Source · Select Committees · Public Accounts Committee
Recommendation 10
10
Accepted
Treasury relies on departments for specific sectoral monitoring despite central oversight.
Recommendation
The Treasury told us that some of its staff work on monitoring the health of the UK corporate sector overall, by looking at a series of indicators.25 It told us that actively monitoring the corporate sector is an important and critical part of what the Treasury does centrally. The Department for Business and Trade also explained its “industry brief” and its “role in economic shocks generally, and monitoring and forecasting”. Nonetheless the Treasury told us that it is reliant on departments monitoring their own sectors.26
Government Response Summary
The government states the recommendation on monitoring the UK corporate sector and relying on departments is already implemented. It highlights existing approaches like Lead Government Departments, improved supplier monitoring, Cabinet Office oversight of strategic suppliers, and published strategies for critical supply chain resilience.
Government Response
Accepted
HM Government
Accepted
1.1 The government agrees with the Committee’s recommendation. Recommendation implemented 1.2 The government uses a Lead Government Department (LGD) approach to cover all phases of emergency planning, response, recovery and risk assessment. Usually, the LGD is the department with primary policy responsibility for the risk and expertise for the area impacted by the emergency scenario. 1.3 LGDs should escalate supplier and company risks through their internal escalation routes and to Cabinet Office and HM Treasury as required, for example should the department identifying the risk not be the clear lead for response, if intervention is being considered and HM Treasury spending approval may be required, or for additional expert support. 1.4 Monitoring of suppliers for financial distress has improved significantly since Carillion’s liquidation in 2018. The Government Commercial Function’s ‘Sourcing Playbook’ and associated guidance provide recommendations to departments regarding regular monitoring of suppliers’ financial performance. 1.5 The Cabinet Office monitors the strategic suppliers to government and proactively engages with public sector stakeholders to share intelligence, including bringing together customers of a common supplier where appropriate. Where there is a high level of exposure across multiple departments, the Cabinet Office may coordinate a response. 1.6 Responsibility for supply chain resilience and corresponding intelligence lies with LGDs. The government has published several strategies to ensure resilience in supply chains for critical sectors, for example on semiconductors, batteries and critical minerals. Supply chain intelligence is regularly gathered by sector teams from conversations with industry and shared with ministers and between officials.