Public sector spending on consultants hits record high despite efforts to cut
Public sector spending on management consultants has ballooned to a near-record high this year despite efforts to cut reliance on the expensive sector.
Fees to consultants from central government, local authorities and other departments swelled to an estimated £3.4bn in the last fiscal year between 2023 and 2024, a rise of 12 per cent on last year’s total, a new analysis of government spending has revealed..
The rise in spending on the sector, which was found by government contract analysts Tussell, bucks what many thought would be a gradual decline in state commissioned consultancy work, after government leaned heavily on the sector during the pandemic.
It will also be cause for concern for Chancellor Rachel Reeves, who, in her recent spending audit ahead the new administration’s first Budget, committed to “reining in” all consultancy spending in government departments.
“I will work with [government departments] to find savings ahead of the autumn Budget, including through measures to stop all non-essential spending on consultancy and Government communications,” she told the House of Commons in a speech announcing the audit’s findings.
She has also pledged to halve government spending
Deloitte retained its place as the public sector’s largest management consultancy provider, raking in over £344m from the state in the most recent fiscal year.
The “Big Four” consultant has been the government’s provider of choice since 2020, when the pandemic sparked a massive surge in consultancy spending in order to get unconventional state services like Test and Trace off the ground.
PA Consulting was the state’s second favourite consultant, earning an estimated £247m, with Irish-American business giant Accenture the third most popular, earning roughly £240m.
The Department for Energy Security and Net Zero spent the most money on consultancy fees, dishing out £339m on the sector’s services between 2023 and 2024.
HM Revenue & Customs spent the second most (£286m), while the Home Office, which spent £278m, was the third most reliant on consultancies.
Asked to respond to the figures, a government spokesperson told City A.M: “We are taking action to stop all non-essential government consultancy spending in 24/25 and halve government spending on consultancy in future years, with a target saving of £550m in 2024- 25 and £680m in 2025/26.
“We will develop a strategic plan for a more efficient and effective civil service, including bold measures to improve skills, harness digital technology, and improve public services.”