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NAO Looks At Use of Consultants In Govt: Wider Lessons For UK PLC ?

Posted on January 12, 2016 at 7:05 PM

The UK's National Audit Office (NAO) is earning its keep when it comes to keeping a focused eye on better corporate governance in government - and UK plc could learn a thing or two as well.

According to a report just out, better scrutiny of proposals within government since 2010 has helped to reduce annual spending on consultants and temporary staff (C&TS) by £1.5 billion.

However, since 2011-12, annual spending on C&TS has gone back up by between £400 million and £600 million, while departments were reducing their permanent workforce. "This pattern suggests a short-term reduction rather than a sustainable strategy" says the NAO.

There is limited evidence so far, it says, that departments are reducing their dependence on C&TS.

And here is the damnation:

"Departments are generating limited competition for both consultancy and temporary staff assignments. Departments chose to use single-tender action, or extend existing contracts for 43% of consultancy work in 2014-15. The largest six consultancy firms win three-quarters of the work let through the Crown Commercial Service (CCS) cross-government consultancy agreement, while small and medium-sized enterprises win only 9% of this work (and 5% of all government consultancy work). For temporary staff appointed through CCS’s temporary staff agreement, around half are appointed without competition." (my emphasis)

NAO analysis suggests that specialist staff are generally paid twice as much as comparable in-house staff. Sir Amyas Morse, head of the NAO, is behaving as I, for one, would expect people with knighthoods to behave: impeccably.

"Departments such as the Home Office and Defra sometimes have difficulty recruiting temporary specialists and go outside the CCS agreement to pay higher rates. Cabinet Office data suggests that, between 2011‑12 and 2014-15, there was an 18% increase in the full-time equivalent annual cost of temporary staff – from an average of £48,000 to £56,500" says the report. (my emphasis)

So who is getting rich (headhunters, for a start I am guessing as well as the consutancy firms) and who is not ?

Draw your own conclusions - the six  largest suppliers of consultancy to government are PricewaterhouseCoopers, Deloitte, KPMG, Ernst & Young, PA Consulting Services and McKinsey & Company.

Lobbying, what lobbying ?

And as for UK plc. Well, hiring consultants is an interesting loophole for the boardroom. See a recent previous blog here, around that business whose conduct is inspiring strong emotions, Sports Direct - and consultants.




Categories: Corporate, Appointments, Scrutiny