Government ministers have been questioned on why “out-of-date” financial information was used for Carillion’s risk assessments ahead of the construction giant’s collapse last year.
Financial data used in the government’s 2016 risk assessments was based on Carillion’s 2014 accounts, despite the availability of more up-to-date information, the business committee and work and pensions committee said in a letter to the Cabinet Office.
The joint inquiry said the government’s assignment of a crown representative had served no noticeable purpose in raising potential issues before the July 2017 profit warning, and called for an urgent review of the role.
The committee chairs, Frank Field MP and Rachel Reeves MP, wrote to ministers in response to the publication of government’s risk assessments by the Public Accounts Committee (PAC) last week.
The PAC - which is leading an inquiry into government strategic suppliers - said the Red-Amber-Green assessment scale was ‘slow and clunky’, and said the government was unaware of the Carillion’s financial distress until the profit warning.
The Cabinet Office recommended that Carillion was given a black ‘’high risk’’ status in November last year but ministers ignored the advice following representations from the company, the PAC report found.