Tackle surge in consultancy spend with better workforce planning, PAC tells departments

Public Accounts Committee warns departments still "do not know their future resource needs and will have to resort more often to using consultants and temporary staff"

By matt.foster

22 Apr 2016

Departments still do not have the right workforce plans in place to clamp down on the use of consultants and temporary staff, according to a new report by MPs on the Public Accounts Committee.

A National Audit Office investigation published early this year found that central government spend on consultants and temporary staff was creeping back up in spite of progress made to rein it in since 2010, when the Cabinet Office imposed strict spending controls limiting the use of outside help.

While the NAO found departments had “substantially” reduced their spending on consultants and temporary staff over the last five years – with the 17 main departments spending between £1bn and £1.3bn on outside and temporary help last year, down from £2.7bn in 2009-10 – it warned that spending had begun to increase again.

Civil service chief John Manzoni: Rise in Whitehall consultancy spend shows need to tackle “critical skills shortage”
Fall in Whitehall consultancy spend going into reverse — NAO
Crown Commercial Service seeks overhaul of temporary staff sourcing deal worth up to £5bn

“Since 2011-12, departments have increased their annual spend on C&TS by between £400m and £600m, while reducing their permanent workforce,” the NAO said. 

The follow-up report from PAC – which quizzed civil service chief executive John Manzoni as part of its inquiry – warns that departments "have not made progress with their workforce planning" and says they "do not know their future resource needs and will have to resort more often to using consultants and temporary staff".

The committee points out that it has "repeatedly" urged government to set out its long-term skills requirements, but says none of the seven departments reviewed by the NAO yet have workforce plans covering their entire departmental group, in spite of "good intentions" and the smarter use of short-term "surge teams" to cover peaks in demand.

PAC calls on all departments to produce a detailed, five-year strategic workforce plan by the end of the year, identifying any skills gaps and areas where they believe they will need to draft in outside help. It also calls on the Cabinet Office to do more to chase departments on their progress, saying the centre of government should name the departments "still lagging behind" on those plans by this time next year.

CCS should be "default option"

The MPs also flag up concern about the apparent reluctance of some departments to procure consultants and temporary staff through the Crown Commercial Service, which aims to drive down the cost of buying in outside help by using the combined commercial clout of the centre of government.

"As far as possible departments are expected to source consultants and temporary staff through the agreements negotiated by the Crown Commercial Service (CCS) on behalf of government," PAC says.

"However, the NAO estimates that central agreements are not used for around half of consultancy and temporary staff assignments. The Cabinet Office feels unable to insist that departments make more use of the agreements and it considers that some highly specialised requirements are not suitable for a general agreement."

While the committee says the Cabinet Office has promised to "set up new agreements that are more commercially attractive to departments", PAC says it should go further, arguing that all departments should use CCS agreements "as their default option" except where "specialist skills are required and for which the business case provides a clear justification for use of other procurement routes".

Launching her committee's report, PAC chair Meg Hillier (pictured) said "poor workforce planning" was leading to a waste of money at a time of tight public spending.

"Funds that could be spent on services are instead going to pay costly and avoidable bills for staffing. This is simply not good enough" – PAC chair Meg Hillier

She added: "Funds that could be spent on services are instead going to pay costly and avoidable bills for staffing. This is simply not good enough.

"There is a place for buying in expert advice and using temporary staff if there is a skills gap but departments first need to be sure they do not have access to these skills in-house. Getting this wrong costs the taxpayer dear.

"Filling permanent roles with temporary staff is short-sighted and does nothing to address underlying skills shortages in the civil service, nor to develop its expertise. When temps leave, valuable experience leaves with them.

"The government needs to get a grip, identify where skills are lacking in-house and put a proper plan in place to deliver those skills through the recruitment and development of high quality, permanent staff.

"The Cabinet Office has a key role to play in this and we will expect to see a greater clarity of purpose when we hold officials to account for their progress in the year ahead."

"This government is scrutinising spend like never before" – Cabinet Office

A spokesperson for the Cabinet Office said: "This government is scrutinising spend like never before. We've stamped out excessive spending on consultants and put in place stringent spending controls. The total spend on consultants is still less than half of that in 2009-10."

They added that the government was "actively" building skills but continued to need expertise for complex projects.

"But we only do this when the key skills are not readily available within the civil service and where it delivers better value for taxpayers," they added.

Manzoni: "We are critically short of some specific skills"

Appearing before PAC during its inquiry, 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 is currently working on a civil service-wide "workforce strategy", expected some time in the spring.

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