IFG - Government must make reforms to avoid another Carillion
The government has yet to address the problems that led to the collapse of Carillion two years ago says a new Institute for Government report – which warns that the Johnson government risks ‘another Carillion’ if it doesn’t get behind the reforms put forward after the firm’s liquidation.
When Carillion collapsed in 2018 it held more than 400 public sector contracts, but the government has not consistently taken up the Cabinet Office’s new guidelines to the way such contracts are designed, awarded and managed. The new IfG report finds that departments regularly ignore these sensible guidelines around publication of commercial ‘pipelines’, about how risk is allocated between government and suppliers, and how bids for contracts are selected. This means that the government is still signing risky contracts which may well collapse.
Those guidelines also do not apply to local government and public bodies, including the NHS, despite those organisations being responsible for over £100bn of procurement spending.
Since Carillion, the Cabinet Office has trained 8,000 officials on how to implement its new guidelines and has won support from major suppliers, but the Johnson government must do more if it is serious about changing the way it handles big projects.
The report calls on the government to:
- Name a Cabinet Office minister who is responsible for improvements in outsourcing.
- Use this summer’s spending review to give the Cabinet Office funding to support and scrutinise contracting by departments.
- Extend contracting training to local government, the NHS, and other public bodies.
- Equip the new Audit, Reporting and Governance Authority with the statutory powers recommended by the Kingman review, including to force changes in company accounts rather than applying to court to do so.
Tom Sasse, IfG senior researcher and report author, said:
“Carillion was a wake-up call, with its collapse showing where a careless approach to outsourcing can lead. The government must implement serious reform if it is to secure services that are reliable, high-quality and value for money – and avoid the prospect of contractors collapsing in future.”
Notes to editors
Latest News from
IEA - Steps to help self-employed “unlikely to be the last” Chancellor has to take27/03/2020 15:15:00
Julian Jessop, Economics Fellow at the Institute of Economic Affairs, commented on Chancellor Rishi Sunak’s plans to support the self-employed during the Covid-19 pandemic
JRF - Government must go further to protect people on low incomes from impact of coronavirus27/03/2020 13:15:00
New JRF briefing briefing urges the Government to go further to protect people on low incomes from the impact of coronavirus.
IPPR - Take a 30 per cent stake in virus-hit airlines, and hold shares in a new UK wealth fund, Chancellor urged26/03/2020 11:35:00
Price of ‘bailing out’ any companies should be equity which will generate long-term returns, say economists in IPPR discussion paper
IEA - Gender pay gap figures “never fit for purpose”26/03/2020 10:35:00
IEA responds to government decision to suspend enforcement of gender pay gap reporting in light of the Covid-19 pandemic
Lift restrictions on migrants’ rights to help limit the spread of Covid-19, says IPPR26/03/2020 09:35:00
New IPPR analysis reveals migrants are more vulnerable to economic and health fallout of the virus outbreak
Civitas - Human rights laws should be decided democratically in Britain – the constitution needs rebalancing24/03/2020 11:35:00
The Human Rights Act should be abolished as Britain seeks to regain the ability to decide its own human rights laws within its own democratic public sphere, a new Civitas publication argues.
IPPR - Think tanks call for bailout conditions for airlines to secure jobs and deliver climate justice24/03/2020 10:35:00
New analysis shows that two major airlines have paid out dividends in excess of £2.6 billion since 2014, while the sector is underpaying corporation tax
JRF - Coronavirus: supporting our partners24/03/2020 09:35:00
Many are deeply concerned about the fast-moving situation with Coronavirus. At JRF we know we are a just and compassionate society, and we rely on one another for support in difficult times.