The government have rejected criticism from Commons watchdog, the Public Accounts Committee, for failing to call in an insolvency practitioner before 'effectively bailing out' the ailing new Royal Armouries Museum in Leeds.
The MPs said the Department for Culture, Media and Sport, in negotiating a deal to save the museum, only commissioned legal advice not ‘appropriate commercial advice’ from a practitioner ‘although they were faced with a threatened insolvency’.
The watchdog added: ‘Departments should ensure that their negotiation team includes people with previous experience of commercial negotiations and that they are supported by appropriate commercial advice.’
But the DCMS, in a formal response to a PAC report, said it took ‘all possible steps to assess the risks and the value for money’ of different options, including closure, after taking ‘not only legal advice but the advice of its economic advisers’ and the advice from a business consultant appointed by Royal Armouries.
They claimed the outcome kept the £21m debt, incurred by private sector partners RAI Building in running the PFI deal, within the private sector.
But MPs said RAI had retained responsibility for the debt but had held on to the profitable part of the enterprise, including corporate hospitality and parking, while Royal Armouries had taken on the loss-making aspects of the museum.
The Department hit back, insisting they were not giving RAI any public funding and had ensured the museum stayed open at least possible cost.