Source · Select Committees · Public Accounts Committee
Recommendation 18
18
Accepted
Novelty of the SAR complicated benchmarking and scrutiny of professional advice fees.
Conclusion
This was the first time a SAR had been used and so we asked the Department and HM Treasury whether they had the skills and experience necessary to successfully deliver the SAR at the outset of the process. The Department told us that despite the exercises and war-gaming to prepare for the SAR, the process was “highly novel, complex, first of 30 Qq 86, 94–95; C&AG’s Report, paras 2.16, 2.19 31 Q 95 32 Q 86; C&AG’s Report, para 2.19 33 C&AG’s Report, para 2.15 34 Q 99 35 Qq 24, 89; C&AG’s Report, para 2.10, Figure 9, Glossary 36 C&AG’s Report, para 12, 3.2 37 Qq 24, 27, 29, 31 16 Bulb Energy a kind” which meant that it needed expert advice.38 By 31 January 2023, the Department had spent £53 million in fees for professional advice relating to the SAR process for Bulb. Of this, the Department spent £49.9 million on Teneo’s fees and £2.8 million on its own advisers. Teneo told us that it expected its fees to be £60 million by the end of the SAR, and this was part of the costs for the SAR reflected in the NAO report. We therefore asked the Department whether, with hindsight, there were areas where it could have saved money on fees or where it had potentially overpaid.39 The Department told us that it scrutinised the fees being charged by Teneo carefully, and that it hired another professional advisory firm to help with the review of these fees. We asked whether it had been possible to benchmark the fees. The Department and HM Treasury told us it was aware that the legal fees it had paid were below commercial rates, but that there was no simple reference class they could use, but that it would take this away as a point to consider. They also told us that the that Teneo had a legal obligation to the High Court to keep costs reasonable and as fair as possible.40
Government Response Summary
The government agrees with the committee's observations, stating that UKGI and HM Treasury will review the Government Corporate Finance Profession's forward plan by Autumn 2024 to raise awareness of specialist skills across government for supplier failure scenarios, alongside the Profession's ongoing work to develop technical skills and share knowledge.
Government Response
Accepted
HM Government
Accepted
5.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2024 5.2 UKGI and HM Treasury will work together to review the Government Corporate Finance Profession’s (‘GCFP’ or ‘the Profession’) forward plan to include raising awareness of the specialist skills that are available across HMG in a supplier failure scenario and similar situations, including drawing on the recent NAO Lessons Learned paper – ‘Monitoring and responding to companies in distress. 5.3 UK Government Investments leads the Government Corporate Finance Profession and the UKGI’s Chief Executive is the Head of the Profession. The GCFP’s purpose is to promote skills development, knowledge sharing, networking, collaboration, and career development in corporate finance across Whitehall. The Profession focuses on technical skills development targeting civil and public servants undertaking corporate finance work across government, to help them develop an understanding of the wider external market and to provide an opportunity to support profile raising for corporate finance practitioners. The Profession continuously evaluates its purpose and vision, interacting with its membership base and utilising a series of surveys to understand the existing level of skills and knowledge of the membership across its published competencies, and its future needs. 5.4 The Profession will continue to monitor and update its knowledge sharing tools for its members. It regularly arranges sharing excellence seminars for members, with contributions from both the private and public sector, drawing on recent case studies to promote best practice and share learnings.