Government spending on consultants rises

Wednesday 13 January 2016

The UK government has always found use for temporary staff, particularly management consultants. However, the coalition tried to significantly cut back on this when it came to power in 2010, reducing the amount spent on consultants by around £1.5 billion. Despite this, recent research shows this trend is reversing.

An investigation undertaken by the National Audit Office (NAO) has found that recent years have been a boom period for government consultants. In the last three years, Whitehall spending on consultants and temporary staff has nearly doubled, increasing by £600 billion to a total of around £1.3 billion per year.

The cause of this increased spend appears to have been the reduction in permanent government staff due to austerity measures. This might suggest that the increase in consultants is unsustainable, but for the moment it is how the government is working.

On average, consultants on government projects are paid twice as much as permanent staff. The NAO's analysis found that from 2011 to 2015, the average annual cost of a consultant or temporary staff member rose by 18 per cent, from £48,000 to £56,500. It is thought that this is due to certain departments struggling to recruit specialists in certain areas without offering higher wages.

In fact, 47 consultants were found to be on contracts offering them over £1,000 per day. Out of all the permanent government staff, only 30 people were on as high a wage according to the NAO's analysis.

On average, government offices are spending between six and eight per cent of their budgets on consultants and temporary staff. This varies between departments, with HMRC only spending one per cent of its budget on this, while the Cabinet Office uses around 35 per cent.

Amyas Morse, head of the NAO, said of these results: "Used well, consultants and temporary staff can be an important source of specialist skills and capabilities for departments that need to transform how they do business."

The NAO also doesn't see this trend reversing any time soon. It has said that "there will continue to be upward pressure on consultant and temporary spending" as government departments try to enact 'transformation projects' suggested by chancellor George Osborne in his latest spending reviews.
Overall, it is clear that it is a good time to be a management consultant in Whitehall. With wages increasing and new opportunities opening up constantly, this aspect of the government is proving to be very lucrative.

By Victoria McDonnell

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