Graphs at a glance: see which government departments spend more than half their total staffing budget on consultants: it's outsourcing in all but name

If you thought the only way to outsource public services was to hand them over wholesale to Capita and G4S you'd be wrong. For some years government departments' use of consultants and interim staff has de-facto outsourced central government functions to a staggering degree. 

This has actually been most stunning in the period before the current Conservative-Liberal coalition government, a time when Labour were in power. Maybe the current coalition government no longer needs to hire so many consultants for hospitals, schools and prisons. After all the hospitals, schools and prisons themselves are being handed over wholesale to the consultants, not to advise on but to own and extract profits from. Even if the new owners do hire consultants, they aren't on the government's books.

Data below is from the National Audit Office's (NAO's) report "Central government's use of consultants and interims". Here we found a truly gob-smacking graph showing the cost of consultants was 40% or more of total staff costs in the Departments of Transport, Education, Energy, and the Home Office. 

What is a minister to do? Given the choice of public servants serving the public, or a consultant hand-picked, hired, paid, bonussed, and under threat of being fired by the minister himself?

Is it a coincidence that the departments most enthusiastically shovelling public money into private purses, Transport; Energy; Education; Health, are the heaviest users of consultants?

 
(The NAO report explained that "Figures provided for HM Treasury are based on gross spending on consultants in 2009-10. In 2009-10 HM Treasury recovered over 90 per cent of its gross spending by re-charging financial institutions. HM Treasury net consultancy costs as a percentage of total staff costs in 2009-10 were approximately 7 per cent").

Interim staff (also subject to hire and fire by their political masters) are not included in the above figures. Interims and Consultants are intended to fill gaps in the capability of the government departments themselves.To fill these gaps you would have thought they would be high-fliers steeped in decades of the deep experience lacking in the civil service? Actually, the official Cabinet Office guidance shows precisely how much experience they need:

• Junior Consultant: minimum of 2 years experience
• Consultant: minimum of 3 years experience
• Senior Consultant: minimum of 5 years experience

Of course a twenty-something Consultant wielding his 3 years of experience costs much more than the senior public servant he pushes around. So the Department of Education's 50% of money would have employed far less than a numerical equivalent 50% of consultants. 

In its annual report for 2012, the National Audit Office took credit for saving £335 million in 2012 from the cost of government employed consultants and interim staff. This was by far the largest saving claimed by the NAO, bigger even than its claim for saving £253 million from notoriously incompetent Ministry of Defence procurement. While consultancy spending by government has declined since 2010, ominously the Management Consultancies Association remains optimistic for the future:

"As expected, the consulting industry as a whole saw an increase in public sector work following two years of dramatic decline. The MCA [Management Consultancies Association] says that future spending levels in the public sectors are likely to be influenced by the outcome of the forthcoming spending review and the state of the economy at the time of the 2015 General Election. The fee income from public sector work remains 21 per cent lower than before 2010. "

At least the MCA reports a 21% drop in public sector fee income. Does a 21% cut sound a lot? Do the maths: 21% lower than 2010 still means more than £600 million a year spent on consultants. And the MCA is confident it is going back up!