A rise in Whitehall’s use of outside consultants and temporary staff shows that government must address a “critical skills shortage”, civil service chief executive John Manzoni has said.
A report published the National Audit Office (NAO) spending watchdog last month found that while the civil service’s use of outside and short-term help had plummeted by more than £1bn-a-year since the 2010 introduction of Cabinet Office controls, spend had begun to creep up again in the last three years.
The NAO warned that a £400m-£600m rise in annual consultancy and temporary staffing spending seen since 2011-12 showed that Whitehall had achieved a only “short-term reduction rather than a sustainable strategy” for tackling its reliance on outside help.
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Appearing before MPs on the Public Accounts Committee on Monday, Manzoni acknowledged the need for the civil service to build in-house capability in order to cut consultancy spend in the longer term.
“One of themes that I think we keep returning to in the civil service workforce as a whole is that we are critically short of some specific skills, commercial, technical, project leadership, as a start," he told the committee.
“We have for instance hired 150 senior, permanent digital staff across government in the last 18 months. That is in addition to the interims and the temps that you see. But we’ve hired 150 of them and they’re deployed across the departments. That is the beginning of the process of rebuilding these skills.
"Because I think the phase that we as a civil service have to go through now does require those critical skills to be in our midst much more than they have been in the last period.”
The Cabinet Office’s 2010 spending controls require departments to obtain ministerial approval and get sign-off from the centre of government before appointing consultants for work lasting more than nine months and costing more than £20,000.
Departments are also encouraged to use a centralised system overseen by the Crown Commercial Service for getting hold of consultants and temporary staff — although the NAO found that departments were currently meeting "only about half" of their needs through CCS, with some continuing to use existing, direct arrangements. The Cabinet Office last week set out plans to overhaul the way departments buy in such temporary help and consultancy expertise.
Asked whether the fall in consultancy spending seen in the immediate wake of the 2010 controls had been “too dramatic”, Manzoni said that that had “probably” been the case. But he added: “Sometimes organisations need a big shock. That was a big shock. It did work.”
The fact that such spending was once again on the rise was, he said, “telling us something” about the current civil service workforce and the need to tackle a skills shortage.
“That’s telling you that we have to now enter this next phase of much more fundamental workforce transformation which is of course what we’re completely focused on,” the chief exec said.
“Many, many hundreds” of digital specialists were now needed across government departments “to effect the technological transformation that we require," he added.
Late last year, Manzoni told MPs that the government was in the process of drawing up new pay grades to try and help government recruit and retain specialists at a time of ongoing pay restraint. Annual payrises in the civil service are currently capped at 1%, with the Treasury announcing last year that its pay curbs would remain in place until at least the end of the decade.
Departments are also expected to shortly unveil new “Single Departmental Plans”, an effort to align departmental priorities with the resources – in both financial and staffing terms – available to them in the wake of November’s Spending Review.
“We are on the verge of implementing a whole new organisational structure as a result of looking at that critical skills shortage across government,” Manzoni told the committee.
“We are beginning to get the sorts of plans that I think you’re after. But this time down a functional lens, not down a departmental lens. And of course, ultimately those two things ought to match. But it will take a little while."
He added: “We haven’t been as good as we should have been. But I do think we’re on the road here.”