Central government's use of consultants

4.18.30pm BST (GMT +0100) Wed 20th Jun 2007

Annette Brooke MP, Member of the Committee of Public Accounts, today said:

"It is quite shocking how some Central Governments are spending so much on consultants and not fully assessing whether they are good value for money. We need greater transparency given the excessively close relationships between some government departments and the consultancy industry.

"I think that Local Government's use of consultants should also be scrutinised."

Annette Brooke MP was speaking as the Committee published its 31st Report of this Session which, on the basis of evidence from the Office of Government Commerce (OGC), examined six main issues: using internal resources instead of consultants; the poor quality of information on the use of consultants; gaining a better understanding of suppliers; getting better deals by using different payment methods and making more use of competitive tendering; the effectiveness of OGC's good practice work; and OGC's own use of consultants.

In 2005-06 the public sector in England spent approximately £2.8 billion on consultants, with central government accounting for £1.8 billion. Aside from the scale of expenditure on consultants, they are routinely used on key government initiatives such as the Identity programme at the Home Office and the Capability Review programme at the Cabinet Office.

In the past three years spending on consultants has risen by a third, from £2.1 billion in 2003-04 to £2.8 billion in 2005-06, largely due to increases in spending by the NHS. Only two departments have shown a consistent decrease in their spending on consultants over the period. Central government is repeatedly using consultants for core skills, including project and programme management and IT, and is increasingly turning to a select list of suppliers.

Central government has made some progress in implementing previous recommendations and good practice in using consultants but much more can be done to improve value for money. In particular, departments are making good use of framework agreements and qualified procurement staff are regularly involved in the buying process. However, areas where departments require significant improvement are: 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; and planning for and carrying out the transfer of skills from consultants to internal staff.

Consultants, when used appropriately, can provide considerable benefits for clients. There are examples where consultants have added real value and enabled departments to make improvements they would not have achieved otherwise. For example, the Ministry of Defence is saving on its procurement, having used consultants to help implement a new approach and develop its internal procurement capability. Nevertheless these benefits will only be secured if departments are much smarter in their use of consultants and more commercially astute in how they procure them. Getting a better grip on the use of consultants would lead to efficiency gains of more than £500 million a year.

ENDS

Notes for Editors

1. Given the massive increase in expenditure on consultants across the public sector, Annette Brooke MP is writing to the local authorities asking how much they have spent in the local area and whether they are making sure they are getting value for money and implementing best practice.

2. This report can be accessed via the internet from around 11.00 am on the day of publication