The government reportedly paid a third less to management consultants in 2010.
According to figures released by the Management Consultancies Association to the Financial Times, it is the first time there has been a year-on-year fall in government spending on professional fees across the entire public sector.
A National Audit Office report at the end of last year said the government spent over £1 billion on consultants and interim specialist staff in the 2009/10 financial year, and around 60 percent of it went on IT and project management.
The National Audit Office found that in 2009-10 the government's 17 departments spent £789 million on consultants and an estimated £215 million on specialist interim staff.
The NAO criticised the way government departments have failed to properly manage consultants and measure the value of their work.
The FT says that although Whitehall cut spending on management consultants by 8 percent in 2009, it was offset by a 35 percent increase by local authorities and other government-funded agencies.
Alan Leaman, chief executive of the MCA, told the FT it was working with the government to improve value for money. “It’s a different era. There won’t be the same demand for big projects [including big IT projects].
“There will be a need for work that brings cost savings, higher productivity and public services closer to citizens. But it’s a different sort of job and it will be a much smaller market for consultancies.”
But despite the government spending less on consultants in 2010, the consulting industry still saw growth during the year, due to an increase in private sector work.
Private sector fee income is said to have increased by 10 percent, the fastest rate of growth since 2007.
Total fees received by MCA companies, which are said to represent 70 percent of the consulting industry, rose 1 percent on 2009 to £5.4bn.