The government exceeded its target to reduce consultancy spending by £550m during its first nine months in power.
As part of an ongoing Public Accounts Committee probe into government’s use of external consultants, MPs were recently told that, in July 2024, the incoming Labour administration had swiftly set an objective of achieving a £550m reduction by “stopping non-essential spending on consultancy” across the remainder of the 2024-25 year.
This savings target was set after an initial audit had determined that departments collectively planned to spend just over £1.5bn with consultancies between July 2024 and March 2025.
Figures provided to PAC in new correspondence from civil service chief operating officer Cat Little reveal that, during this nine-month period, departments spent a cumulative tally of £910.6m – equating to a reduction of £602.7m when compared with their initial plans.
In her letter to MPs, Little – who also serves as permanent secretary of the Cabinet Office – noted that “the committee expressed a particular interest in ensuring that a reduction in consultancy does not simply lead to an increase in ‘professional services’ or ‘contingent labour’”.
“As part of Spending Review Phase 2025 submissions from departments, they were asked to set out plans for spending on external resourcing for the next five years including consultancy, professional services and contingent labour,” she added.
“HM Treasury analysed departments submissions in summer 2025 which showed that spending across all these categories are reducing by over £1.17bn in real terms by 2030. Expenditures were forecasted to reduce in each of the three categories. During Spending Review 2025, HM Treasury set individual limits on consultancy spending for each department who have all agreed plans to stay within these limits. We will set out further details in the publication of the [upcoming] Civil Service Strategic Workforce Plan.”
By far the biggest government spender in the latter half of 2024 and the first quarter of 2025 was the Department of Health and Social Care, with total consultancy outlay of £251.9m. This is in addition to consultancy deals across the NHS totalling £235.1m during the timeframe – which were not included in the baseline spending figure nor the target to reduce it.
Also still spending large sums on external advisors were: the Department for Energy Security and Net Zero on £160.9m; the Department for Transport on £153.1m; the Department for Environment, Food and Rural Affairs on £149m; and the Home Office on £113.5m.
Departments with spending in the tens of millions included the Ministry of Defence with £81.9m, the Department for Science, Innovation and Technology on £54m, and the Department for Business and Trade with £44m spent.
But, elsewhere, a range of other organisations – including some of Whitehall’s biggest departments – spent comparatively meagre sums. Agencies recording £15m or less in consultancy spending during the nine-month period include: the Cabinet Office, the Department for Culture, Media and Sport; the Department for Education; the Department for Work and Pensions; the Foreign, Commonwealth and Development Office; HM Treasury; the Ministry of Housing, Communities and Local Government; the Ministry of Justice; the Northern Ireland Office; and the Attorney General’s Department.
HM Revenue and Customs spent only £200,000 on consultants during the timeframe, while the Wales and Scotland Offices spent nothing at all.
Other non-ministerial departments – including some regulators, and the National Crime Agency – collectively spent £48m.
Before entering government, Labour set a target of halving consultancy spend within a parliament.