Whitehall’s £1.8bn consultancy bill revealed
Whitehall departments spent £1.8 billion on consultants last year, a new report from the National Audit Office (NAO) has found.
The spending watchdog acknowledges this is less than the £2 billion spent in 2003, but says savings of up to £540 million could be made by a better use of internal staff and an improvement in the way contracts are negotiated.
Overall, the public sector spent £2.8 billion on consultants last year. The largest amount of money was spent on IT projects – about £550 million – and management, with the biggest consultancy firm, IBM, making £275 million from public sector contracts.
Consultants are brought in to provide expertise in certain projects, and today’s report acknowledges this “vital role”. But the NAO says Whitehall departments are failing to properly assess how much – and why – they are spending in this area.
It says they must identify “core skills gaps” within full-time staff and provide the training necessary to fill these, and also work on the presumption that internal staff are better placed to do the job than outside experts.
The NAO calls for improvements in the contract process to ensure better value for money, and says the public sector must in general become “smarter” in understanding how consultancies work to get the best they can for taxpayers’ money.
Auditor general John Bourn said: “Departments need to think ahead about what skills they should have, so they don’t have to rely on consultants year after year.
“They should examine whether they really need to use consultants quite as much as they do, a move which could release substantial sums for frontline services.”
Edward Leigh, the chairman of the public accounts committee that has previously examined this issue, said departments must “kick their consultancy habits”.
“The NAO confirms what many of us have long suspected – the external consultancy gravy train continues full steam ahead, courtesy of the public purse,” he said.
Liberal Democrat Treasury spokesman Vince Cable said today’s report showed a “reckless” and “disgraceful” use of taxpayers’ money, particularly in an area such as the NHS which was being forced to make major cuts to manage deficits.
“Time and again ministers have been encouraged to implement good practice and time and again they have failed. This is just not good enough,” he said.
Mark Serwotka, general secretary of the Public and Commercial Services (PCS) union, also expressed outrage at the findings, saying ministers should not be sacking thousands of civil servants only to replace them with expensive consultants.
“What we are seeing is the economics of the mad house as the government cut jobs in name of efficiency while blowing billions on consultants to do the work,” he said.
