Whitehall needs to spend more wisely on consultants

From our Thunderer in The Times (Thursday 22 December) - our Chief Executive John O'Connell on the need for Whitehall to spend more wisely on consultants:

A report this year from the National Audit Office said that government departments spent up to £1.3 billion of taxpayers’ money on consultants in 2014-15. While that number was down compared with 2010, the annual cost is starting to creep back up. Given the sums involved, it is vital that the public sector gets these deals right.

The truth is that the private sector tends to be a relatively sophisticated buyer of consultancy services. Given that the decision to buy in services could impact on investment elsewhere, it is almost always taken carefully. And, crucially, there is usually value added — the services supplied make a real difference to the buyer. That is, of course, why there is a thriving market for good consultancy, with a premium for the very best.

The state will often need consultants and using them for the right reason is justified. Just look at the types of projects Deloitte will miss out on as a result of the leaked briefing note: complex work in trade and legal services for the Brexit department; setting up shared human resources, finance, IT and procurement services. These are the types of projects that can go horribly wrong and spiral out of control, leaving taxpayers footing even bigger bills. So getting in specialist help can save money in the longer term.

Unlike the private sector, the state too often tends to be a poor buyer of these services. The NAO found that in 2014-15 43 per cent of consultancy work was done through “single tender action” — i.e. not shopping around or renewing contracts with existing suppliers. Just 9 per cent of work was awarded to small and medium-sized enterprises.

Public sector organisations too often hire consultants to tell public servants the bleedin’ obvious, such as when Brighton council spent £1,000 to teach staff about respect.

The NAO recommended that in the longer term public sector bodies should develop the skills within their workforce to reduce dependence on external services. We know many state bodies employ executive staff on big salaries, so taxpayers might expect them to fill skills gaps identified by the NAO.

So whether it is Deloitte or any other organisation, the answer is not for the public sector to stop using consultants — it’s to use them appropriately and ensure robust contracts are in place to protect taxpayers’ money.