NAO finds government lacks clarity on consulting spend

Amid calls for the UK government to bring its spending on private sector partners down, a new report from the National Audit Office suggests that officials do not have “consistent data” on what individual departments spend on consultants. The research also found a lack of clarity on how the expenditure had changed over time, complicating efforts to track spending cuts. 

The UK’s consulting market is estimated at bringing in annual revenues of over £20 billion. It’s second largest client base is the public sector – with government contracts having driven between one-fifth and one-quarter of consultancies’ incomes in recent years.

This is something which has been noticeably on the rise over the last decade. With the UK’s civil service having been left in a weakened state by an era of austerity cuts, the state was faced with a succession of systemic challenges – from the protracted Brexit process, to the Covid-19 pandemic. In this context, the government regularly sought to plug skills-gaps with knowhow from the consulting sector – something officials argued was better value for money than permanent appointments.

In the 2019/20 financial year, public sector spending on consultants hit £2.1 billion – but ballooned to £3.4 billion by the end of the 2023/24 year. Inheriting a bleak economic picture, the new Labour government which was installed after that pledged to find over £3 billion in savings for the following three years. Doubt was quickly cast on that promise, however, with a poll of senior civil servants finding that 96% expected consulting spending to increase, regardless.

Now, a report by the Comptroller and Auditor General at the National Audit Office has suggested that the government lacks the necessary oversight on consulting spending to accurately assess its plans. Examining figures from HM Treasury (HMT), which estimated that central government spend on consultants in 2022-23 was at approximately £1.36 billion, the NAO noted that other sources suggest the figure could be significantly higher – and as HMT aims to halve government spending on consultants by £550 million in 2024-25, reaching £700 million in savings by 2028-29, that lack of clear data may “present challenges in monitoring progress towards this target”.   

According to the NAO, 86% of government officials found the work of consultants either somewhat or extremely valuable. As a result, the lack of consistent data prevents HM Treasury from “understanding the roles for which consultants are repeatedly hired”. As a result, it does not have a clear picture of where money could be saved by hiring full-time workers or by promoting internally instead.  

The NAO report finds several reasons as to why the data on consultancy spending is inconsistent. These include different definitions being used within departments of what constitutes consultancy work, and difficulties in classifying services that consultants deliver.  Looking ahead, it recommends several ways in which the government could better monitor consulting spending, to evaluate when and where value for money is actually realised.

This includes proper planning for skills in department workforce plans, so they do not need to procure consultants unnecessarily or at short notice; the right scrutiny and oversight so consultants deliver the best value. See NAO good practice guide for further guidance; clearly establishing roles and responsibilities for a project; and ensuring that civil servants learn from consultants while they are working together by building knowledge transfer agreements into contracts. 

Industry response

Following the release of the report, Tamzen Isacsson, chief executive of the Management Consultancies Association, said, “The National Audit Office’s report highlights the vital role consultants play in helping government deliver complex projects and drive innovation across our public services. We welcome the NAO’s recognition of the value consultants bring in specialist areas such as digital transformation, cybersecurity, and organisational change and the significant contribution our industry makes to the public sector.

“We believe ethics and integrity must be at the heart of our profession. Through our Consulting Excellence principles and the Chartered Management Consultant Accreditation (ChMC), MCA members are committed to upholding the highest standards of professionalism and transparency. Every engagement must be conducted with integrity, aligned to government priorities, and designed to deliver long-term value for taxpayers.

“We fully support the call for greater transparency, value for money, and robust oversight in consultancy engagements, and stand ready to work in partnership with government to ensure high standards and effective knowledge transfer. By partnering effectively, we can help government organisations achieve better outcomes for taxpayers while equipping civil servants with the skills they need to meet future challenges. We recognise the financial constraints the current administration is facing and share its ambition to improve public sector productivity and innovation – enabling government to do more with less using specialist expertise and world class capabilities.

“We also encourage government to continue investing in training and development across the wider public sector as it embeds the best practices set out in the Consultancy Playbook and unlocks the full potential of the Procurement Act. This includes enhancing the role of SMEs in driving innovation and growth through public sector procurement.  

“Recent examples of successful projects delivered in partnership with government showcased at the MCA Awards 2025 include overhauling public transport, embedding AI in government practices to help generate growth and improving healthcare for millions of patients. In addition, the Chartered Management Consultant Accreditation (ChMC) supported by many leading firms across the industry ensures clients receive the highest quality and most qualified consulting support.

“The UK consulting sector is a great British success story - a thriving force in the economy driving growth and jobs and recognised across the world as a centre of excellence. We encourage the government to continue championing our sector and home and abroad as set out in the Industrial Strategy.”