UK government will struggle to meet pledge to cut consultancy spending, report finds
A report has warned that the UK government may not be able to meet its target to cut spending on consultants due to a lack of available data to understand what is being spent.
The Public Accounts Committee of UK parliamentarians said that inconsistent data on how much departments spend on external consultants would hinder efforts to half consultancy spending in 2025-26.
The latest estimate by HM Treasury of consultancy spending was £1.36bn [US$1.82bn], but MPs highlighted that other sources put the figure at as much as £2.23bn [US$2.98bn].
It is uncertain how much is spent because the central Cabinet Office relies on departments to develop their own internal controls on how much they spend on consultants, and these approaches vary.
MPs said that government seems “unconcerned at the many and obvious inaccuracies in its own data” on consultants, and highlighted that departments are not complying with Cabinet Office directives on consultancy spend.
The report calls for the publication of a list of which departments are not complying with Cabinet Office requests on consultancy procurement, and a detailed breakdown of what each department spends on individual private contractors, categorised by type of service.
In addition, the report finds that contracts signed by departments often combine consultancy and professional services, making it difficult for departments to isolate the spend on consultancy services only.
The committee’s deputy chair Clive Betts MP said that chancellor Rachel Reeves’ pledge to “stop public funds walking out the door to external providers where government could do the job itself” was “self-evidently the right course”.
However, the report shows “this may not be so simple” given the lack of grip on precisely what is being spent. “With consultancy spend now wound so tightly into how departments run their contracted-out work, and with so little and such inconsistent data available, actually bearing down on this spending will be a tough knot to unpick,” he said.
“The consulting sector will of course continue to play an important role in filling any specialist gaps where government truly does not have the requisite skills for project delivery, as well as demonstrating cutting-edge practice in the use of new technologies from which the public sector can learn lessons.”
Reducing dependency on consultants is also a priority for governments around the world, with Global Government Forum’s Making Government Work: Five pillars of a modern, effective civil service report – the result of interviews with 12 senior civil service leaders from around the world – highlighting a need to build up professions around key skills, chief among them digital, but also including finance, HR and recruitment, procurement and commercial, and communications.
Read in full: Making Government Work: Five pillars of a modern, effective civil service
The Public Accounts Committee said that the government’s planned strategic civil service workforce plan has the potential to support better use of consultants through undertaking proper planning and assessment of available resources.
The committee called for the Cabinet Office to produce the workforce plan by May, including an assessment of skills gaps in government that require external resources, and guidance produced to help departments inform consultants of the rules and regulations on the use of artificial intelligence in their work for government.
With the workforce plan, government can understand what resources are available to it in-house, Betts added, “rather than instinctively pulling the expensive consultancy lever for any difficult project and spending unnecessary billions in public funds in the process”.
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