Source · Select Committees · Public Accounts Committee
Recommendation 27
27
Deferred
Value in exploring international frameworks for company intervention and non-intervention approaches.
Recommendation
We also asked the witnesses whether they looked to different international regimes to learn any lessons about how to deal with companies and sectors that might be in trouble. The Treasury and the Cabinet Office said that each country is unique and will have its own way of handling insolvency or distress situations, but the Treasury told us that there would be value in looking at the way other countries structure their frameworks for intervention or non-intervention in companies.79 72 C&AG’s Report, para 3.9 73 Q70 74 Q28 75 Q18 76 Q70 77 Qq45–47 78 Correspondence from HM Treasury to Committee, 30 January 2024 79 Q54 18 Monitoring and responding to companies in distress
Government Response Summary
The government agrees with the recommendation and aims for a July 2024 implementation, but focuses its response on improving and formalizing the internal evaluation of company distress cases. HM Treasury will work with the Cabinet Office and UKGI to consider future changes, including strengthening requirements for departmental evaluation, but does not explicitly commit to reviewing international frameworks.
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.