Whitehall consultants in Labour firing line

Labour announced plans this week to cut back on the use of consultants in Whitehall as part of a wide-ranging efficiency drive, writes Phillip Inman. The party revealed figures showing spending on consultants had risen to #2.5bn over the last four years.

The decision will come as a blow to accounting firms which have built up large public sector divisions. KPMG revealed this week that a drop in income from its public sector practice had contributed to its weak results.

Labour Treasury spokesman Alan Milburn said spending last year had spiralled to u670m. He described the figures as ‘a shocking waste of precious public resources’ and said Labour would introduce a value-for-money test.

But one Big Six consultant said some firms could pull out of government work if value-for-money tests were conducted at the expense of quality.

‘Margins are already very small. Add to that the high cost of bidding, and government contracts could become a big turn-off.’

Milburn asked each government department to quantify the savings achieved as a result of the use of consultants, but only the Cabinet Office responded.

It said savings of u750,000 were anticipated this year.

‘Departments will have to detail expected savings before any go-ahead is given for engaging consultants,’ Milburn said.