Government cuts spending on consultants

The government has cut its spending on consultants by nearly 50% since May but there will be a resurgence in the £1bn annual bill for hired advisers as it has simultaneously failed to grow its own expertise, the parliamentary spending watchdog has warned. The exponential growth of consultants in government led to a £1bn bill last year. Ministers now believe they will nearly halve that this year after implementing a freeze on all but the most essential new contracts, but it has failed to start training up its own people, leaving a skills gap at the heart of government, says the public accounts committee. The skills that consultants bring to government – traditionally including project management, procurement advice and accounting work – will be even more crucial in the next year at the government enacts sweeping reforms to the welfare system, NHS and education, the committee says. Margaret Hodge, Labour MP and chair of the public accounts committee, said: "Departments have become too reliant on buying in core skills rather than developing them in their own staff. Some departments depend far more on consultants than others. In itself, that is not surprising. "What is unacceptable is the poor understanding of whether the extent of a department's use of consultants is justified by the nature of its business. Why should the Department for Transport, for instance, be so dependent on consultants? "It is a mark of departments' poor understanding of spending on consultancy that some have reacted to cost pressures by cutting that spending in an uninformed way. This runs the risk that short-term savings could lead to increased costs and poor value for money for the taxpayer in the long term." The report says that training budgets could be cut as part of the spending downturn, risking further damage to the skills levels in government: "There is expected to be a big dip in expenditure on training and development due to the recent round of spending cuts. The Cabinet Office admitted that during a period of financial restraint, this is one area likely to come under the most pressure. It explained that there were many changes in government that are going through the policy development stage. Once policies moved on to the implementation stage there would likely be a resurgence in the use of consultants." It identifies wide variety in spending on consultants: for every £100 spent on staff costs, the Department for Transport spends £70 on consultants, while HM Revenue and Customs spends only £2. The Department of Health has cut its spending by 95% since May, compared with only 1% at transport. The report demands better explanations for the wide variation across government.