Advice from private consultants costs Government £1bn a year

Advice to Government departments from private consultants costs tax payers around £1bn a year, new figures have shown.

Fees to outside consultants have rocketed by 600 per cent since Labour took office in 1997. Yesterday MPs from all parties criticised the spiralling cost of consultants and accused the Government of wasting hard-earned public funds.

The Government claims its extensive use of external consultancies, including agencies such as McKinsey - a former employee of Prime Minister Tony Blair's strategic adviser Lord Birt - ensures a "more effective delivery" of policies.

Figures released by ministers show that over the past three years government departments have paid consultants hundreds of millions of pounds. Some are charging £2,000 a day.

The Department of Transport has spent over £700m on "external consultants and advisers" since 2002, replies to parliamentary questions have shown.

The department said last night its consultancy budget represented "the total spent by the department and its agencies on all types of external advisers, not just management consultants".

But MPs have questioned why civil servants cannot do the job themselves - and at a fraction of the cost.

The Department for the Environment, Food and Rural Affairs has spent almost £50m on management consultancy over the past three years, including over £17m in contracts with PA consulting group, which is also advising the government on ID cards.

The management consultants hired by Defra also include IBM UK Ltd, Deloitte consulting, the Hedra consortium and Cornwell Management Consultants.

In reply to a parliamentary question from Labour MP Austin Mitchell, Jim Knight, the Environment minister, said: "Defra engages management consultants across its entire business, with the sole purpose of providing the department with more effective delivery of the policy aims set by ministers."

The Home Office has been paying around £35,000 a day to around 30 staff from PA Consultancy for work on its ID card scheme.

Last year the Ministry of Defence spent almost £70m on external advisers, a 170 per cent rise on the previous year and figures show that the Department for Trade and Industry hired 1,421 consultancy firms in the past year, as well as over 600 individual consultants. The Department for Education spent £17m on consultants in the past three years. The Whitehall Department which spent the least on external consultancy fees was the Department of Culture which spent only £143,000 over the past three years.

For 2003, the most recent figures available, £1.3bn was spent on consultants, more than £3m a day.

According to the Management Consultancies Association, which is about to publish a report confirming the sums paid by government to external consultancies, spending in the public sector far outstripped growth in other sectors with an overall increase in fees of 13 per cent coming from a boom in work commissioned by the Government.

The Tories yesterday accused the government of wasting tax-payers' money and spending too much on external advisers. "Once upon a time Labour claimed to be the party of the poor and downtrodden. Now it seems devoted to £1,000 an hour management consultancy gurus," said a Tory spokesman. "If the Government is spending so much on external advisors, what on earth are its own highly paid pen pushers doing? Fat government simply cannot stop getting fatter."

Some government departments refused to tell MPs how much they spent because replying to their question would represent a "disproportionate cost".