One of the Tory’s main plans is to cut the number of consultants working for various government departments. Without it, it is doubtful that a Conservative government would enable local authorities to freeze council tax (a policy that incidentally makes this blogger think the Shadow Chancellor reads Coffee House).
The desire to cut the cost of consultants is understandable. Spending on consultants across the public sector reached to a whopping £3bn in 2006, according to the National Audit Office. The cost has probably gone up since then. The Conservatives think they can save a total of £500 million in the first full year of government, and by £1 billion in all subsequent years (although this also includes government advertising).
The huge increase in the use of consultants is almost entirely caused by the NHS, where spending on consultants in 2006 jumped to more than £500m. But other departments are at it too. According to the 2006 NAO report, DfiD spent £255m; the Ministry of Defence £213m; the Department for Environment, Food and Rural Affairs £160m; the Home Office £129m. The companies that have made the most out of Whitehall are IBM, LogicaCMGT, Accenture, and PA Consulting.
Thinking back to my own time working for the government, I remember different kinds of consultancy arrangements. Most were completely legitimate, bringing in expertise that the departments cannot afford to keep on full-time.
The problem is that while the government has imposed a ceiling on recruitment, and the personnel in most departments are "talented amateurs", more and more specialist expertise has to be brought in. In DfiD, for example, whole cadres of in-house experts, like engineers, have left and now work for private companies that are brought in either on a case-by-case basis or, like Crown Agents, on five-year contracts. When DfiD had to deploy alongside British forces in Iraq, there are simply not enough trained and willing officials to go with the soldiers and consultants had to be brought in.
The problem for the Tories is that stopping the use of consultants will create a gap. So a Conservative government either has to stop doing certain things or hire more civil servants. Ah, the Tories say, better management will make efficiency savings. And people will be better trained to manage consultants to cut costs.
The latter will certainly help. In 2007, MPs were shocked to find practically none of financial directors in government departments had any qualifications or training in accountancy. Again thinking back to my own experience, consultants frequently
have more experience in contractual negotiations than their paymasters. Sometimes the consultants are former officials themselves, who have gone through several negotiations. Even when the strictest EU rules are applied to tendering appropriately (which is the case in all but a handful of instances), when it comes to judging performance, officials struggle if they do not have the expertise.
Personally, I’m a little skeptical of the real scope for efficiency savings, at least in the first two years of a Tory government. It takes time to learn how to run a government. Just ask Tony Blair. And while there is a lot of low-hanging fruit, like making departments talk to each other on which are the best consultancy firms and who are the best partners, don’t expect rapid change.
So where am I going with this? That a Tory government will probably end up having to cut programmes, even very popular ones, if it wants to make the necessary savings.
One, its totally unrealistic. Taking out £700m in year 2 is a nonesense without hitting real services. These consultants are not just wasting public money. And in fact, some of the key policies, like reorganising the NHS to be managed by a new quango, will require more admin and high consultancy use.
Two, if i was cutting back on needless bureacracy, it would, in truth, be the civil service i would cut, not McKinsey or PWC
Speaking as a former consultant (now retired) I have to tell you this policy is total tripe.
Tripe the masses can feast on, that is true. But its tripe nonetheless.
The consultants in the NHS are now the problem - they are part of the solution - just look at the FESC contracts by which outsiders come in, or look at all the work Hague's former consultant McKinsey has done to turn underperforming hospitals around.
This policy will badly hurt the ability of public services to modernise and reform. Its exactly the sort of thing you would expect from a left-wing opposition, not a government that aspires to change anything, let alone the public services
Well Ihave to say that if I were a consultant I would say that. If you are sacking people then sacking the people who are expensive is a good place to start. And you are expensive, you know. You say we couldn't get on without you. Well maybe not. Let's try and see. We can always rehire you if we need to. You'llbe always available. It's like a playboy cutting down on his mistreeses, don't you know. I might have said whores, but I wouldn't be so rude.
The David Craig accusations of government consultancy ae not without foundation. The concerns you raise are also well founded, as are the points made by DJCampbell above. The pressing needs (in ascending order) are: a) competence, as you point out b) responsibility (and accountability) being clearly assigned in the Civil Service - something Sir Humphrey will resist to the last. The NAO (I think) report on SRO's was damning. c) clarity of thought from politicians. The Daniel Craig problem will then vanish.
Consultants and contractors have always been employed by government departments when job-specific expertise may not be found 'in house' but nothing on the immense scale of recent years.
