Government consultancy spend criticised

The National Audit Office (NAO) has criticised the UK government's approach to employing consultancies to assist with work such as IT projects.

The NAO, which scrutinises public spending on behalf of Parliament, slammed the government in a report entitled "Central Government's Use of Consultants". This report found that the public sector spent a total of £2.8bn on consultancy, an increase of 33 percent between 2003-04 and 2005-06, largely due to a rise in spending in the National Health Service.

"There's more to be done to secure value for money, and the government needs to take a much more strategic approach," said an NAO spokesman. "There's not enough information being shared on consultancy services, and consultants' skills need to be transferred to staff."

The NAO's list of criticisms of the government included that it:

• does not collect or aggregate adequate management information on its use of consultants;
• does not make proper assessment of whether internal resources could be used instead of consultants;
• does not have adequate controls on awarding contracts by single tender;
• does not undertake or share post-project performance reviews to inform future buying decisions;
• does not actively engage with and manage the relationships with key consultancy suppliers to better understand how they work and align objectives;
• and it does not regularly plan for and carry out the transfer of skills from consultants to internal staff to build internal capabilities.

IT consultancy represented the biggest amount of government spend in the 2005-06 period, with over £550m spent. The amount spent on IT consultancy has dropped over the past two years, while spending on other forms of consultancy has accelerated.

The government has turned to consultants to help it implement many IT projects over the years, including its ID card programme and the multi-billion pound upgrade for the NHS IT system. Both projects have been criticised, but the NAO reported that "key programmes... would have made less progress without the specialist skills and experience brought to bear by consultants."

The NAO said that the government needed to use consultants far more efficiently, or public money would continue to be wasted.

"When used incorrectly, consultants can drain budgets very quickly, with little or no productive results," said the report.

The NAO said it was not possible to make an overall assessment of the benefits that have arisen from the money spent on consultants, in part because departments rarely collect any information on what has been achieved.

According to the NAO, there are examples where consultants have "added real value and enabled departments to make improvements they would not have otherwise. Nevertheless there is some way to go before central government overall is achieving good value for money from its use of consultants."