Government hands KPMG and EY huge contract for AI training of civil servants
During the 2024 election, the Labour Party made the reduction of government consulting spending one of its key pledges. In office, it has struggled to live up to that promise, however, and is now reported to have issued the largest single contract to Big Four firms in more than 14 years.
As reported by the Financial Times, the UK government has awarded a contract worth up to £456 million to LPMG and EY to train civil servants. Citing data from government procurement tracker Tussell, the report also noted that this was the largest single contract win by the Big Four firms of EY, KPMG, Deloitte or PwC since Tussell began tracking these records in 2012.
Set in that same year, the previous record saw PwC handed a £322 million deal by the Foreign Office. This time, KPMG and EY will split the fee – with KPMG’s share capped at £137 million. Meanwhile, EY could earn up to £137 million, equivalent to around 13% of its UK consulting revenue over the same period.
It is worth pointing out that the government is not guaranteed to spend the full amount, with £456 million serving as a ceiling, not a guaranteed total. Even so, amid continued public scrutiny of spending on consulting firms, the deal arguably represents a major shift in policy.
While critics will suggest this is further rowing back on papering over the cracks at Whitehall with private sector contracts, however, supporters will note that in the long term it will help build capacity. Looking ahead, the arrangement will see EY and KPMG train officials across various skills areas including AI between 2026 and 2028.
While the Keir Starmer administration pledged to save more than £1.2 billion in consulting fees by 2026, Tussell figures suggest that Big Four companies have already secured £1.25 billion in contracts this year, exceeding last year’s total of £1.06 billion.
When the Financial Times contacted a Cabinet Office spokesperson, they defended asserted that the government remains committed to halving consultancy spending, with £700 million in annual savings now expected by 2028/29.
The spokesperson added that the contract awarded covers training services rather than consultancy and will be phased out once the in-house training model is in place.
