Spending on consultants by UK councils jumps to £400 million

11 February 2019 Consultancy.uk 8 min. read
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A freedom of information request by a leading UK newspaper has revealed that local councils across the UK have spent around £400 million on consulting firms in the last year alone. According to a report by The Times, 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.

In recent years, a succession of local councils have come under fire from officials and the general public for their consulting spending in the UK. The local authority of St Albans has routinely been criticised for its £1.2 million consulting budget, while in 2017, Cornwall’s council was castigated for spending some £750,000 on a single report into the benefits of tourism in the area – only for the firm in question to conclude somewhat underwhelmingly that Cornwall should promote "a sense of place" by emphasising the region’s relationship with the environment, tourism and food and drink.

Most famously perhaps, Northamptonshire County Council – once considered a flagship council for low-tax local government in the years of David Cameron’s national government – incurred the wrath of the public and the press alike for its consulting spending. The institution cut £40 million from its budget after wasting money on ‘frivolous activities’, while neglecting public services. Following protracted scrutiny, the council made Chief Executive Christine Reed redundant, only to employ her consultancy, Gradon Consulting, within the space of a month, on a £650-a-day rate – placing Reed in charge of a large IT project in the process.

Combined spending of local authorities on consulting services (£ million)

Despite the mounting pressure on local authorities to curb their spending on consultants, however, the opposite continues to occur across the UK. According to the results from a series of freedom of information requests by UK broadsheet The Times, council spending on consultants swelled to nearly £400 million in 2018, even as the country’s central government urged local authorities to prioritise funds for pressurised frontline services.

With Theresa May’s embattled Westminster regime having proudly claimed that austerity was “over” last year, some critics will now be asking if it ever began for certain sections of society, as consultants saw their fees from councils balloon once more. According to the figures released by The Times, spending on consultants has rose by 21%, from £327 million to £395 million, over the last four years.

Four-year increase

Northamptonshire County Council was once again among the chief offenders, as the entity – which claimed it was on the brink of bankruptcy twice in the last 12 months – paid consultant Damon Lawrenson a fee of £1,150 a day to act as its interim Chief Executive between October 2017 and March 2018. This was in addition to a further £773,000 put toward consultants who helped the council with its 'budget delivery task force' operating between 2014 and 2016. While Northamptonshire’s previous record will have drawn the public eye most obviously, however, it is not the only council which will have raised eyebrows with its consulting bill.

A number of similarly struggling councils boosted their spending on advisory services, amid the imposition of stringent cuts to frontline services including public libraries, and full time staff. Sefton, Norfolk and Enfield councils all more than doubled their expenditure on outside advice, in spite of having little money in reserve to cover unexpected costs, and having announced frontline austerity cuts on numerous occasions in the last decade.

One of the most pronounced examples of this trend featured the council of the UK’s second city. Birmingham was scrutinised by auditors for burning through £117 million of its reserves in two years, and for in effect running an annual deficit of £75 million. While the council has introduced several rounds of swingeing cuts to public services and ramped up council tax by 4.99%, but also nearly doubled its spend on consultants, from £2.8 million to £5.2 million, over the past four years.

Elsewhere, Canterbury council shelled out £8,500 for a pantomime strategy, while, Newry, Mourne and Down district council in Northern Ireland was picked out by the Daily Mail for blowing £2,100 of taxpayer funds on economic impact reports for a clown festival and comedy night. At the same time, Derby Council was marked out for arguably wasting £2,400 of funds on advice relating to how many golf courses the town needed, and St Albans City and District Council – which previously provoked ire for reportedly spending £1.2 million on consultants between 2016/17 – laid out £2,000 for help with a Christmas market.

Predictably, the figures have led to a number of public criticisms of the relationship between local councils and the consulting sector. Layla Moran, a Liberal Democrat member of the Public Accounts Committee, described the spending as “absolutely shocking.”

She went on to tell The Times, “When schools, hospitals and emergency services are being cut year on year, why are struggling local councils across the country wasting so much money?”

Value for money?

While the average spend over the last four years has increased, however, defenders of councils spending on consulting services will undoubtedly point to the fact it now seems to have plateaued. In 2017, The Times’ data shows that consulting spending from councils peaked at £399 million, and was £4 million less in 2018. As spending had increased continuously on the matter since 2014, this might suggest that it will once again fall away, with councils now theoretically more efficient having engaged consultants.

To that end, proponents of council spending on consulting also continue to assert that tapping external expertise can help find savings and even boost revenues, with the example of authorities from the Vale of the White Horse District Council and South Oxfordshire District Council no doubt in the minds of many councils. The two local governments recouped millions of pounds in council tax, thanks to a digital transformation programme supported by consultants from Capita.

“Consultants play a vital role in the public sector and according to recent research are valued by public sector leaders for the transformational impact, innovation and increased efficiency they bring.”
– Tamzen Isacsson, Chief Executive, MCA

Indeed, the Local Government Association has since argued that paying consultants is a smart expenditure, which avoids wasting public money to employ permanent staff when occasional support would work better. This policy can be seen at work on a national level, for better or worse, with the consulting industry reportedly having recently landed contracts worth £75 million to help complete Brexit preparations, with the Civil Service severely understaffed having laid off swathes of full-time Whitehall employees during the age of austerity.

Tamzen Isacsson Chief Executive of the consulting industry’s representative body, the Management Consultancies Association, also defended councils spending public funds on external advisors. In a statement to the press, she argued, “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.”

Isacsson added that consultants play a vital role in the public sector, and cited recent research saying they are valued by public sector leaders for the transformational impact they bring, while allowing front line services to continue uninterrupted. The study in question is the same which Isacsson pointed to while addressing findings from the British Medical Association that consultancies had been paid £26 million by the NHS as the service looks to reorganise – something which BMA Council Chair Dr Chaand Nagpaul said was “difficult to comprehend” while seeing a lack of investment in the workforce, equipment and buildings of the institution.

According to the MCA’s independent survey of 250 UK industry decision makers across the public and private sector, the use of consulting services across entities of all sizes remains relatively pervasive, with 84% of respondents stating they currently engage consultancies. 81% of these clients said they were satisfied with the services provided, giving answers even split between “met most expectations”, “exceeded expectations”, and “substantially exceeded expectations.”