Labour attack pounds 565m spent on consultancy services: Policy described as 'grotesque waste of taxpayers' money'

THE GOVERNMENT spent pounds 120m last year on hiring management consultants to do the jobs of civil servants. The figure is revealed in an unpublished report by the Prime Minister's Efficiency Unit.

Last night, Labour attacked the 'staff substitution' total, claiming it was proof of a growing 'crisis of confidence' in Whitehall. Michael Meacher, the Opposition civil service spokesman, said it indicated 'deep distrust and side-lining on a truly massive scale'.

To spend pounds 120m in areas where there is a shortage of civil servants when so many had lost their jobs was 'a scandalous misuse of taxpayers' money. The Government should be training and recruiting to ensure they have the capability in- house, as it's cheaper'.

Earlier, another aspect of the provisional report - that the Government last year spent pounds 565m on consultancy advice to produce a saving of pounds 10m - caused a furore at Prime Minister's questions. The Labour leader, John Smith, claimed it was 'a grotesque waste of taxpayers' money'. Families facing increased tax bills would 'resent this further example of the Government's now legendary incompetence'.

John Major dismissed the attack as 'bogus'. The scrutiny study had been ordered because he was concerned over the growth in expenditure on consultants and wanted to to discover whether they were providing good value for money. 'If it confirms that the expenditure is producing good results we will maintain it. If not, we will make the changes required,' he declared.

The pounds 565m covered 6,800 projects involving 1,700 consultancies. Seven firms - Andersen, PA, KPMG, Ernst & Young, Price Waterhouse, Coopers & Lybrand and Touche Ross - took almost 20 per cent of the work.

Mr Meacher said that 'any board of management where the costs so enormously exceeded the benefits would be sacked . . . by its shareholders'. The report's conclusions showed the Government's 'flagship programmes of market-testing and civil service reforms were unsustainable'.

Appearing before the Treasury and Civil Service select committee, Sir Robin Butler, head of the Home Civil Service, refused yesterday to comment on the report. He angered MPs by refusing to allow them to conduct a Whitehall-wide attitudes survey, as part of their study into the role of the modern civil servant: 'I'm concerned nothing should be done which can be used to weaken the civil service's reputation for political impartiality.'

Sir Robin went on to re-open the row about when ministers can lie to Parliament, by supporting the assertion of William Waldegrave that the former prime minister, James Callaghan, had misled the Commons during the 1967 sterling crisis. Lord Callaghan hotly denied the original charge.