Consultants to lose £3bn of UK government work under plan to halve advisory spend
Both Tories and Labour pledge to cut reliance on external firms
Consulting firms risk losing billions of pounds of lucrative government work after the Conservatives and Labour both pledged to halve UK government spending on external advisory firms.
The two main parties made manifesto commitments this week to cut their reliance on consultants over the next parliament, a move expected to save around £3bn over five years.
Government use of consultants has risen to record levels since the last election, driven by demand for emergency schemes during the Covid-19 pandemic, as well as digital transformation projects and civil service training.
Eight companies — Deloitte, EY, KPMG, PwC, McKinsey, BCG, Bain and Accenture — have between them been awarded £7.1bn of public sector contracts since December 2019, according to figures from Tussell, a data group.
Critics, including Parliament’s public accounts committee, warn that the government’s reliance on consultants wastes money and prevents the UK’s civil service developing valuable skills in-house.
Lord Theodore Agnew, a then-UK government minister, said in 2020 that an “unacceptable” over-reliance on advisers wastes taxpayer money and “infantilises” the civil service.
This week, Labour leader Sir Keir Starmer and Prime Minister Rishi Sunak pledged to slash spending on consultants as they sought to find cash to fund their manifesto commitments against an uncertain economic backdrop.
Labour, which is far ahead in the polls, estimated it would save £745mn a year — or £3.73bn over five years — by halving spending on consultants, which it said would be reallocated to “prioritising frontline public service delivery and public sector capability”.
Calculations by the cabinet office, commissioned by the Conservatives, forecast that Labour’s move would create net savings of £3.04bn by the end of 2029.
The Conservative party also said it would halve spending on external advisers, introduce controls on all equality, diversity and inclusion initiatives and spending.
The party in addition wants to return the civil service to its pre-pandemic size, which would mean axing nearly 90,000 roles, according to the Institute for Government.
“You can be more economic and say you’ll save £3bn by cutting consultants, but you’ve got to replace them with [civil servants],” said one veteran public sector consultant at a global advisory firm.
“You might see that as more efficient but what it isn’t is more effective. You would massively cut productivity, performance and effectiveness.”
“You might see that as more efficient but what it isn’t is more effective. You would massively cut productivity, performance and effectiveness.”
The UK government has previously made efforts to reduce the use of advisers in Whitehall, including the creation of an in-house consultancy arm during the last parliament.
Backed by former Downing Street adviser Dominic Cummings, the “Crown Consultancy” was supposed to cut government spending on private sector firms. However, the project was scrapped last year after officials admitted it “didn’t work” and that departments preferred to use external advisers.
High spending since the last election has been a boon to consulting firms, with Deloitte awarded contracts worth £1.9bn during the period, Tussell data showed. Its Big Four rivals KPMG, EY and PwC won £1.3bn, £1.03bn and £1bn, respectively.
Actual spending is usually lower than the value of contracts awarded because many projects run over several years and because Tussell’s data sometimes include contracts for projects such as IT upgrades, which the government does not classify as consultancy spending.
The consulting industry argues that bringing in advisory firms for short-term projects through competitive tenders is more cost-effective than employing specialists in government departments full time.
“The next government will face a complex series of challenges on an unprecedented scale and we believe it will continue to need the very best of private sector expertise to deliver better frontline services for taxpayers,” said Tamzen Isacsson, chief executive of the Management Consultancies Association.
Why democratic societies are having trust issues
We have faith in those closest to us while politicians seem increasingly distant
This week’s news that trust in UK politics is at an all-time low will surprise no one. This is not a one-party problem — 45 per cent of people told the British Social Attitudes Survey they would “almost never” trust administrations of any party to put the national interest before their own. It’s a judgment on a political class that seems removed from the rest of society.
But this lack of trust indicates a much deeper and more profound change in democratic societies in a year of elections across the world: we are increasingly untethered from each other; disconnected, fractured, atomised.
This isn’t just about politics. If we are to improve trust in the institutions that hold us together, we need to look a little closer to home. Humans are deeply relational beings. We crave belonging; we long to connect to something greater than ourselves. It is hard to connect with, or trust, things — or people — that feel far removed from us.
Like many, the people I trust the most are those closest to me. In most cases, they are physically close: those with whom I share a home, office space, or dining table. They are those I share blood with, or take communion next to.
It makes sense that the Ipsos Veracity survey of 2022found that nurses were the most trusted profession. Others included doctors, teachers, taxi drivers, car mechanics and restaurant staff. These are people we encounter face to face. And we are literally trusting them with our lives: our safety and health.
Most people may only meet a politician in the flesh during election campaigns — when they might well believe it is not their wellbeing that’s sought, but their vote. We trust people who tell the truth, who are competent and who do what they say they are going to. But to so many, politicians are those who held parties while thousands died from Covid, made Brexit promises they could not keep, or handed public contracts to their friends while cutting public services for everyday people.
Picture an MP and we’re more likely to imagine someone wearing a suit in the ornate chamber of the Houses of Parliament than someone running their constituency surgery in a grubby community hall, though both form part of their weekly lives.
Politicians sense our need for connection; which is why we see constant attempts by leaders to highlight things they think narrow the distance between us and them, making them seem more relatable: Rishi Sunak’s GP father and pharmacist mother, Keir Starmer’s toolmaker dad and nurse mum. Though a seemingly wacky comms strategy, Ed Davey having a whale of a time on rollercoasters has sparked warmth. So too have his emotional broadcasts about caring for his disabled son. To laugh is human, to cry divine.
Politics has always been an exclusive club, but there are reasons people feel particularly untrusting now. Technology makes it harder to get away with inconsistencies and lack of integrity. Footage of a gaffe can be shared millions of times on social media. It’s not just exposing fallibility, but instant and constant dissemination of it.
Participation in political parties, which act as the connective tissue between people and politics, is also low, exacerbated by technological and digital distractions. But while we are not engaging, we simultaneously want politics to connect more to the realities of our everyday lives. This is perhaps why support for the devolution of power to the local level has risen in England — and is notably higher among those with low levels of trust and confidence.
We are not just less connected to politicians, but to each other, which in turn leads back to a lack of trust in politics. The invisible bonds that once held us together in communities, and connected us to the institutions entrusted with our flourishing, have been severed.
Our research at Theos found religious Britons, and Christians in particular, were more likely than the non-religious to feel they could make a difference in politics. Those who practise their faith — with all the transcendence, community, social interaction and local participation that this provides — score higher on political trust. It is those who have — through a multitude of factors — become more disconnected that trust less.
To restore trust, yes, we need more truth and integrity in politics. But we also need to reconnect with those around us, to strengthen communities, and build the kind of politics that doesn’t win or lose on polling day.
