Labour government would halve consultancy spending, Reeves says

Shadow chancellor also pledges to appoint a Covid corruption commissioner and review government's major projects
Rachel Reeves. Photo: PA/Alamy

By Tevye Markson

10 Oct 2023

Labour has said it will slash government consultancy spending in half if it wins the next general election.

Speaking at the Labour Party annual conference, shadow chancellor Rachel Reeves also announced plans to chase down fraud by appointing a Covid corruption commissioner and a “hit squad of investigators” to support them.

Reeves said the party “will slash government consultancy spending, which has almost quadrupled in just six years” if it gets into power.

“Consultants can play an important role, but taxpayers must get value for money,” she said.

“So, we will introduce tough new rules. If a government department wants to bring in consultants, they must demonstrate the value-for-money case. And if they cannot, then that request will be denied.

“We will aim to cut consultancy spending in half over the next parliament.”

Responding to the speech, minister for the Cabinet Office Jeremy Quin said it is already the case that consultancy spend provides demonstrable value for money.

“The overwhelming majority of spend (70%) in this area is focused on bringing in specialists and technical experts needed to deliver value for money,” he said on Twitter/X.

In 2021, the government launched The Consultancy Playbook, which provides guidance to departments and arm's-length bodies on how to commission and engage with consultants more effectively, with the aim of "achieving better outcomes, better value for money and improved civil service capability", and ‘maximising value throughout – right from pre-procurement to contract exit”.

The Cabinet Office also made it easier for departments to spend money on consultants this year by raising the threshold at which contracts with consultancy firms require central approval from £600,000 to £20m.

Covid fraud 'hit squad'

In another new pledge, Reeves said the party will “go after those who profited from the carnival of waste during the pandemic”.

If elected, Labour would appoint a Covid corruption commissioner who would be supported by a “hit squad of investigators, equipped with the powers they need and the mandate to do whatever it takes to chase down those who have ripped off the taxpayer, take them to court, and claw back every penny… that they can”, Reeves said.

The shadow chancellor said an estimated £7.2bn has been lost to fraud from Covid support schemes such as the Small Business Grant Fund, furlough and "Eat out to help out".

Reeves claimed that just 2% of all fraudulently claimed Covid grants had been recovered.

Parliament’s Public Accounts Committee said in a report published last month that as of May, only £20.9m had been recovered out of £1.1bn in small-business support loans suspected to have been illegitimately obtained, which is 2%. Last month, DBT said the amount regained had reached £32.6m.

Spotlight on HS2 and major projects

Reeves also announced Labour will undertake an independent inquiry into the failures of HS2 to “learn the lessons for the future” and a review of every major capital projects across government.

Shadow transport secretary Louise Haigh will commission the independent expert inquiry into HS2, while Darren Jones, the shadow chief secretary to the Treasury, will lead the review of major projects.

Reeves said Jones will “work closely with industry experts”, examining “line by line” every ongoing major capital project, to make sure that “on day one of a Labour government”, the party is “ready to get Britain building again”.

She said: “When it comes to getting things built and projects delivered, Britain has become the sick man of Europe.”

Reeves's other commitments included ensuring that an elected Labour Party would “enforce the ministerial code” by stopping non-essential private jet trips by ministers, which she said would “save millions of pounds”.

The ministerial code states that "non-scheduled flights" may be used by ministers only when "a scheduled service is not available, or when it is essential to travel by air".

The bill for ministers’ non-scheduled flights in 2022-23 was £4.7m, according to reports, with Sunak spending almost £500,000 in just one week last autumn.

Reeves also confirmed the party’s intention to go ahead with some previously announced plans such as:

  • A fiscal lock where any significant tax and spending changes would need to include an Office for Budget Responsibility forecast.
  • A National Wealth Fund, leveraging £3 of private investment for every £1 of public investment
  • Banning zero hour contract and “fire and rehire”

Reeves described her approach as "securonomics", which she said means "government putting economic security first".  To do this, she said the UK will need to rebuild its capacity to "do, make and sell here in Britain" so it is "less exposed to global shocks".

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