Despite previous government attempts to reduce reliance on external expertise, UK public expenditure on management consultancies has risen to COVID-era levels.
Recent data from market research company Tussell indicates that spending on frameworks is primarily driven by tech-based management consultancies.
The report reveals that payments to these suppliers surged by 57 percent over five years, reaching £3.4 billion in fiscal year 2023/24. Central government has been the main spender, accounting for between 52 and 63 percent of the expenditure in the last five years.
Spending peaked during the pandemic years of 2020-2022 as the government scrambled to respond to the global crisis. Although expenditure dropped to £3 billion in fiscal year 2022/23, it has since returned to its peak.
Framework agreements, aimed at reducing costs and providing suppliers with work, reveal a significant portion of the spending going to tech consultancies.
While the majority of the spending over the past five years came from the MCF3 framework, which covers various consultancy services, the next top frameworks were all focused on technology. These include G-Cloud, Technology Services, Digital Outcomes and Specialists, and Digital Specialists and Programmes.
In the latest fiscal year, framework agreements and Dynamic Purchasing Systems accounted for 42 percent of management consultancy spending.
New finance minister Rachel Reeves has committed to reducing the public sector’s reliance on external management consultancies.
While austerity measures in 2010 aimed to reduce consultancy spending, the underlying lack of skills in the civil service has continued to hinder efficiency. The Public Accounts Committee has highlighted the government’s heavy reliance on consultants as a short-sighted approach.
In light of increased spending due to COVID-19, the government has once again pledged to review and reduce consultancy contracts.
It remains to be seen if the new government will invest in internal skills and offer competitive remuneration to reduce the public sector’s reliance on external tech support.
