Irish government spend on consulting remains similar after criticism

20 September 2017 6 min. read

The Irish government has continued to reduce its spending on consulting, having come under sustained criticism for its outsourcing practices. Last year the government racked up a €12 million bill on contracts to external consultants, with just three departments accounting for most of the expenditure.

Over the course of 2017, governments around the world have come under mounting pressure to justify the cost of external consultants on the public purse, despite a reluctance to increase public spending in other areas. In the UK, consultancy spending relating only to core Civil Service administrative functions made headlines, with Whitehall’s spending on private consultants and temporary staff rising by between £400 and £600 million since 2013, according to National Audit Office figures, despite the Service remaining spread thin, following austerity cuts. Further afield, Australia’s national government have been under increasing media scrutiny following the announcement executive spending on consultancies had hit a staggering A$5 billion. Meanwhile, in the Netherlands, the government continue to spend large amounts on external contracts, however responding to criticism of their own, it was revealed they had scaled back spending on strategy and management consulting over the past year.

Now, in Ireland, on the back of months of similar criticism, figures for each of the government’s 15 departments have been released, disclosing a total consulting spend of €12,236,769 during 2016. While broadly similar to spending in 2015, the figure represents a significant reduction on consultancy contracts compared to a decade ago when twice that amount was spent. The biggest spenders last year were the Department of Agriculture (€3.2 million), the Department of Children (€3 million) and the Department of Public Expenditure (€1.4 million). The lowest figure was recorded in the Department of Arts, Culture and the Gaeltacht which disclosed a comparatively small spend of only €1,833.

Irish government spend on consulting remains similar after criticism

Much of the consultancy expenditure in the Department of Agriculture was for technical advice including laboratory services, forestry development, marine support and computer development – as the department prepares to support the Irish agricultural sector amid a period of digital transformation – with global investments in agricultural technology having boomed to $46 billion last year. Almost all of the Department of Children’s spending went to the long-running longitudinal study into childhood in Ireland, being conducted by the Economic and Social Research Institute and Trinity College Dublin, which costs more than €2.5 million each year. Much of Department of Public Expenditure’s outside contracts revolved around updating its procurement and ICT systems – which in the wake of global cyberattacks such as WannaCry, has become a growing priority, as governments around the world seek to safeguard their vital confidential information, to avoid becoming the next NHS-style victim. Consultant Deloitte was paid almost €700,000 for strategic market assessment for procurement. Another prominent consultancy firm, Accenture, was paid €250,000 for its work on an ICT project, while KPMG was paid €160,000 for its work on e-invoicing.

The Department of Jobs also spent €744,125 during 2016 on consultancy contracts, including a €119,000 contract with PA Consulting for a study of global markets and opportunities for Irish business, along with Z_Punkt Technology, which picked up €105,000 on a future technology exercise. Consultants at Amárach were paid €98,000 for the firm’s work on alcohol labelling, as part of the Department of Health’s spend of €704,304.

Reallocation rather than reduction

Consulting and professional services have continuously made the wrong kind of headlines in Ireland over the past year. Earlier in 2017, it emerged that the bill for consultants, liquidators and lawyers involved in the winding-down of the Irish Bank Resolution Corporation (IBRC) amounted to €215 million in the 47 months leading to the end of 2016, with the Irish arm of multinational consultancy KPMG receiving a total of €130 million for its role in the proceedings. A number of Irish firms also became embroiled in the Panama Papers scandal of 2016, in which consulting and audit advisories were alleged to have assisted wealthy individuals and corporate players with the avoidance of tax.

Earlier this year it was announced Cork City Council has spent almost €4.5 million on consultants each year from 2009 to 2016. The figure, which was described as ‘incredible money’ by one former Lord Mayor, came as the local authority look to plug gaps left by austerity layoffs which have left permanent staff depleted, part of a growing trend across Ireland and the UK. Drawing parallels with that more localised example, the national government’s figures show a plateau in consulting fees for 2016, which to an extent responds to criticism for a heavy use of public funds on short-term contracting, rather than long-term investment in permanent talent.

Ireland’s consulting sector has continued to book growth recently, with firms like PwC looking set to continue growing their presence in the country over the coming period. Both businesses and local and national governments are thought likely to continue investing in the segment, with changing landscapes in taxation and data regulations increasing demands for specialist services from both international and domestic companies across the Republic. Digital disruption and trading conditions for indigenous business becoming less stable, due to Brexit and other international developments also likely mean that rather than scaling back consulting spending further, the government is more likely to simply reallocate its consulting budget. According to a breakdown of finances for 2017, Ireland’s Civil Service budget allocation for “consultancy services, value-for-money and policy reviews” will rise by 15% to almost €10.5 million, including consultancy spending relating only to core Civil Service administrative functions, which remain spread thin following austerity cuts, the Department of Public Expenditure explained.