Government 'wastes 40m pounds on consultants': Departments duplicate work ordered from outside experts

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THE Government wastes about pounds 40m a year by failing to use outside consultants properly, according to an efficiency unit report.

Government departments and agencies are duplicating the work they order from consultants, a scrutiny by the unit found. They are appointing as project managers civil servants who are too inexperienced, too busy or who change jobs too often. Only limited attempts are made to assess the benefits consultants bring or their value for money.

Over four years, departments and agencies could specifically identify only pounds 50m of savings - pounds 12.2m a year - from the use of external consultants on whom they jointly spent pounds 560m in 1992-93. That was because information about the use of consultants within government is often inaccessible; it is not possible to track spending and savings consistently across government; and consultants' contributions may be only part of a larger process. Even when the outcome is quantifiable, there may be no ready way of apportioning consultants' particular contributions to a new trunk road, new weapons system, more competitive British firms, or the big gains from privatisations or competitive tendering, for example.

'All one can really say with confidence is that external consultancy advice has been an important element in securing substantial quantifiable benefits for government, and that these benefits have been many times greater than the cost of the consultancy itself,' the report says.

None the less, 'substantial improvements' should be made in the way consultants are used. 'We found few attempts to look first at what other departments and agencies have done, or to see if there were other, cheaper ways of tackling the problem.' Making 34 recommendations to improve performance, including a central library of previous projects and a 'brokerage' service to identify the most appropriate consultants, the efficiency unit said consultants should be seen as a costly resource to be used 'only on matters of real importance to the organisation'.

Recommendations to improve the way consultancy contracts are agreed and handled would cost about pounds 22m a year but that should produce savings of pounds 65m, chiefly in consultancy fees - producing a net saving over three years of nearly pounds 130m. That did not include benefits from 'more relevant, more sharply focused and better-managed consultancy work, with results more systematically implemented'. If that produced only a 0.1 per cent efficiency gain across government, savings would total another pounds 164m a year.

David Hunt, Chancellor of the Duchy of Lancaster, said departments would be asked to draw up action plans based on the scrutiny's recommendations. Michael Meacher, his Labour opposite number, said the report showed half a billion pounds had been spent for 'pitiful' savings.

The Government's Use of External Consultants; HMSO; pounds 10.