Tories pay sell-off consultants pounds 320m

Chris Blackhurst@c_blackhurst
Thursday 15 October 2015 11:51

The Government has spent almost pounds 320m on obtaining consultancy advice on its privat- isation programme, according to new figures released today.

A series of parliamentary answers to Alan Milburn, Labour MP for Darlington, reveal the full extent of the so-called privatisation "gravy train" and raise further questions about the way the sell-offs have been handled.

The main beneficiaries have been a handful of leading banking and accountancy firms, many of which enjoy close links with the Conservative Party.

One of the most active advisers, for example, has been NM Rothschild, which counts Lord Wakeham and Norman Lamont among its directors. When he was Secretary of State for Energy, Lord Wakeham appointed NM Rothschild to advise on the future of the mining industry. To date, consultants have earned pounds 284m from direct sales and pounds 34m from "market testing" Government functions to see if they could be better managed in the private sector. Market testing often acts as a precursor to wholesale privatisation.

Not all departments provided full figures, prompting Mr Milburn to allege the total bill is far higher than pounds 320m. The Ministry of Defence would only say it had spent pounds 7m on privatisation advice - on the sale of the royal dockyards. Other MoD disposals, like redundant RAF bases, were not included.

Even so, Mr Milburn demanded to know how the MoD had spent pounds 7m employing consultants on the sale of the Rosyth and Devonport dockyards, even though the only firms which want to buy the yards are the two which currently run them.

Topping the Whitehall league table is the Department of Transport, which has spent pounds 122m, most of it on rail privatisation. Other big spenders include the departments of Trade and Industry (pounds 68m), Environment (pounds 26m) and Scotland (pounds 20m). Not all the money was spent on the multi- million pound sales. Consultants were paid pounds 627,000 to advise the Department for Education on privatising the Plant Breeding Institute. The Ministry of Agriculture was charged pounds 41,000 for advice on the Covent Garden Market Authority, while examining future options for BBC transmitters cost National Heritage pounds 172,000.

Despite plans by Cabinet ministers to slash the use of outside consultants, there is no sign, so far, of any cutbacks. Costs rose last year alone by pounds 26.5m. Any cuts being planned were bound to be "too little, too late", said Mr Milburn, adding that a handful of City firms would continue "to feather their nests at the public's expense".

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