Public sector spend on management consultants rises for second year in a row

New figures from the Management Consultancies Association show another year-on-year rise in public sector consultancy spending – but totals remain well below 2009 peak

By Civil Service World

15 Jun 2016

The public sector's overall spending on management consultants rose for the second year in a row in 2015, according to new data from the Management Consultancies Association.

The MCA's latest annual report is based on detailed returns from the so-called "Big Four" accounting firms – EY, Deloitte, PwC and KPMG – as well as other major consultancies including Accenture and IBM. 

It records a slight increase in the use of consultants in government and the public sector in 2015, with aggregate consulting fee income from the public sector standing at £1.123bn, up from £1.109bn in 2014 and £1.107bn in 2013. However, the total 2015 spend on consultants in the public sector remains well below its 2009 peak, where spending stood at £1.803bn ahead of a government-wide crackdown on the use of outside help.

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The Cabinet Office tightened controls on the use of consultants in 2010, requiring central government departments to obtain ministerial approval and inform the centre of government before appointing consultants for work lasting more than nine months and costing more than £20,000.

According to the MCA, total returns from public sector consulting fell to £999m in 2011, the year after those controls were brought in.

The findings of the MCA report echo a recent National Audit Office review of central government's spending on consultants and temporary staff, which found that spend on such help had begun to creep up again since 2012 despite a sharp drop of more than £1bn since 2010.

"Change in culture"

According to the MCA, digital and technology consulting accounted for the largest chunk of public sector consultancy spend in 2015, making up 29% of the total. 

The MCA's report said the large proportion of public sector consultancy spend devoted to digital transformation showed that outside help with this area of reform was still "desperately needed".

"Despite the leadership of the Government Digital Service (GDS), bureaucratic considerations, long-term ICT relationships, and a lack of commissioning expertise have inhibited digital innovation," the report said.

It added: "There have been pockets of success. The government’s open data initiatives have created interesting possibilities for business and have provoked useful discussions about the relationship between citizens and ‘their’ data. But public sector digitisation has been predominately characterised by essential, but slow-moving legacy-system closedowns and technological convergence."

Operational support was the next highest area of spend, according to the MCA, accounting for 13% of the total, while project and programme management support was the third-most-sought-after, comprising 11% of the total.

The MCA also used its annual report to urge a "change in the culture of contractor engagement" on the part of the public sector, arguing for government contract management professionals to be grouped in "smaller, more senior, better-paid teams", who could potentially be shared by departments "or even outsourced".

Launching the report, MCA chief executive Alan Leaman said: "Consulting is critical to the success of our public sector, providing value to the taxpayer by helping deliver better services in innovative ways.

"We’ll continue to work with the Crown Commercial Service and the Cabinet Office to ensure the use of consulting expertise is genuinely focused on value for money and the transformational change that government needs. This report confirms that we are making progress."

Civil service chief executive John Manzoni told MPs earlier this year that the recent year-on-year rises in Whitehall's use of outside consultants and temporary staff showed that government needed to address a “critical skills shortage”, acknowledging that the civil service needed to do more to build in-house "commercial, technical, [and] project leadership" skills.

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