Personal consultants had been paid a “scandalous” £3.4bn by public our bodies final 12 months, new figures reveal.
The statistics, from outsourcing knowledge firm Tussell, present that authorities spending on personal consultants was £1.3bn (62%) increased in 2023-24 than 2019-20. In addition they reveal that the surge in advisor spending seen throughout Covid has failed to return again all the way down to pre-pandemic ranges.
The brand new figures exhibit the dimensions of the problem going through Keir Starmer’s authorities, which goals to halve the federal government’s spend on consultants throughout this parliament. The Monetary Instances reported final week that KPMG has received a authorities contract value as much as £223m to coach civil servants, starting in August.
Since Labour received energy, almost £650m of recent authorities contracts to consultants have been awarded, many agreed earlier than the transition to a brand new authorities. They embody the take care of KPMG to supervise civil service coaching for the subsequent 15 months – the second largest public sector contract awarded to the agency.
Prem Sikka, an educational specialising in finance and accounting and a Labour peer, stated: “The entire thing is scandalous as a result of the true downside is that we’re residing in an period when there’s a cult of hiring consultants. Consultants contribute little. There is no such thing as a approach you possibly can stroll into a fancy organisation for just a few weeks, perceive the problems, be part of the dots and put together a significant report.
“In case you are utilizing consultants, which means you don’t have any in-house, institutionalised data, as a result of when these consultants stroll away, no matter they know goes with them. This then makes you eternally completely depending on consultants.”
The full value of consultants on the Division of Well being and Social Care, its businesses and NHS our bodies was greater than £570m in 2023-24, in keeping with Tussell. This has fallen considerably within the final two years, however compares with about £310m in 2019-20 earlier than consultancy prices rose dramatically to assist address the pandemic.
On the Dwelling Workplace, spending on consultants in 2023-24 rose to £237m final 12 months as the federal government labored to clear asylum backlogs and launch the now deserted Rwanda scheme. That was nearly double the £121m recorded the 12 months earlier than.
In the meantime, the Division for Transport spent £165m on consultants final 12 months, usually to advise on infrastructure tasks such because the HS2 excessive pace railway, and the Ministry of Defence spent £86m.
The cash was largely spent by authorities departments and public our bodies with a small group of companies equivalent to PA Consulting and Accenture, which made £247m and £240m respectively from authorities contracts in 2023-24.
The “large 4” companies – KPMG, Deloitte, PricewaterhouseCoopers and EY – collectively had been paid just below £900m in 2023-24.
KPMG quickly withdrew from bidding for presidency contracts in 2021 after a sequence of company scandals, together with being discovered to have solid paperwork and misled regulators over audits for corporations together with the now collapsed Carillion.
Authorities use of consultants has been criticised previously, together with as much as about £1m a day paid to personal consultants to work on the Covid test-and-trace programme, which a Commons committee concluded was an “eye-watering” waste of taxpayer cash that “did not ship on its central promise of averting one other lockdown” regardless of “the huge sums of cash” invested.
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Economist Mariana Mazzucato, director of the College Faculty London Institute for Innovation and Public Function and co-author of the The Large Con: How the Consulting Trade Weakens our Companies, Infantilizes Our Governments and Warps Our Economies, described the federal government’s relationship with the sector as “parasitic”.
She stated: “We’re going through challenges from digitalisation to local weather and extra, and these require enormous quantities of collective intelligence, capability and functionality. And in case you don’t put money into that throughout the state, in fact, you’ll turn out to be hooked on different [organisations].”
Mazzucato added: “One of many largest points is not only the rise in consulting spending however that these consultants coming in have little or no data concerning the stuff they’re consulting on.”
She stated the brand new authorities wouldn’t achieve dislodging its reliance on consultants “with out funding throughout the civil service”.
Tamzen Isacsson, chief govt of the Administration Consultancies Affiliation (MCA), stated consultancies labored in partnership with the federal government to enhance public sector productiveness and innovation, enabling them “to do extra with much less”. She stated consultancies had helped drive the transition to internet zero and improved cyber safety.
She stated: “It’s unrealistic to count on authorities to make use of an enormous pool of personal sector consultants and assets and way more value environment friendly to make use of them for brief time period tasks serving to enhance the effectivity and supply of important nationwide companies. We stand able to serve the subsequent authorities in energy and recognise the monetary constraints the brand new administration faces. The UK consulting sector is a good British success story – a thriving power within the economic system, driving development and jobs and recognised the world over as a worldwide centre of excellence. Our MCA member companies have extremely stringent governance procedures which guarantee employees engaged on public sector tasks meet the very best requirements in ethics and are held to account to make sure the general public curiosity is being served.”
Earlier governments have made a number of pledges to scale back reliance on consultants since 2010, however final yeardepartmental restrictions carried out by former prime minister David Cameron had been quietly eliminated. These required central authorisation for contracts over sure limits, initially set at these lasting greater than 9 months or exceeding £20,000.
Officers say that Tussell’s figures are sometimes increased than recorded in annual departmental studies, which is prone to replicate completely different methodologies. A authorities supply stated: “We’re taking instant motion to cease all non-essential authorities spending on exterior consultants as we sort out the £22bn black gap within the public funds this 12 months, which was left due to the recklessness of the earlier authorities.
“By means of our plan to halve the quantity spent on consultancy companies in coming years, we’re decided to ship a saving of £550m in 2024-25 and £680m in 2025-26.
“We are going to develop a plan for a extra environment friendly and efficient civil service, together with daring measures to enhance expertise, harness digital know-how and enhance public companies.”
This text was amended on 2 September 2024 so as to add a remark from the Administration Consultancies Affiliation.
