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Last Updated: Tuesday, 19 June 2007, 14:01 GMT 15:01 UK
MPs attack 2bn consultants bill
Hospital ward
Much of the increase was due to NHS spending, MPs said
The government spends nearly 2bn a year on external consultants, often without adequately measuring value for money, a committee of MPs has said.

Whitehall spent 1.8bn of the public sector's 2.8bn bill for 2005-6, a 33% rise in three years, the report said.

Public Accounts Committee chairman Edward Leigh said tighter controls could save 500m a year.

The government said there were a "great many" projects which had been delivered successfully using consultancies.

The report said only the Department of Trade and Industry and the Department of Work and Pensions had shown a "consistent decrease" in spending on consultants since 2003-4.

Recruitment plan

Much of the increase was due to NHS spending, it said, and 54% of total expenditure on consultants went on IT and project management.

"Consistently relying on consultants for basic skills is expensive and repeated use suggests poor value for money," the report said. It suggested departments "plan their recruitment and training accordingly".

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
Edward Leigh
Committee chairman

It said departments and the Office of Government Commerce "do not routinely know how much money is spent on consultants" - making it hard to measure whether they were worth the money.

And often civil servants had the skills to do the job themselves and were cheaper, yet consultants were still being used.

The report said reasons for using consultants should be "clearly articulated" to prevent them being used for the wrong reasons - such as a means of deflecting blame.

'No idea'

It also recommended that departments be more rigorous in checking expenses and consider paying consultants "on what they produce" rather than on the time spent working.

And it said departments should share experiences and look to transfer skills from consultants to their own staff.

Committee chairman Mr Leigh added: "Consultants can of course bring in valuable expertise that departmental officials do not possess.

There are a great many examples where consultancies have helped government deliver projects very successfully
Office of Government Commerce

"But 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 and so have no idea at all whether the benefits are justified by the cost."

He said departments must be "commercially much sharper" in drawing up contracts.

"It is impossible to believe that the public are receiving anything like full value for money from this expenditure," he said.

'More transparency'

Mark Serwotka, head of the Public and Commercial Services Union, said it was "false economy" to cut 100,000 public sector jobs - then plug the gaps with expensive external consultants.

And Liberal Democrat Treasury spokesman Vince Cable said "greater transparency" was needed in contracts and that there were "excessively close relationships" between the consultancy industry and the government.

But a spokesman for the Office of Government Commerce said it was "misleading" to suggest external consultants did not offer good value for money.

"There a great many examples where consultancies have helped government deliver projects very successfully," he said.

He also said, as public services were undergoing major reform, it was "only right" that external expertise was used. And he said efficiency programmes had helped make savings of more than 15bn.


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