To understand this problem, one would need to go back to 1981 and revisit Margaret Thatcher's decision to disestablish the Home Civil Service on the advice of her supermarket gurus (as if any of them would understand how the machinery of government works). That decision radically destabilised both the ethos and structure of the professional civil service. Creeping privatisation, below inflation pay rises and the 'outsourcing' of core tasks to 'agencies' have also contributed to the current rock-bottom morale of public servants.
Consultants are merely a sticking plaster being used to address the law of unintended consequences and that is what happens when people fiddle with things they don't understand.
Unfortunately, because nobody in the present or incoming administration has ever had a 'real' job, don't expect the damage to be fixed anytime soon.
What would really cut public expenditure would be a bonfire of the QUANGOs, epecially those set up by Nulabour to provide lucrative positions for its cronies, hangers-on and henchmen. Local government is just as guilty, often allowing favoured bureacrats, usually of the socialist persuasion, to retire early with large pay-offs and pensions only to re-employ them immediately as consultants through one or more of the firms that have been established for just such a purpose.
"That a Tory government will probably end up having to cut programmes, even very popular ones, if it wants to make the necessary savings."
As will any government. A statement of the bleeding obvious, I think.
As to consultants, well one would certainly expect them to fight their corner but they have yet to prove their value. If they are all fired the sky will not fall. If Cameron's intention is to push direct powers and personal responsibilities further down the line that'll be a very good start.
It's about time that people were made individually responsible for their actions. Consultants take that all away, by nannying and dictating even the slightest tasks.
Anyone who has worked in the private sector knows that when times are really tough you simply have to take a 5% or 10% cut in numbers. At the same time you have to maintain production and service levels. It is difficult and always seems impossible but when you have to do it the efficiencies get found. Part of the problem with the current generation of politicians is that they simply do not have this experience of running large organisations. It may be harsh but an incoming Conservative government needs to instruct a 5% reduction in Civil Service numbers with no reduction in services and a further reduction in the use of agency staff.
My, my the consultants who make a fine living by, largely, stating exactly what their clients want to hear seem to be protesting way too much...
Like quangos the real value to the government is that they have someone to pin the blame on if their ideas go pear shaped, for most politicians this is worth shelling out copious quantities of more than £2.5K a day for someone in a suit to state the bleedin' obvious.
The real target should be the entire workforce including consultants. They are the easier target as said above.
The real problem won't be tacked until they take on the Public Sector Unions who are making a last stand for Trades Unionism at our expense and in a less overtly aggresive way, for now, than their 1970/80's ancestors.
This is a populist statement of intent. Will they realy do what they need to?
Like the author, I am an ex-consultant in Central Government, albiet in a small way. The key is not to focus on the contultants, but to focus on reform of the Civil Service.
It is a generalist organisation and culture where non discipline specific academic qualifications allow individuals to operate at very high levels, in disciplines where, in the commercial world they would need a high level vocational qualification i.e. ACCA or CIMA in finance.
The Professional Skills for Government initiative which was supposed to provide this was fudged by Gus O'Donnell, who realised that, if he was to meet the requirements of the reform, a lot of his mates would surely be put out to grass.
In essence the issue is that those that are charged with reform in the Civil Service (and the public sector generally) are those who have the most to lose through the reform.
This policy is doomed, because, if you enact it, you will remove all the real competece in Government Departments.
The growth in the management consultancy market is one of the great con-tricks of post-industrial Britain and one eagerly embraced by New Labour.
The problem has long been that business hierarchies, whether in government or the private sector, are not structured to empower their management levels to implement the incremental changes and improvements needed for real progress (in Japan - Kaizen - although even that concept is now under siege by the change refugees from the failed industrial market before being properly tried here). Everyone has become seduced by the grand gesture and "big bang" approach to change which requires external consultancy input to get concepts past turgid, uncomprehending and often plain stupid management hierarchies and their even more arcane boards. It has become a culture convention for British business that boards listen more to outsiders than their own people.
In almost all cases the consultants draw from and adapt ideas and issues already articulated and understood from within the in-house management levels they examine. Because the in-house people have the knowledge but not the empowerment for change the consultants merely translate it into a form that the hierarchies and boards can buy into, believing that acumen, insight and knowledge can only legitimately come externally. The consultancy market has exploited the fact that British business culture is so stifling, hierarchical, top-down, age-discriminating and distrusting of its own people, constantly switching between responsibility and empowerment rather than implementing both evenly. That is why the top people get paid such huge amounts - because only they are empowered to make change happen. The result is a dynamic "club" of chief executives who move around between organisations, including the public sector, on six figure + salaries, supported and justified by an army of consultants. The same culture is now extending to councils and for some time has been creeping into government with the concept of "czars". With dynamism locked up like this it will never permeate through organisations in a way that would result in real change. The whole thing is a game, an illusion, played out until the next "big bang" and the next round of whopping bonuses and fees enjoyed by the twin partners in the crime.
