Source · Select Committees · Public Accounts Committee
Recommendation 16
16
Accepted
Government previously lacked a structured framework for providing financial support to distressed companies.
Conclusion
In 2020, the government set out publicly some broad principles which it uses to underpin decisions on providing last-resort bespoke financial support to financially distressed companies. The government has publicly stated that there is an “extremely high bar for putting taxpayers’ money at risk in this way”.42 The Treasury told us that before developing the principles, it had had “a rather ad hoc framework for addressing companies in distress-type situations.”43
Government Response Summary
The government agrees with the recommendation and aims for a July 2024 implementation. It outlines existing guidance, expert teams (HM Treasury's Special Situations team, UKGI), and departmental responsibilities for managing interventions, committing to shortly re-issue relevant information and the NAO's good practice guide to departments.
Government Response
Accepted
HM Government
Accepted
4.1 The government agrees with the Committee’s recommendation. Target implementation date: July 2024 4.2 The Accounting Officers’ (AO) Assessments Guidance and Survival Guide provide advice on AO responsibilities. Managing Public Money provides complementary information and highlights Cabinet Office guidance. 4.3 The Cabinet Office’s Commercial team publishes a range of guidance on identifying and responding to company financial distress. This includes playbooks, e-learning, deep dive training and on-going written guidance. 4.4 HM Treasury’s Special Situations team provides central expertise and support for departments when considering bespoke interventions, ensuring they are designed on commercial terms to protect taxpayers’ interests and reflect the government’s principles for intervention. Departments are also supported by UK Government Investments (UKGI), the government’s centre of excellence for corporate finance. 4.5 The Department for Business and Trade’s Special Situations team engages across their sector teams and other government departments to respond to economic shocks, signposting others to specialist services across Whitehall. 4.6 While it is departments’ responsibility to monitor interventions, HM Treasury will often place conditions on spending approvals that appropriate follow-up work is conducted over the life of an intervention. 4.7 The Second Permanent Secretary of the Treasury regularly writes to departments to draw their attention to the principles and processes for intervention on company cases. This is supplemented by detailed guidance circulated by HM Treasury’s Special Situations team. 4.8 The government considers that publication of the National Audit Office’s report provides a timely opportunity to further highlight guidance for dealing with distressed companies. HM Treasury will therefore shortly re-issue information across departments and AOs including the NAO’s good practice guide.