MPs have raised doubts over the viability of the government’s plan to halve spending on consultancies.
Ministers announced in November 2024 that they would “halve consultancy spending in future years, saving the taxpayer over £1.2bn by 2026”.
But a new report from the Public Accounts Committee says the Cabinet Office and Treasury do not have accurate government-wide data because spending data is not collected on a consistent basis and different sources report different figures.
It says the government "therefore cannot set meaningful targets".
In 2022–23, the latest year with data available, central government spend on consultants was estimated by the Treasury to be approximately £1.36bn, while different sources estimate the amount currently being spent on consultancies aa between £1.34bn and £2.23bn. The Cabinet Office is using the £1.34bn figure as the benchmark against which to measure progress on government's ambition to halve consultancy spend.
The Cabinet Office uses the departmental annual report and accounts and the Treasury’s OSCAR data to monitor expenditure on consultants, but the Crown Commercial Service uses Jaggaer and Oxygen Finance to inform its decision-making around consultancy use.
“It is therefore hard to see how the Cabinet Office can be confident which source is most accurate and properly monitor progress against targets to reduce spending,” the report says.
Another issue impacting on inconsistency is some departments' failure to comply with central definitions and directives on reporting consultancy spend, the committee said.
While the Cabinet Office issues guidance for departments on the use of consultants, including the Consultancy Playbook, it does not monitor compliance. Government chief commercial officer Andrew Forzani told the committee in December that the commercial function is continuing to remind departments of the definitions and “putting quite a lot of focus and effort into bringing departments together to improve the situation”.
The report says the lack of a clear picture of how much is spent on consultants and how this spending has changed over time “makes it difficult to make decisions on use of consultants or monitor progress against its targets to cut consultancy spending”.
It also says the Cabinet Office seems “unconcerned at the many and obvious inconsistencies and inaccuracies in its own data about what departments spend on consultants”.
“Given these problems, and its seemingly indifferent position on the matter, it is clear that the Cabinet Office does not have a grip on what government spends on consultants,” the report says.
The report asks the Cabinet Office to provide a detailed breakdown of what each department spends on individual private contractors, with the amounts categorised by type of external service, such as consultancy, contingent labour, and professional services. It also calls for the Cabinet Office to set out which departments are not complying with its requests on consultancy procurement and what it intends to do to address non-compliance.
Another concern raised in the report is that the Cabinet Office is unable to demonstrate that the consultancy spend target is an effective way to reduce spending on external providers.
The report notes that departments often hire firms to provide a package of services, such as consultancy, professional services and contingent labour, within the same contract, which makes it difficult to isolate the amount spent on consultancy.
“As a result, government bodies may be under or over-reporting their consultancy spending,” it says. “The variability in definition and lack of rigour in reporting consultancy spend may also allow departments to reclassify spending and under-report rather than reduce spending.”
The report asks the Cabinet Office to update the committee by July with data on the past three years of spend on all external resourcing, including consultants, professional services and contingent labour, to demonstrate a reduction in expenditure.
On a more positive note, the report says the forthcoming strategic workforce plan for the whole of the civil service "has the potential to allow departments to better identify skills gaps and reduce the need for external resources, including consultants". It calls on the Cabinet Office to commit to publishing the workforce plan by May 2026.
Clive Betts, deputy chair of PAC, said the pledge to "to stop public funds walking out the door to external providers where government could do the job itself is self-evidently the right course" but "our inquiry has shown this may not be so simple, given that government does not yet have a grip on precisely what is being spent".
"With consultancy spend now wound so tightly into how departments run their contracted-out work, and with so little and such inconsistent data available, actually bearing down on this spending will be a tough knot to unpick," he said.
Fran Heathcote, general secretary of the PCS union, said the committee's findings "reveal a shocking lack of oversight of billions of pounds of public money".
"If the government is serious about cutting consultancy spending, the answer is clear: invest in civil servants, bring this work back in-house and end the over reliance on profit-driven companies."
A government spokesperson said: "This government is relentlessly rooting out waste to protect taxpayer money and make the state more efficient.
“We have already met our target to reduce consultancy spending by more than £550m in 2025, and are reducing back office costs by 16% to save £2.2bn a year by 2030.”