with the Cabinet Office and UKGI to consider future changes and how to strengthen departmental evaluation requirements and share lessons. It also points to parliamentary and NAO scrutiny as providing evaluation.
Government Response
Acknowledged
HM Government
Acknowledged
The government agrees with the Committee’s recommendation. ensure best practice and learning is applied when considering interventions in different sectors, the centre of government, including UKGI, HM Treasury’s Special Situations team and Cabinet Office, acts as a source of expertise to support departments drawing on experiences of previous company distress cases. To date, evaluation of company cases has not been formalised. This is an area of potential improvement. HM Treasury will therefore work with the Cabinet Office and UKGI to consider future changes, potentially including placing conditions on departments to report back to the centre. It is the responsibility of LGDs to evaluate their interventions, as they are best placed to understand sectors they are responsible for, their departmental objectives and legal obligations. HM Treasury and Cabinet Office will consider how to capture and share cross- cutting issues and whether requirements for departmental evaluation can be further strengthened. In addition, government interventions are often scrutinised by Parliament, such as the inquiries on Carillion, Silicon Valley Bank (UK) and Bulb Energy. Departmental Select Committees may also hold hearings or exchange correspondence with departments on bespoke interventions, such as CF Fertilisers and Celsa Steel. This provides further rigorous evaluation. As highlighted by their report, the National Audit Office provide further evaluation by regularly scrutinising government’s response to company distress cases, from Northern Rock to Bulb Energy. As outlined in response to recommendation 4, HM Treasury will circulate the NAO’s recent report and good practice guide to departments.