Outside looking in

7 Nov 11
The coalition government announced early on that it was going to slash the use of consultants in the public sector. So what are their pros and cons?
By John Thornton | 1 November 2011

The coalition government announced early on that it was going to slash the use of consultants in the public sector. So what are their pros and cons?

Illustration: Angus Greig

When the coalition government came to power in May 2010, it was keen to dramatically reduce the public sector’s use of consultants. This was not just to quickly switch off a significant stream of spending but also because ministers questioned whether the public sector was getting good value.

In 2009/10, central government departments spent more than £1bn on consultants. One of the coalition’s first decisions was to save £1.1bn on discretionary spending, with the aim of stopping a lot of consultancy contracts.

The FireControl project highlights some of the issues. The plan was to replace the 46 local fire and rescue centres in England with nine regional control HQs. These were to be state-of-the-art, computer-linked units that would co-ordinate the response to disasters and save time, money and lives. 

Significantly, the Department for Communities and Local Government spent £68.6m on consultants, amounting to 76% of the cost of the central project team. Some £42m of this total was paid to one major consulting firm to advise on project management.

Despite these large sums and the consultants’ critical role in the project, the Public Accounts Committee described FireControl as one of the worst cases of project failure that it had seen in years. It has now been cancelled, with none of the original objectives achieved and a minimum of £469m wasted.

In various past lives, I have been a consultant, managed large consultancy businesses, commissioned consultants, reviewed projects and mopped up after those that have gone wrong. I don’t know the details of this project but it does raise fundamental issues about how the public sector uses consultants and what it should expect from them.

The term consultancy is often used to cover the spectrum of activity that ranges from high-level strategic advice at one extreme, through interim management to managed services at the other. Just over £200m of the £1bn spend in 2009/10 was actually used to fund interim managers and temporary staff.

Pure consultancy, if there is such a thing, is about buying in skills and expertise that you don’t already possess. This could be in areas such as strategy development, systems integration or project management.  

A useful analogy is with bridge building. If you are in the business of building bridges you need to maintain these skills as part of your organisation’s core competences and you don’t want them to walk away at the end of the project.

But if you only build a bridge every ten years, it is best to employ a consultant to advise you and manage the project. In return for buying in this specialist expertise, you expect the consultants to take responsibility for the bridge working as planned and you are entitled to sue them if the bridge falls down.

Used wisely and procured properly, consultants can bring additional expertise, insight, resource and flexibility. Used poorly, they can confuse accountability, provide false reassurance and add significant costs.

There are, of course, politics involved in using consultants. In some cases, you might know the answer to a problem but want a big name to confirm the solution or to advise on a course of action that might otherwise appear unpalatable and difficult to implement.

However, you would also expect a good consultant to tell you if your plans are misguided and unlikely to succeed.

Isn’t it time that the private sector accepted more of the responsibility for the failure of big government IT projects and for the public sector to make firms more accountable?

John Thornton is a director of e-ssential Resources, and an independent adviser and writer on business transformation, financial management and innovationTransparent

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