McKinsey consultants advising BIS on savings, Sajid Javid confirms

Management consultants looking at "operating costs across the department and partner organisations", says business secretary, but none "working directly" on its response to the Spending Review

By matt.foster

18 Sep 2015

Business secretary Sajid Javid has confirmed that private consultancy McKinsey has been drafted in to advise the department on cutting costs.

Reports that the US management consultancy had been asked to carry out an "efficiency and effectiveness review" of BIS-funded bodies were first published on the Guardian's Political Science blog in July – and Javid has now revealed the extent of McKinsey's work.

As an unprotected government department, Business, Innovation and Skills (BIS) has been asked by the Treasury to draw up plans for savings to its resource budget of both 25% and 40% ahead of November's government-wide Spending Review.

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Responding to a parliamentary question tabled by Labour's Chuka Umunna, the business secretary confirmed that the firm had been carrying out work for the department in four areas – although he said that no McKinsey staff were "working directly" on the BIS response to the Spending Review.

The consultancy will, Javid said, assist as BIS looks at "operating costs across the department and partner organisations"; help carry out a review of the Student Loans Company; work with the Department for Education and the Treasury to look at the "cost drivers in further education"; and take part in work led by Whitehall's central procurement team the Crown Commercial Service (CCS) to look at the way BIS buys goods and services from third parties.

The business secretary added: "The department has consulted with our key partner organisations during the Spending Review process and Her Majesty’s Treasury have undertaken a public consultation on the Spending Review which closed on September 4."

According to the department's 2014-15 accounts, 84% of BIS spending is delivered through its partner organisations, which include research councils, the Intellectual Property Office, the UK Atomic Energy Authority, and the UK Space Agency. The latest Office for National Statistics figures show that the department employed approximately 16,540 full-time civil servants in the first quarter of this year.

Speaking to the Financial Times earlier this week, Javid said that BIS, as the "largest unprotected department" would have to "look at making tough decisions" to meet the Treasury's call for further cuts. "I don’t relish that in any way," the business secretary added.

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