Cabinet Office ditches consultancy and professional services spend controls

Removal of guidelines could mean departments can now spend up to £20m on consultants without requiring external approval
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By Sam Trendall

07 Feb 2023

The Cabinet Office has discontinued with immediate effect the dedicated spending controls that were previously applied to planned spending by government agencies on consultancy and professional services. 

In practice, the move could mean that the threshold at which departments' contracts with consultancy firms require any form of central approval moves – from £600,000 up to £20m.

Spending controls in a range of areas – including digital and technology, marketing, property, facilities management, training, contingent labour, redundancy payments, and large commercial contracts – were first introduced in 2010. These were made a permanent fixture in 2012.

The controls require departments to submit requests for planned spending that exceeds the stipulated thresholds in each area. Approval can then be granted – or denied – by specialised Cabinet Office teams. For some smaller engagements, internal approval from a minister or senior manager may suffice, while spending plans that would trigger more than one set of controls – for example digital and contingent labour – require the green light in all applicable areas.

As of earlier this week, there is now one fewer such area, with the controls previously applied to consultancy and professional services having been ditched.

There does not appear to have been a formal public announcement of the removal of the controls but updates to the relevant GOV.UK page indicate that the mechanism no longer applies.

“This spend control is being discontinued effective 31 January 2023 in line with the agreed lifting of burdens [and] realignment of focus and impact of Cabinet Office spend controls,” it says. 

The page adds: “Following workshops during January on an operational level the removal of the controls is welcomed. Higher level contracts [of more than] £20M are still covered in other controls, [such as] commercial, digital [and] contingent labour. Operationally for ease of reference for fiscal year-end audit – where reliance was placed on these controls – the detail of the control will remain on GOV. UK for a further two months.”

In response to enquiries from PublicTechnology, the Cabinet Office indicated that departments have been informed of the change in policy in various ways, including workshops and written guidance to sent to procurement teams and senior managers. It is understood that submissions that were undergoing the approval process prior to the cessation of the controls have all been informed of the decision. 

A spokesperson for the department added: "In order to reduce administrative burdens resulting from central spending controls, government departments are no longer required to refer consultancy and professional service spending to the Cabinet Office. This places more trust and responsibility on departments rather than having the Cabinet Office approve individual spending items."

'Knowledge gaps'

Before the controls were discontinued, approval was previously required for any central government organisation that wished to sign a contract for consultancy and professional services worth over £120,000 or lasting more than three months.

For smaller or shorter deals, sign-off was required from a minister – where applicable – or, otherwise, a chief executive, or equivalent.

Consultancy and professional services contracts worth more than £600,000 or lasting more than nine months were subject to approval by the Cabinet Office.

The controls defined consultancy as any services “that provide advice to fill a knowledge gap… where the individuals delivering the service will operate outside of the client organisation’s structure and staffing establishment… [and] where payment is based on the delivery of a defined output”.

Professional services, meanwhile, were considered to be those that are not “purely or mostly advisory” and, unlike consultancy, may “often be delivered in a business-as-usual environment”.

The removal of controls for the external provision of such services comes as part of a wider refresh of the Cabinet Office’s overall spend controls policy. The updated guidance – the seventh iteration of the controls, since they were first introduced – includes changes to some of the thresholds and other processes. 

The eight other types of control all remain in place, including: advertising, marketing and communications; digital and technology; contingent labour; national property control; facilities management; redundancy and compensation; and learning and development.

The commercial controls section is now described as “including consultancy and professional services”.

But the thresholds for these controls – which are only applied to contracts worth in excess of £20m – are set more than 160 times higher than the previous dedicated guidelines for consultancy spend.

Sam Trendall is editor of CSW's sister title PublicTechnology, where this story first appeared

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