Source · Select Committees · Public Accounts Committee
Recommendation 22
22
Deferred
Specialist skills for company distress are concentrated centrally, resulting in patchy government capabilities.
Recommendation
The Treasury told us that having the right skills and capabilities in place is “a really critical lesson” highlighted by the NAO’s report. It acknowledged that these skills are currently “patchy across government”.61 The relevant specialist skills for responding to company distress situations are concentrated mainly at the centre of government.62 The Treasury told us that its special situations team, UKGI and the Cabinet Office were the “three pockets in the centre” that held the “expertise and experience in both the framework and the practice of how this all works.”63 UKGI told us that its special situations team of 18 has a total of 225 years of experience of financial distress, and has been involved in over 200 cases where distressed companies had approached government in the last six years.64 We also heard how these three central teams are “more in the restructuring business” as they have become trusted by companies who “tell us stuff confidentially so we can be part of the solution”.65
Government Response Summary
The government agrees with the recommendation to address patchy skills across government, setting an April 2025 target. It outlines existing guidance and training but commits to the Cabinet Office Commercial Function working with relevant bodies to look at developing a more targeted approach for skills development.
Government Response
Deferred
HM Government
Deferred
5.1 The government agrees with the Committee’s recommendation. Target implementation date: April 2025 5.2 The Government Commercial Functional Standard refers to ‘Sourcing Playbook’ 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. 5.3 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. 5.4 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. 5.5 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.