MPs and unions have lambasted the government for spending £3bn on external advice in areas such as IT.
Parliament's all-party Public Accounts Committee has hit out at the government's "profligacy" for spending nearly £3bn on consultants, without a clear idea of the benefits.
Spending on consultants has risen by a third to nearly £3bn over the last three years, with the NHS accounting for most of this increase, says the committee's report, published on 19 June, 2007. Whitehall departments are repeatedly using consultants for core skills, including project and programme management and IT.
"It is impossible to believe that the public are receiving anything like full value for money from this expenditure," said committee chair Edward Leigh. "Departments are often on the phone to consultants without first finding out whether their own in-house staff have the skills to do the job. Even worse, departments and the Office of Government Commerce do not know how much is being spent on consultancy."
Since the committee last reported on the issue in 2002, the government has made only limited progress on its recommendations. Likewise, many of the recommendations from a report in 1994 by the Cabinet Office Efficiency Unit have not been fulfilled.
Over the past three years IT consultancy and project management skills accounted for 54 percent of total government spend on consultants. But consistently relying on external consultants for basic skills is expensive and, over a period of time, represents poor value for money, according to the MPs.
VIDEO
Dialogue Box 7.4: The expanding digital universe
How much data will be created and stored in 50 years' time? Rupert and Charles make some extrapolations and come to a startling conclusion
The Public and Commercial Services Union (PCS) has accused the government of cutting 100,000 civil and public service jobs and then making increasing use of consultants to plug the gaps, often at up to 10 times the cost.
The union cited the "ludicrous situation" at HM Revenue and Customs, which sought to save £105m in the past year by cutting staff, yet spent £106m on management consultants who have often been doing the same work as civil servants.
Mark Serwotka, PCS general secretary, said: "Rather than investing in its own workforce, the government has effectively given management consultants a licence to print money at the taxpayer's expense."
Departments must identify core IT skills gaps and decide on the most cost-effective use of internal and external resources, planning recruitment and training accordingly, the report says.
The report acknowledges that if consultants are used appropriately, they can provide considerable benefits. It gives the example of the Ministry of Defence's saving on procurement, after using consultants to help develop new buying methods.
Overall, departments have to adopt a much more intelligent approach to the use of external consultants and be more commercially aware in procuring consultants and drawing up fixed price contracts or ones that include incentives.
The committee's findings are based on a report by the National Audit Office published last year, as well as evidence from government buying agency, the Office of Government Commerce.
