The cost of Government consultants

The Government is spending £1.75 billion a year on private sector consultants to help departments push through reform of the public services, according to research by The Telegraph.

Ironically, it also claims that those who depart the Civil Service on Friday often reappear on Monday as freelancers on thousands a day - the same so-called Friday-to-Monday scenario which was the Government's initial reasoning for introducing IR35.

It states that some consultants are being paid more than £2,000 a day, which is nearly 10 times the amount a senior civil servant is paid for doing a similar job. This comes at a time when the Chancellor, Gordon Brown, intends to cut nearly 85,000 Whitehall jobs and a further 20,000 around the country.

However, the Telegraph claims that the Government is spending millions on management consultants, auditors, computer experts, environmentalists and legal advisers from the private sector, with the costs hidden in various budgets.

Research by the Telegraph shows that last year (unless specified):

• the Department for International Development spent £697.5 million on consultants;
  
• the Department for Transport paid £293.6 million;
  
• the Ministry of Defence paid £262.8 million;
  
• the Department for Work and Pensions paid £291.5 million (2002/3);
  
• the Department of Health paid £10 million;
  
• the Department of Trade and Industry paid £52 million (2003/3);
  
• the Cabinet Office paid £15.2 million;
  
• John Prescott's Office of the Deputy Prime Minister paid £52.3 million.

Taking into account other departments, but not including local councils, NHS trusts and other public bodies, the total annual cost of consultants across Whitehall was £1.75 billion.

According to The Telegraph, consultants - often large firms - are used by different Departments in different ways. The Home Office hired PA Consulting to implement the manifesto pledge to speed up the youth justice system and they are also advising the Department for Constitutional Affairs on how to reach its 80 per cent fine enforcement target.

The accountancy firm PKF has a £2 million contract with the Department for International Development to support Sierra Leone's audit services. Price Waterhouse Coopers, which does about 10 per cent of its work for the Government, had a £38,000 contract last year to advise on the costs and benefits of the 2012 Olympics bid.

More efficient

The Government would justify the use of consultants by claiming it is more efficient than having experts permanently on the Civil Service pay-roll. However, MPs and senior Civil Servants are worried about the cost of the advisers and that the use of consultants allows departments to reach their job cutting targets.

One Civil Service union official claimed that very often consultants are ex-civil servants being paid vastly more for doing similar work to their previous jobs.

Friday-to-Monday

In an editorial article, the Telegraph took issue with the Friday-to-Monday scenario. Initially, the Government claimed that the practice of someone leaving a job as an employee on a Friday to return to the same job on a Monday as a consultant was the rationale behind the introduction of IR35.

While stressing that these are not hospital consultants, the leader article says: "These are the masters of the universe required to implement Labour's modernising agenda: management consultants, IT consultants, health and safety consultants, education consultants, change consultants, PR consultants, more IT consultants - the list goes on and on. They have the advantage, as far as ministers are concerned, of not appearing on the public sector's official payroll (which has, anyway, risen by £500,000 on Labour's watch to £5.3 million). So when Gordon Brown boasts that he wants to cut those working for the government by 100,000, it is doubly misleading. Not only is he recruiting at the same time as he is losing staff; those who depart the Civil Service on Friday often reappear on Monday as freelancers on thousands a day."