The value of contracts awarded by the UK government and public bodies to consultants more than doubled to £2.5bn in 2020-21, as extensive use of the private sector was made in response to the coronavirus crisis, according to new research.
The Big Four professional services firms — Deloitte, EY, KPMG and PwC — were awarded contracts worth £1.2bn on a combined basis in the year to March 2021, according to analysis by data provider Tussell.
The figures were released as chancellor Rishi Sunak prepares to use his Budget on Wednesday to intensify efforts to repair the public finances after huge public spending during the Covid-19 pandemic.
The House of Commons public accounts committee in March criticised the government’s use of consultants on its Covid-19 test and trace programme, saying some were paid up to £6,600 a day.
Meg Hillier, Labour chair of the committee, previously questioned the continued use of consultants after the test and trace system was up and running.
Professional services firms have reported rising profits this year because of increased demand for their work from both the public and private sectors.
The value of contracts awarded by the government and public bodies to consultants rose from £1.2bn in 2019-20 to £2.5bn in 2020-21, according to Tussell’s analysis.
The figures include work for central government and arm’s length public bodies, but exclude local authorities. Payments under many contracts may be lower than their published value — and in some cases consultants pass on work and fees to subcontractors.
Deloitte secured contracts worth up to £493m, or almost 20 per cent of the total awarded by the government and public bodies to consultants in 2020-21, including £420m for pandemic-related work, Tussell found.
Deloitte faced scrutiny over the cost and efficacy of its work on the test and trace programme but chief executive Richard Houston said last month the firm had played an “essential” role.
PwC obtained contracts from the government and public bodies worth more than £281m in 2020-21, the second highest total, according to Tussell.
KPMG signed deals valued at £244m, while EY secured contracts worth £200m.
McKinsey, Accenture and PA Consulting obtained contracts worth £123m, £117m and £99m, respectively.
Covid-19 consulting contracts worth a total of £664m were awarded by the government and public bodies in 2020-21, Tussell found.
The government said the figures were “inaccurate and misleading”. “Totals are inflated by adding consultancy spend outside central government, not distinguishing between the value of contract awards and actual spend, and by mislabelling spending as consulting,” it added.
Actual spending on consultants by central government and arm’s length bodies was about £1.5bn in 2020-21, said a person briefed on the government’s figures. That was about double the total of “more than £700m” the government has said it spent on consultants the previous year.
“It is sometimes necessary for the government to draw on expertise from the private sector, as was the case during the pandemic where fast action was needed to protect the NHS and save lives,” said the government.
The Cabinet Office launched an initiative in May to cut spending on advisers and give civil servants skills to do more work themselves. This “shows the government is taking concrete action to reduce spend on consultancies and enhance expertise within the civil service”, it said.
Tamzen Isacsson, chief executive of the Management Consultancies Association, a trade body, said bringing in consultants on short-term contracts was more cost-effective for taxpayers than employing large sums for full-time specialists.
Contracts were awarded through official tenders and MCA members have procedures to ensure the government receives value for money, she added.
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