‘Scandalous’ £3.4bn UK state spending on private consultants last year | Tax and spending

Non-public consultants had been paid a “scandalous” £3.4bn by public our bodies final yr, new figures reveal.

The statistics, from outsourcing information firm Tussell, present that authorities spending on personal consultants was £1.3bn (62%) greater in 2023-24 than 2019-20. In addition they reveal that the surge in marketing consultant spending seen throughout Covid has failed to return again all the way down to pre-pandemic ranges.

The brand new figures reveal the size of the problem dealing with 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 gained a authorities contract price as much as £223m to coach civil servants, starting in August.

Since Labour gained energy, almost £650m of latest 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 greatest public sector contract awarded to the agency.

Prem Sikka, a tutorial specialising in finance and accounting and a Labour peer, stated: “The entire thing is scandalous as a result of the actual downside is that we’re residing in an period when there’s a cult of hiring consultants. Consultants contribute little. There isn’t a approach you’ll be able to stroll into a fancy organisation for just a few weeks, perceive the problems, be a part of the dots and put together a significant report.

“If you’re utilizing consultants, meaning you haven’t 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 without end completely depending on consultants.”

The overall 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 line 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 deal with the pandemic.

On the Residence Workplace, spending on consultants in 2023-24 rose to £237m final yr as the federal government labored to clear asylum backlogs and launch the now deserted Rwanda scheme. That was virtually double the £121m recorded the yr earlier than.

In the meantime, the Division for Transport spent £165m on consultants final yr, typically to advise on infrastructure initiatives such because the HS2 excessive velocity 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 “massive 4” companies – KPMG, Deloitte, PricewaterhouseCoopers and EY – collectively had been paid slightly 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 cast paperwork and misled regulators over audits for firms 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.

Economist Mariana Mazzucato, director of the College School London Institute for Innovation and Public Goal and co-author of the The Huge 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 dealing with 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 spend money on that inside the state, after all, you’ll change into hooked on different [organisations].”

Mazzucato added: “One of many greatest points is not only the rise in consulting spending however that these consultants coming in have little or no data in regards to the stuff they’re consulting on.”

She stated the brand new authorities wouldn’t reach dislodging its reliance on consultants “with out funding inside the civil service”.

Earlier governments have made a number of pledges to scale back reliance on consultants since 2010, however final yeardepartmental restrictions applied 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 usually greater than recorded in annual departmental reviews, which is more likely to mirror totally different methodologies. A authorities supply stated: “We’re taking quick motion to cease all non-essential authorities spending on exterior consultants as we deal with the £22bn black gap within the public funds this yr, which was left due to the recklessness of the earlier authorities.

“By means of our plan to halve the quantity spent on consultancy providers 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 abilities, harness digital expertise and enhance public providers.”