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.
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