Britain has exchanged one class system for another. The chief executives are the new wicked barons, the consultants the knights for hire and the rest just the serfs beavering away as before. Socialism just changes the style and the buzzwords. The rest stays the same.
Yes the competence in most departments has been removed - and largely replaced by politics. That said, it's certainly not impossible to reverse this position. Just fire some consultants and political advisors, wait for the wailing, and then recruit competent individuals into the Civil Service. It's been done before - and it would be altogether cheaper.
Previous
geoff
October 1st, 2008 12:13am Report this commentOne, its totally unrealistic. Taking out £700m in year 2 is a nonesense without hitting real services. These consultants are not just wasting public money. And in fact, some of the key policies, like reorganising the NHS to be managed by a new quango, will require more admin and high consultancy use.
Two, if i was cutting back on needless bureacracy, it would, in truth, be the civil service i would cut, not McKinsey or PWC
DJCampbell
October 1st, 2008 12:17am Report this commentSpeaking as a former consultant (now retired) I have to tell you this policy is total tripe.
Tripe the masses can feast on, that is true. But its tripe nonetheless.
The consultants in the NHS are now the problem - they are part of the solution - just look at the FESC contracts by which outsiders come in, or look at all the work Hague's former consultant McKinsey has done to turn underperforming hospitals around.
This policy will badly hurt the ability of public services to modernise and reform. Its exactly the sort of thing you would expect from a left-wing opposition, not a government that aspires to change anything, let alone the public services
Penelope
October 1st, 2008 12:18am Report this commentThe growth in consultants is directly attributable to competition and outsourcing as you say. Both good things in my view.
Fergus Pickering
October 1st, 2008 6:27am Report this commentWell Ihave to say that if I were a consultant I would say that. If you are sacking people then sacking the people who are expensive is a good place to start. And you are expensive, you know. You say we couldn't get on without you. Well maybe not. Let's try and see. We can always rehire you if we need to. You'llbe always available. It's like a playboy cutting down on his mistreeses, don't you know. I might have said whores, but I wouldn't be so rude.
BrianSJ
October 1st, 2008 7:10am Report this commentThe David Craig accusations of government consultancy ae not without foundation. The concerns you raise are also well founded, as are the points made by DJCampbell above. The pressing needs (in ascending order) are:
a) competence, as you point out
b) responsibility (and accountability) being clearly assigned in the Civil Service - something Sir Humphrey will resist to the last. The NAO (I think) report on SRO's was damning.
c) clarity of thought from politicians.
The Daniel Craig problem will then vanish.
Baldylocks
October 1st, 2008 7:38am Report this commentConsultants and contractors have always been employed by government departments when job-specific expertise may not be found 'in house' but nothing on the immense scale of recent years.
To understand this problem, one would need to go back to 1981 and revisit Margaret Thatcher's decision to disestablish the Home Civil Service on the advice of her supermarket gurus (as if any of them would understand how the machinery of government works). That decision radically destabilised both the ethos and structure of the professional civil service. Creeping privatisation, below inflation pay rises and the 'outsourcing' of core tasks to 'agencies' have also contributed to the current rock-bottom morale of public servants.
Consultants are merely a sticking plaster being used to address the law of unintended consequences and that is what happens when people fiddle with things they don't understand.
Unfortunately, because nobody in the present or incoming administration has ever had a 'real' job, don't expect the damage to be fixed anytime soon.
The Laughing Cavalier
October 1st, 2008 9:36am Report this commentWhat would really cut public expenditure would be a bonfire of the QUANGOs, epecially those set up by Nulabour to provide lucrative positions for its cronies, hangers-on and henchmen. Local government is just as guilty, often allowing favoured bureacrats, usually of the socialist persuasion, to retire early with large pay-offs and pensions only to re-employ them immediately as consultants through one or more of the firms that have been established for just such a purpose.
Chuck Unsworth
October 1st, 2008 9:45am Report this comment"That a Tory government will probably end up having to cut programmes, even very popular ones, if it wants to make the necessary savings."
As will any government. A statement of the bleeding obvious, I think.
