A senior civil servant has played down comparisons between Interserve and the collapse of Carillion.
Speaking to the Public Accounts Committee, John Manzoni, permanent secretary at the Cabinet Office, said the government was in regular contact with Interserve regarding its financial structure and the situation was “very different” to the collapse of Carillion earlier this year.
When probed about Interserve, he said: “This is a company which has basically sound businesses with a couple of issues in the energy to waste sector which have caused problems for them.”
Concerns were raised about Interserve, one of the UK’s largest providers of public services, when it confirmed it was in financial rescue talks with creditors. Immediately following the news, shares in the company dropped by 70%. Government contracts currently make up 70% of the company’s £3.2bn turnover.
While confirming that the government had been in contact with Interserve about refinancing for a long time, Manzoni said that the firm could continue to be awarded contracts provided they’re able to meet financial requirements.
He said: “We’re not legally allowed to not award them contracts if they bid and if they win.”
Post-Carillion, the government has put in place systems to prevent large suppliers from collapsing in the same way. Part of this, Manzoni said, was the introduction of living wills, which ensure suppliers put contingency plans in place in the event of a company’s failure. Interserve is one of the key government suppliers currently piloting living wills.
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