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Government to spend more on IT consultants as skills gap remains unsolved

According to a Public Accounts Committee report, the need to fill gaps in tech expertise as a result of Covid-19 and Brexit means the public sector will resort to costly third-party support

The UK government is likely to spend more with consultants in 2021 in areas including technology as a result of the need to fill the skills gap in the public sector, due in part to the departure from the European Union and the Covid-19 pandemic.

The conclusion comes from a Public Accounts Committee (PAC) report, in which Cabinet Office estimates show that the current cost of using consultants in areas including IT across government is nearly £1bn. The PAC report noted this is likely to increase in 2021 as the government resorts to high-cost consultants and outsourcing to fill the expertise gap.

Such reliance on consultants results in waste, budgetary increases and overruns, as well as delays in the delivery of projects, the PAC report noted, despite continued assurances by government that is committed to addressing the issue. As an example, the report argued that lack of skills in the Home Office was “at least partly responsible” for a three-year delay in the delivery of the Emergency Services Network (ESN) programme.

“Government’s preferred response to failing projects is too often to pay out billions to consultants rather than investing in developing skills, expertise and knowledge in public services,” said Meg Hillier, chair of PAC.

According to Hillier, the current approach is unhelpful in terms of improving the civil service’s future capacity and capability, and instead is a “constant drain on public funds with little evidence of benefits”.

“We’ve got a long economic slog ahead of us in the wake of Covid-19, and the government is pinning a lot of hope on massive infrastructure and environmental projects – it cannot continue this pattern of huge waste and loss, or we will never get out of the hole we are in,” she said.

Regarding the issue of increased cost and delays, the PAC recommends that the Cabinet Office should work with functions and departments to identify skills gaps and prioritise the resolution of these problems as part of the Civil Service Modernisation and Reform process.

“The current cost of using consultants to fill these gaps should be considered as part of this work. The Cabinet Office should outline in its Treasury Minute response how it plans to reduce reliance on external consultants and mitigate these costs in future,” the report noted.

Still on the root cause of the government’s reliance on often expensive consultants, the PAC report said the lack of skills has been worsened by pay restrictions in the civil service, as well as the significant salary disparities between departments. These factors, according to the report, led to difficulties in the recruitment, as well as the retention of specialists.

“The Cabinet Office, HM Treasury and functions should outline in the Treasury Minute response how, and by when, they will review pay exception case processes across the functions to address current pay disparities and avoid creating an internal market for specialists,” the report recommended.

Diversity is another problem when it comes to retaining and attracting specialists, the report said. The PAC acknowledges the efforts made by the Cabinet Office, saying it is aware of the need to improve in those fronts and that it is making recruitment processes fairer. It believes these changes will help to ensure that people from different backgrounds are encouraged into the civil service.

However, these actions are not enough, the report said. “While we welcome the Cabinet Office’s commitment to diversifying the civil service, more needs to be done to improve the intake and retention of minority groups and those with different socio-economic backgrounds,” the report said.

It went on to request that the Cabinet Office writes to the PAC within three months with detailed and broken-down information on the retention and progression of staff from different backgrounds, alongside plans for further reform in this area.

In addition, the report noted that departmental data is not good enough to support functions’ development of comprehensive workforce plans, and addressing that would see improvements in staff planning. This is worsened by departments each having their own systems for collecting data on their staff, meaning that workforce data quality and content vary.

The recommendation from PAC to the Cabinet Office is to set out how it will work with departments to make sure workforce data is collected at the right level, to better address skills gaps and shortages.

The lack of a “capability blueprint” for departments is another problem outlined in the report. According to the PAC, documents should include a clear operating model and set out the organisational capacity for each function and without them, it is difficult for departments to fully exploit functional expertise.

The Cabinet Office should focus on expanding use of such blueprints beyond the Commercial function – the HR, Finance and Communications functions are currently developing theirs – and complete these by April 2021.

In the same vein, the PAC report noted that only a handful of the 14 government functions have been able to demonstrate the benefits of their activities and quantify their costs and benefits and that this has been an area of difficulty for the Cabinet Office.

As a recommendation, the PAC advised the Cabinet Office, HM Treasury and functions to agree a consistent methodology for measuring costs, benefits and impacts across all functions by July 2021, and report back to the PAC.

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