Cabinet Office answers urgent question on Interserve

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The Parliamentary Secretary of the Cabinet Office, Oliver Dowden, has reassured Government and Interserve suppliers that the refinancing deal will not affect the delivery of public services

Interserve, one of the UK’s largest government contractors, announced that they were going into administration on 15 March and control has passed to a new company.

Following this, shadow cabinet office minister, Christian Matheson, asked the government last night (18 March) to make a statement regarding Interserve.

In response, the Parliamentary Secretary of the Cabinet Office Oliver Dowden said: “As I have said repeatedly to the House, the government are not responsible for decisions taken by companies in the private sector.

“What the government are responsible for is the continued delivery of public services, and I assure the house that has happened in this case. Schools continue to be cleaned, roads continue to be repaired and improved, and services in Government buildings continue to run as normal.”

Dowden added: “I reassure hon. members that nothing in Interserve’s refinancing will affect the delivery of public services. No staff have lost jobs and no pensions have been affected.

“The company has executed a contingency plan that it had prudently developed in case shareholders rejected the proposed refinancing deal. This was a pre-agreed transaction, known as a “pre-pack” administration. Hundreds of pre-pack administrations are performed every year, including by well-known companies. It is a well-established and normal process, typically used when a shareholder is blocking a business’s restructuring.

“To be clear, the operating companies responsible for the delivery of all Interserve’s services, public and private, have remained wholly unaffected. As a result of shareholders failing to reach agreement on the proposed refinancing, the parent company—Interserve plc—was put into administration. The operating companies, the companies that actually deliver the services, were then almost immediately purchased by a new company, Interserve Group.”

Dowden continued: “We have learned from the collapse of Carillion, and we are implementing changes to our procurement and commercial processes, as the chancellor of the Duchy of Lancaster and I have set out in several speeches. For example, we have published “The Outsourcing Playbook”, which was developed with industry and outlines a range of measures designed to ensure that outsourcing projects succeed.​

“We are now asking suppliers of critical contracts to provide detailed information to help to mitigate any risk to service delivery in the rare event of corporate failure. These “living wills” are now being piloted by five strategic suppliers, including Interserve. We are taking action on prompt payment, including excluding suppliers from Government procurement if they cannot demonstrate prompt payment to their supply chain. We are also taking steps on embedding social value in Government procurement, and I launched the consultation last week.”

The full transcript can be found here.

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