Government hands consultancies £160 million in Brexit contracts

With a seemingly endless Brexit process set to lumber on until the end of October 2019, the UK Government has handed a new round of contracts to consulting firms regarding its divorce from the EU. Worth around £160 million, some of the contracts are set to last until Spring 2020, and will pay some of the world’s largest professional services firms between £3 million and £6 million each.

The British Government finds itself attempting to modernise its structures, processes and tools in order to alleviate a time of acute pressure for policymakers and implementers, alike. Particularly important to this agenda’s execution is the leveraging of new technologies, which offer savings in terms of value and efficiency. In 2017, this saw the UK government select 30 firms for £690 million financial consultancy framework, while less than a year later the Crown Commercial Service has commenced a second tender process to award firms a place on its Management Consultancy Framework 2 (MCF2), projected to be worth over £2 billion.

At the same time, this growing role for consultants has been further ramped up by the protracted process of Brexit. With the UK’s painful split from the European Union having already taken longer than the two-year negotiation window initially set out, and no deal still in sight, the uncertainty this has caused has placed a colossal strain on the UK’s understaffed civil service. In order to paper over the cracks at short notice, this has led to the UK Government leaning heavily on the consulting industry to assist with the situation.

At the start of the year, this saw a collection of some of the world’s largest consulting firms have won a set of contracts collectively worth £75 million. The news drew major public scrutiny, with the Government accused of wasting public money as well as claims the contract excluded smaller firms, as they were awarded under ‘Health and Community’, making them very difficult for smaller companies to compete for.

Defending the Government’s position at the time, a spokesperson said, "It is standard for government departments to draw on the advice of external specialists to deliver key government policy. All government contracts are published online – and these are no exception.”

Now, the UK Government has added a new round of Brexit contracts with outside consultants to the mounting bill, this time totalling almost £160 million in taxpayers’ money. On the back of a decade of austerity, the civil servants’ union had already described the Government’s spending on consulting as “eye-watering", and this news will no doubt come as an additional shock to Whitehall workers. A number of the contracts are reportedly set to run until April 2020, or six months after the UK's new scheduled departure date from the EU, Halloween 2019.

New contracts

This comes just weeks after the UK stood down some 6,000 Whitehall staff hired to cope with a possible No Deal Brexit, having spent £1.5 billion on planning for it. The army of 6,000 civil servants who had been preparing for the UK to crash out of Europe were partially seconded from other duties, however some 4,500 were new recruits brought on-board specifically for the No Deal scenario, and according to the Guardian no longer have a “clear role” in the organisation. Critics of consulting spending will likely point to these workers to argue further outsourcing to temporarily broaden the civil service pool is unnecessary at this time.

Among the new round of contracts published by the Cabinet Office, some nine firms awarded contracts last year such as Big Four heavyweights EY and Deloitte have had them extended for another year, while a further 11 have been given brand new contracts. These deals will see the firms paid between £3 million and £6 million each, taking into account things such as accounting and auditing work as well as computer and management services.

Speaking in defence of the spending, a Cabinet Office spokesperson said, "As a responsible government we have, and will continue to, draw on the expert advice of a range of specialists to deliver a successful and orderly exit from the EU."

This news may also draw further ire, as it leaves the Government heavily dependent on the national wings of the world’s largest professional services firms, which it is being pressured to break up in order to avoid conflicts of interest between the companies’ auditing and consulting offerings. In the shadow of the collapse of Carillion, when auditing failures from a Big Four member allegedly led to its liquidation, a report from MPs recently endorsed the idea of breaking up the Big Four in the interest of competition, and preventing further bankruptcies among the country’s largest employers.

Commenting on the use of consultants during the Brexit process, Management Consultancies Association CEO Tamzen Isacsson said that Brexit had created an unprecedented workload for the UK Government. With the need to set up and plan new systems to cover border control, trade, agricultural policy and immigration, and establish a contingency plan to ensure the UK is prepared whatever the outcome, she argued it was completely normal for the country to look to the private sector for support.

Isacsson added, "The consultancy sector has supported the UK in these efforts providing vital skills, extra capacity and insight and experience from all economic sectors as well as innovative ways of working. Brexit planning has been an important part of consultancy work over the past couple of years and a recent independent survey of public sector leaders said consultants gave them access to “independent thinking” (49%) “transformational outcomes”(49%) as well as knowledge transfer and achievement of project goals. As you would expect expenditure on public consultancy is subject to a high degree of scrutiny but the benefits are clear.”