Treasury quizzed over forward sale

Treasury officials faced tough questioning last week at a Public Accounts Committee meeting on the sale of civil service caterer Forward at the beginning of last year.

But despite concerns about the level of professional fees paid to effect the deal with Sutcliffe, there was little doubt that the £4.6m achieved was a good price.

A valuation by accountants Price Waterhouse in 1991 had valued Forward at £2.5m on the assumption the Government would meet the cost of redundancy, as seemed likely at the time.

A subsequent valuation by Ernst & Young in 1992 priced the business at between nil and £1m, as it was believed that Forward's market share could fall.

In the event, Forward lost 31 out of 32 contracts that were market tested prior to the sale.

When asked what had actually been sold with Forward, Treasury deputy secretary Robin Mountfield told the committee "a flow of income, some goodwill, £55,000 of fixed assets and around £500,000 in stocks".

Committee member Kenneth Carlisle said that the Treasury "seemed to have got a pretty good price" for Forward, in view of its troubled history.

At the time of the sale in February 1994, Forward had a turnover of £30m and held 70% of Government contracts.