A new administration is determined to change the way in which government works. It sets itself ambitious targets for savings and efficiency. At the same time it launches massive programmes of public services reform, with changes planned in education, health, the police, welfare and local government. One of its members even calls it ‘Maoist’.
This is the context that should be dominating all current discussion about how government is organised and how it purchases professional services. Yet it hardly merits a mention in the two reports published this year on central government’s use of consultancy – first by the National Audit Office and, this week, echoed by the Public Accounts Committee (PAC).
Indeed, both reports are primarily backward looking and dominated by process. They tend to the argument that there is a ‘correct’ level of spending on consultancy, presumably less than before. Surely that depends on the need and the value. Looking forward, that need will be significant. And the value could be vital.
Not that these two reports should be dismissed. Scrutiny is welcome and should lead to better decision-making. And they have included some positive recommendations that, if acted on, will create better value for the taxpayer and a more certain future for the consulting industry.
For instance, there is now a growing consensus that there should be a clearer dividing line between consulting and interim management or other forms of staff substitution. There is joint frustration with the quality and reliability of the data that government departments produce.
Both reports make the point that Whitehall needs to improve its manpower planning and not be tempted to use consultancy as an alternative. They also agree that the current moratorium on the use of consultancies – a policy of ‘stop-go’ according to the PAC – is storing up problems for the future that could turn out to be expensive.
There are two ways in which the coalition should now respond. First, ministers should do more to explain and promote their approach to reducing the deficit and transforming public administration.
We need to hear more about their philosophy. What does the plan look like for getting to 2015 and how do they expect government to be different by then? What do they think they can do in-house? Where are the gaps? What models have they looked at from overseas and other sectors that they think will be useful?
The Management Consultancies Association published a short report back in the spring called ‘We can cut the deficit’, with workable ideas from member consultancies on how to cut the deficit by up to £25bn without reducing the quality of public services. Some radical changes need to be implemented but we believe that it will be possible to save money while also improving public services. Progress will require greater public debate and engagement.
Second, the new Efficiency and Reform Group (ERG) of the Cabinet Office has a rare opportunity – and responsibility – to put central government’s use of consultancy on a firmer and more effective footing. We need better and consistent evaluation of outcomes, wider commitment from consultancies to initiatives such as the MCA’s code of practice and reforms to procurement that reduce the costs for both suppliers and buyers and reward innovation and competition.
We know from our own work and contact with departments that consultancies can and do make the difference in helping government to achieve its objectives and making Britain a better place to live. A new focus from the ERG on value-added and performance will do much to bring out the best in the industry and reassure taxpayers.
Alan Leaman is chief executive of the Management Consultancies Association
