Consultants 'fleece' the public purse

In the second of a three-part series, the IoS looks at how Government has spent a cool £20bn on management advisers

Famously described by Robert Townsend, former chairman of Avis, as "people who borrow your watch to tell you what time it is and then walk off with it", the army of management consultants employed to help to run the UK has come at the staggering estimated cost of £20bn in the past 10 years. Some consultants are being paid daily rates in excess of £3,000.

If the sums spent on IT programmes is added, the figure spirals to £70bn – sufficient to pay for hundreds of new hospitals. Instead, the main result appears to be the growth of an industry benefiting from lucrative contracts, according to David Craig, a former management consultant and author of Plundering the Public Sector.

Now all political parties are competing to plug the yawning financial chasm in the public budgets. Gordon Brown has promised to slash consultancy bills by half while the Tories have pledged to cut expenditure on consulting and advertising spending if they form the next government. Last night, the shadow Cabinet Office minister Francis Maude accused the Government of fuelling "a culture of waste" by frittering away millions on "incompetent projects".

An analysis by The Independent on Sunday has revealed the extent of the Government's profligacy. Among the big spenders are the Department of Health, whose expenditure on consultants totalled £125m last year. The most recent figures for defence chiefs' spending was £107m for 2007-08. The Department for Children, Schools and Families (DCSF) claims £59m went on consultants last year, but the figure rises to £70m if £11m cited for advice from "external experts" is included. The Department for International Development spent £21m on consultancy in 2009 – yet this excludes expenditure relating to developing countries.

One department, Defra, parted with more than £1bn for consultants and "professional services" between 2002 and 2007 – £187m of which went to management consultants. And the Home Office got through £662m on consultants in the past five years. The Department for Culture, Media and Sport is among the most parsimonious, spending £1.22m on consultants last year. That figure reaches almost £6m when IT costs and "professional services" are included.

The scale of spending is staggering, claims Mr Craig. "All too often, greedy management consultants are completely fleecing government departments because of the incompetence and inexperience of the people they are dealing with." He believes typical mark-ups for consultants can be more than 800 per cent. "Take a basic consultant on a salary of around £30,000. You sell that consultant to government for £6,000 a week – the equivalent of £250,000 a year. Nobody in the public sector ever asks why you are charging so much, but it is a back of a fag packet calculation; any idiot can do it. It becomes immoral when you're taking money from public services."

"Risk-averse" civil servants are a big part of the problem, according to Edward Leigh MP, chair of the Commons Public Accounts Committee. He accused them of being "always willing to pass the buck to the consultants instead of making decisions themselves", adding: "More civil servants have got to have courage to say 'no minister, we can't afford to do this', not 'yes minister'."

The civil service union, the Public and Commercial Services Union, defended its members' record. "It is scandalous that nearly 100,000 civil and public servants have been cut while billions of pounds has been wasted on consultants, often doing the same work as civil servants, but at 10 times the cost," a spokesman said.

The consulting industry said the bill is much smaller. It estimates the government consultancy business was worth £2bn last year. In 2006, the National Audit Office said almost £3bn a year was spent on external expertise. Alan Leaman, chief executive of the Management Consultancies Association, insisted the industry provided good value. "What you are buying is access to specialist skills, knowledge, understanding and experience." However, he conceded: "I think the biggest challenge for the industry is the ability to say 'no, although you're asking us to do that and we'd make money from doing it, we wouldn't recommend it'."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Tradewind Recruitment: PMLD Teacher

Negotiable: Tradewind Recruitment: PMLD Teacher A specialist primary school i...

Recruitment Genius: Online Media Sales Trainee

£15000 - £30000 per annum: Recruitment Genius: Now our rapidly expanding and A...

Recruitment Genius: Public House Manager / Management Couples

£15000 - £20000 per annum: Recruitment Genius: Are you passionate about great ...

Recruitment Genius: Production Planner

£20000 - £30000 per annum: Recruitment Genius: This fast growing reinforcing s...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links