Source · Select Committees · Public Accounts Committee
Recommendation 18
18
Accepted
Maintaining propriety during rapid, imperfect decision-making in company distress situations is challenging.
Conclusion
Propriety is concerned with meeting high standards of public conduct and parliamentary expectations, and cannot be dispensed with even when making difficult judgements on competing issues in an emergency.46 Responding in these situations often requires rapid decision-making by officials and ministers, based on imperfect information and a set of unattractive options.47 We heard how quickly departments have to weigh up different options and make decisions in a crisis situation. For example, when the government was notified of the imminent failure of Flybe in 2020, UKGI told us that advisors spent four days in the company and assessed that intervention “would not be a good use of government money because, if we put a penny in at the top, we might not be able to work out where that penny would go and it might not be focused on what we needed it to”.48 More recently, when the issues surrounding Silicon Valley Bank arose, a number of teams were stood up over the course of a weekend to come up with a rapid set of different contingency plans.49
Government Response Summary
The government agrees with the recommendation, with a target implementation date of July 2024. It outlines existing guidance and expert support available to departments for rapid, proper decision-making in crisis situations, and commits to shortly re-issuing information and the NAO's good practice guide.
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.