Committee calls on Westminster to take greater care hiring consultants

09 May 2017

Concerns surrounding the UK government’s search for a private consultancy firm to assist with the implementation of Brexit continued to grow last week, as the chairwoman of a spending watchdog warned taxpayers they are in danger of being short-changed by the process. 

A new report from the Parliamentary Public Accounts Committee into spending on consulting firms should give Westminster pause for thought, according to the committee’s chair. Speaking to the BBC, Meg Hillier stated that she was concerned the challenges of Brexit will place the short-staffed civil service under increasing strain, while warning Whitehall – the central hub of the national civil service – needed to be “really savvy about how they let and manage these contracts,” or risk being taken advantage of. “After all, Brexit is supposed to save us money,” she concluded.

While the head of the civil service, Cabinet Secretary Sir Jeremy Heywood, declared there was “no doubt at all” that the service was “well equipped to deliver all of this government's priorities – including the UK's exit from the EU,” the government has faced increasing criticism regarding the amount of public money being spent outsourcing policy implementation to the private sector.

Committee calls on Westminster to take greater care hiring consultants

Caution needed when hiring consultants

In the report published at the end of March, Hillier’s committee levelled claims that one firm in particular had already used the stretching of the civil service to their benefit, pre-referendum. UK-based PA Consulting Group were singled out by the paper, and were alleged to have repeatedly been “unclear… about the breakdown of its costs and profits,” while selling the UK Trade and Investment department “a service it is not clear it needed.” 

While that particular contract was terminated in 2016, PA’s consultancy specialists are among four major companies bidding for a much sought-after £1.5 million contract, to assist with the implementation of Brexit. The successful party will reportedly work with government departments to knit together 729 different plans relating to customs and immigration procedures, since last summer’s (shock) referendum result signalled the UK’s intent to leave the EU. They will also be expected to provide advice relating to new challenges arising from Brexit, in areas such agriculture, automotive and financial services.

According to a recent study by Bain & Company, a ‘hard’ Brexit has the potential to wipe around 30%, or £3 billion, from the profit pool of UK-based companies across key sectors – with the grocery and automotive industries to face the hardest hit. 

Along with PA, three constituent members of the ‘Big 4’ of the global accountancy and consultancy elite – EYKPMG and PwC – are also in the running for the contract. Deloitte, the fourth, meanwhile ruled themselves out of bidding for any government contracts for six months after a controversial company memo claiming the UK had “no overall negotiation strategy for Brexit” was leaked. The memo sparked a fierce rebuttal from 10 Downing Street, with Prime Minister Theresa May’s office accusing the firm of “touting for business”, and while their withdrawal would seem to take responsibility, the recent claims surrounding PA will do little to ease concerns among the broader public around hiring further private-sector expertise.

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Manchester Mayor criticised for £250,000 consulting spend

19 March 2019

The Mayor of Greater Manchester has been criticised for splurging hundreds of thousands of pounds on consulting fees before determining that the region’s fire brigade must slash its budget by millions. Andy Burnham put more than £250,000 towards work from ten consulting firms as part of a review into the region’s emergency services.

Despite the continued argument that projects like the Northern Powerhouse initiative are helping to address the North-South divide in the UK, statistics still show that the North has borne the brunt of austerity in England. Northern English cities have been disproportionately affected, with their spending cut on average by a fifth since 2010, while cities in the south and east of England had average losses of 9%.

The impact of spending cuts has been keenly felt in Greater Manchester in particular, where local government spending has fallen by as much as £650 per person since 2009 in some parts of the region. As the area looks to find further savings, while the Central Government continues to fail to deliver on its pledge to end austerity, it has been announced that the fire brigade for Greater Manchester faces a reduction of up to £10 million from its budget.

The swingeing cuts to hit the emergency service would likely see its fleet of fire engines reduced from 56 to 47, while six fire stations face closure, and 113 support staff could suffer the axe. The news follows an investigation from Mayor Andy Burnham, which was triggered in part by the admission of Chief Fire Officer, Jim Wallace, that since 2015 the service has failed to deliver “its own efficiency plan”.

Greater Manchester Mayor Andy Burnham spent £268,300 to review the city’s fire service

The review itself has been far from inexpensive, however, and it has led some to accuse Burnham of hypocrisy. During the review of the fire service, which has delivered demands for the service to find major efficiency savings, the Greater Manchester Mayor reportedly splurged £268,300 in public funds on consulting work for his root-and-branch review.

According to local newspaper Manchester Evening News, Burnham tasked ten different consultancies with helping to compile the review, receiving payments ranging from £101,000 to £7,000. The largest amount was handed to Leicester headquartered P. Cooper & Associates for the expertise of a “senior change and transformation programme specialist,” while it was reported that another of the consultants gave “guidance on leadership and culture”.

A Greater Manchester Fire and Rescue Service (GMFRS) spokesman said of the spending: “The Programme for Change programme has required input from specialists who are expert in areas such as organisational transformation, operating models for fire safety and estates.”

Manchester’s fire brigade was criticised in 2017 when, in the wake of the Manchester Arena bombing, a report by Lord Kerslake noted crews had been held back from helping. Contrary to helping deliver a more efficient service, Unison has told the press that it believes the proposed cuts will make the residents of Greater Manchester “less safe”. With the expenditure of the review on private sector consultants now public, meanwhile, the union has slammed the report for throwing away public funds while jeopardising vital public sector work.

Unison represents the 113 staff who may lose their jobs, and a spokesperson for the union told Manchester Evening News, "It's disappointing that when finances are clearly tight, priority has been given to hiring external consultants rather than engaging with the workforce. This will be a shock to our members who were only told on Monday their jobs were at risk."

In recent years, a succession of local authorities have come under fire from officials and the general public for their consulting spending in the UK. Earlier in 2019, a freedom of information request by The Times revealed that local councils across the UK have spent around £400 million on consulting firms in the last year alone. According to the report, this represents a rise of more than a fifth since 2014, with critics using the figures to call into question the value added by engaging external expertise.

Commenting on the criticism many councils face, Tamzen Isacsson Chief Executive, Management Consultancies Association, said, “Consultants play a vital role in the public sector, [providing] transformational impacts, innovation and increased efficiency… Vital front line services continue to operate uninterrupted [while] consultants often help local authorities get better results with less money. As the MCA awards this year demonstrate consultants are delivering social benefits across the UK – from work on getting better outcomes for children in care to finding better processes for finding homes for vulnerable families in London these examples offer a true reflection of the consulting excellence that operates across the UK to the benefit of councils and the wider society.”