Brexit buoys public spending on top consultants

New analysis has shown that public spending on consultants had been growing substantially long before the present crisis. With the Civil Service still depleted after a decade of stringent austerity cuts, the Big Four, the MBB and PA Consulting Group claimed £461 million in 2019-20 alone.

In October it was reported that consultants had racked up a £175 million bill for their work with the UK Government during the Covid-19 pandemic. As a result of its thin-spread Civil Service, the UK Government resorted to massive outsourcing of its work, tapping consultants from many of the world’s largest professional services firms.

As reported by The Guardian, contracts collated by data company Tussell saw disclosed spending on consultants rise by £65 million since the end of August, a 35% increase, triggering alarm bells in Parliament. At the same time, large contracts were also handed to consultants to help the Government revive its failing test and trace regime, as it struggled to prepare for an inevitable second wave of the pandemic.

While the on-going pandemic might be driving up state consulting spending in the short-term, however, a longer-term event has also seen growing amounts of public money handed to private consultants. The Government has long been papering the cracks in its depleted White Hall operations with consultants to help with the seemingly never-ending Brexit process.

While the UK’s withdrawal from the European Union might have slipped from the leading headlines over 2020 due to Covid-19, the Government’s dependency on top consultants for its impending divorce from Europe has not eased up.

According to further analysis from Tussell, spending on eight top consultancies has risen by 45% to more than £450 million in the last three years. As the final Brexit deadline draws ever closer, while the £88 million spent on consultants for transport is the highest bill – and represents a sizeable 156% year-on-year increase – the Home Office in particular has seen the biggest increase in consultancy spending over three years. It jumped 788% to £57 million as the department sought to deal with security, immigration and border preparations for post-EU life.

Deloitte was by far the biggest recipient of public funds from 2019 to 2020. The firm earned fees of £147 million from public funds over that period, compared with £40 million just two years earlier, amid a bonanza related in large part to Brexit.

This represents an impressive bouncing back for the professional services giant, which briefly ruled itself out of the running for any Government contracts in 2017, following a leaked memo disparaging the Government’s Brexit strategy, which caused Theresa May’s office to release an unprecedented attack on the firm, claiming the firm was “touting for business” through “unsolicited” analysis.

PwC was the next biggest winner, meanwhile, racking up a bill of £106 million in 12 months, followed by fellow Big Four members EY and KPMG. MBB strategy heavyweights McKinsey & Company, Boston Consulting Group and Bain & Company meanwhile received £43 million between them, and British origin PA Consulting Group picking up £33 million.

Speaking in defence of the spending on consultants, Management Consultancies Association CEO Tamzen Isacsson recently said, “The consulting sector has been able to bring in experience very quickly to support Government and deal with complex negotiations around data, infrastructure and procurement at pace… We should remember that Government is dealing with an unprecedented volume of workload and major upheaval both due to Covid-19 and Brexit and using external resources has enabled the Government to work quickly and with intensity in many areas.”