As to consultants, well one would certainly expect them to fight their corner but they have yet to prove their value. If they are all fired the sky will not fall. If Cameron's intention is to push direct powers and personal responsibilities further down the line that'll be a very good start.
It's about time that people were made individually responsible for their actions. Consultants take that all away, by nannying and dictating even the slightest tasks.
Forlornehope
October 1st, 2008 9:56am Report this commentAnyone who has worked in the private sector knows that when times are really tough you simply have to take a 5% or 10% cut in numbers. At the same time you have to maintain production and service levels. It is difficult and always seems impossible but when you have to do it the efficiencies get found. Part of the problem with the current generation of politicians is that they simply do not have this experience of running large organisations. It may be harsh but an incoming Conservative government needs to instruct a 5% reduction in Civil Service numbers with no reduction in services and a further reduction in the use of agency staff.
Travis Bickle
October 1st, 2008 10:23am Report this commentMy, my the consultants who make a fine living by, largely, stating exactly what their clients want to hear seem to be protesting way too much...
Like quangos the real value to the government is that they have someone to pin the blame on if their ideas go pear shaped, for most politicians this is worth shelling out copious quantities of more than £2.5K a day for someone in a suit to state the bleedin' obvious.
Ian C
October 1st, 2008 11:29am Report this commentThe real target should be the entire workforce including consultants. They are the easier target as said above.
The real problem won't be tacked until they take on the Public Sector Unions who are making a last stand for Trades Unionism at our expense and in a less overtly aggresive way, for now, than their 1970/80's ancestors.
This is a populist statement of intent. Will they realy do what they need to?
Hereford
October 1st, 2008 12:09pm Report this commentLike the author, I am an ex-consultant in Central Government, albiet in a small way. The key is not to focus on the contultants, but to focus on reform of the Civil Service.
It is a generalist organisation and culture where non discipline specific academic qualifications allow individuals to operate at very high levels, in disciplines where, in the commercial world they would need a high level vocational qualification i.e. ACCA or CIMA in finance.
The Professional Skills for Government initiative which was supposed to provide this was fudged by Gus O'Donnell, who realised that, if he was to meet the requirements of the reform, a lot of his mates would surely be put out to grass.
In essence the issue is that those that are charged with reform in the Civil Service (and the public sector generally) are those who have the most to lose through the reform.
This policy is doomed, because, if you enact it, you will remove all the real competece in Government Departments.
Nicholas
October 1st, 2008 1:52pm Report this commentThe growth in the management consultancy market is one of the great con-tricks of post-industrial Britain and one eagerly embraced by New Labour.
The problem has long been that business hierarchies, whether in government or the private sector, are not structured to empower their management levels to implement the incremental changes and improvements needed for real progress (in Japan - Kaizen - although even that concept is now under siege by the change refugees from the failed industrial market before being properly tried here). Everyone has become seduced by the grand gesture and "big bang" approach to change which requires external consultancy input to get concepts past turgid, uncomprehending and often plain stupid management hierarchies and their even more arcane boards. It has become a culture convention for British business that boards listen more to outsiders than their own people.
In almost all cases the consultants draw from and adapt ideas and issues already articulated and understood from within the in-house management levels they examine. Because the in-house people have the knowledge but not the empowerment for change the consultants merely translate it into a form that the hierarchies and boards can buy into, believing that acumen, insight and knowledge can only legitimately come externally. The consultancy market has exploited the fact that British business culture is so stifling, hierarchical, top-down, age-discriminating and distrusting of its own people, constantly switching between responsibility and empowerment rather than implementing both evenly. That is why the top people get paid such huge amounts - because only they are empowered to make change happen. The result is a dynamic "club" of chief executives who move around between organisations, including the public sector, on six figure + salaries, supported and justified by an army of consultants. The same culture is now extending to councils and for some time has been creeping into government with the concept of "czars". With dynamism locked up like this it will never permeate through organisations in a way that would result in real change. The whole thing is a game, an illusion, played out until the next "big bang" and the next round of whopping bonuses and fees enjoyed by the twin partners in the crime.
Britain has exchanged one class system for another. The chief executives are the new wicked barons, the consultants the knights for hire and the rest just the serfs beavering away as before. Socialism just changes the style and the buzzwords. The rest stays the same.
Chuck Unsworth
October 1st, 2008 2:29pm Report this comment@ Hereford
Yes the competence in most departments has been removed - and largely replaced by politics. That said, it's certainly not impossible to reverse this position. Just fire some consultants and political advisors, wait for the wailing, and then recruit competent individuals into the Civil Service. It's been done before - and it would be altogether cheaper.
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