Government ditches plan to reduce ‘consulting dependency’

The latest twist in the continued love-affair between the UK government and external consultants has seen plans to create an in-house advisory wing scrapped. The news comes just two years after plans for the ‘Crown Consultancy’ were first discussed as a means to reduce taxpayer spending on private sector professional services giants, such as the Big Four and the MBB.

Thanks to a decade of austerity cuts, public services were already stretched thin before the advent of Brexit or Covid-19. In the years since, however, the NHS and Civil Service have been pushed to breaking point – with the under-resourced organisations asked to do even more with less. But as the government sought to quickly react to the series of crises the UK has faced in the past six years, it resorted to short-term contract fixes, rather than long-term building.

This has seen the government resort to massive outsourcing of its work, tapping consultants from many of the world’s largest professional services firms. Exemplifying this surge in such work, data from Tussell suggests that in 2016, contract awards were as low as £700 million – and had risen to £1.6 billion by 2019. The last three years of the pandemic have seen this boom by a further 75%, to £2.8 billion, though.

Among the consulting firms that are leading beneficiaries of this work, there are many of the world’s largest professional services entities. Big Four firm Deloitte was awarded contracts worth £278 million in 2022 alone, while its closest rivals PwC and EY won £152 million and £101 million, respectively. And while KPMG voluntarily withdrew from bidding for work for much of the year after its involvement in a series of scandals, it still was awarded £12 million in contracts.

While the figures might be taken with a pinch of salt – Tussell’s data sometimes includes contracts for IT upgrades and similar projects, which the government does not itself class as consulting work – it has added further fuel to disagreements about state outsourcing in the UK. So has the decision of the government to drop its proposed project to provide strategic advice and to train public sector staff, to wean it from a perceived dependency on consultants.

After discussions began in late 2020, the unofficially titled ‘Crown Consultancy’ has been axed. Reports in the Financial Times confirm that while there has been no official announcement, the government has shuttered its ‘consulting’ hub, according to sources familiar with the matter. The report also said insiders admitted the scheme “didn’t work”, and that government departments still preferred to use external consultants.

One year ago, the hub had wings in Glasgow, Birmingham and London, and was staffed by 60 specialist civil servants, providing advice to departments across government – with plans to grow. After a number of major government shifts in the last 12 months, though, that number dwindled to 40. The Cabinet Office said that the remainder of staff who had been working in the department would now be deployed to other roles.

In the time it was active, the hub developed a “consultancy playbook” to guide civil servants on getting value for money when hiring advisers. However, after the resignation of Lord Agnew – the Minister who oversaw its launch, having bemoaned the government’s “unacceptable” over-reliance on advisers, wasting public money and “infantilising” civil servants – its days appear to have been numbered from the start of 2022.

Commenting on the shift, the Cabinet Office said, “The Government Consulting Hub was established to ensure the government built more in-house capability while continuing to deliver efficient public services. As part of the next phase of work, training on the use of consultants has now been integrated into the core curriculum, including through the consultancy playbook.”

It said it would continue to ensure the government only used consultants “when absolutely necessary”. Meanwhile, consulting industry heads continue to argue that hiring advisors temporarily through competitive tenders is more cost effective than employing specialists permanently, anyway.

Management Consultancies Association CEO Tamzen Isacsson has repeatedly championed this point in recent years, previously noting, “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.”