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Government wastes £500m a year on consultants

Antony Savvas

The government wastes £500m a year on consultants, says the Commons Public Accounts Committee (PAC), with IT consultants’ fees cited as contributing to the overspending.

Edward Leigh MP, chairman of the PAC, said, “Vast sums of money are being spent by government on external consultants. Central government alone is paying out nearly £2bn a year. It is impossible to believe that the public are receiving anything like full value for money from this expenditure. In fact, a good proportion of it looks like sheer profligacy.”

The total figure has gone up a third in the last three years, said the PAC, largely due to increases in spending by the NHS. The PAC said central government is repeatedly using consultants for core skills, including project and programme management and IT, and is increasingly turning to a select list of suppliers.

Leigh said, “Government departments are often on the phone to consultants without first finding out whether their own in-house staff have the skills to do the job. Even worse, departments and the Office of Government Commerce do not know how much is being spent on consultancy, and so have no idea at all whether the benefits are justified by the cost.”

Leigh said that departments routinely do not set out agreed benefits from such contracts with consultants and that they are often paid simply on the basis of the amount of time worked, and not on what the work has achieved.

Leigh said departments must now adopt a much more intelligent approach to the use of external consultants and must become “commercially much sharper in procuring consultants, and in drawing up fixed price contracts or ones containing incentives for achieving the desired outputs”.

He said that if such procedures were adopted, £500m in savings could be achieved.

The PAC said that in 2005 and 2006 the public sector in England spent around £2.8bn on consultants, with central government accounting for £1.8bn of this.

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