Government wastes £500m a year on consultants

Government could save £500m a year through the better use of consultants, according to a report published today by the authoritative House of Commons Public Accounts Committee.

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Government could save £500m a year through the better use of consultants, according to a report published today by the authoritative House of Commons Public Accounts Committee.

Central government is paying £1.8bn a year on outside consultants, with local government accounting for a further £1bn. IT and project management top the list of public sector spending on consultancy.

But committee chairman Edward Leigh MP, Chairman of the Committee of Public Accounts, today said:
“It is impossible to believe that the public are receiving anything like full value for money from this expenditure. In fact, a good proportion of it looks like sheer profligacy.”

Leigh accused government departments of picking up the phone to external contractors rather than looking to see if they had the necessary skills in house.

He also accused Whitehall and its procurement arm, the Office of Government Commerce, of not knowing how much is being spent on consultancy. As a result they “have no idea at all whether the benefits are justified by the cost,” he said.

The Public Accounts Committee said Whitehall departments “routinely do not agree with the consultants any measurable benefits to be expected from the contracts. And consultants are often paid simply on the basis of the amount of time worked and not on what the work has achieved.

Leigh accused the consultancy firms of being “truly on to a good thing,” and asked, “What would we say of anyone in private life who dealt with contractors like this?”

The committee called for much more commercial awareness from government departments and echoed Sir Gus O’Donnell, cabinet secretary and head of the civil service, who has reportedly told departments not to hire advisers when in-house advice is available.

There was recognition of the improved use of framework agreements and that qualified procurement staff are regularly involved in the buying process.

However the committee spelt out a range of areas where departments require significant improvement. These include:

  • Collection and use of management information;
  • The assessment of whether internal resources could be used instead of consultants; controls on awarding contracts by single tender;
  • Completing and sharing post-project performance reviews;
  • Actively engaging with and managing the relationships with key consultancy suppliers;
  • Planning for and carrying out the transfer of skills from consultants to internal staff.

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