Source · Select Committees · Public Accounts Committee
Recommendation 26
26
Deferred
Challenges persist in recovering costs from third parties after airline insolvencies.
Conclusion
We asked the witnesses whether there had been any learning from the experiences of airline collapses about industry insurance schemes and also how government manages the risks around recuperating money from private insurers. UKGI suggested that there was some work undertaken to identify where there might be similar risks but could not recollect where that had got to.77 The Treasury’s subsequent letter explained that the cases of Monarch and Thomas Cook highlight the challenges in recovering costs from third parties when government steps in. It said that the Department for Transport is “taking the time to thoroughly consider the most appropriate package of measures to take forward” in response to the Airline Insolvency Review, which was published in 2019.78
Government Response Summary
The government agrees with the recommendation and aims for a July 2024 implementation, acknowledging that evaluation of company cases has not been formalized. It states HM Treasury will work with Cabinet Office and UKGI to consider future changes to internal evaluation, rather than specifically addressing lessons from airline collapses or managing risks with private insurers.
Government Response
Deferred
HM Government
Deferred
6.1 The government agrees with the Committee’s recommendation. Target implementation date: July 2024 6.2 The government agrees with the Committee on the importance of evaluation. To 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. 6.3 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. 6.4 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. 6.5 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. 6.6 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.