18 May 2007
Whitehall departments have been told to slash spending on consultants after auditors criticised the government's £2bn bill for advice.
The head of the civil service, Sir Gus O'Donnell, has written to all departmental permanent secretaries, warning them that they should use external consultants only when their department does not have the necessary in-house expertise.
Cabinet Office sources this week confirmed that the strongly worded letter was sent to permanent secretaries on May 10. It states that the public sector was often a 'lax client' of consultants and that too many advisers are hired to do work that civil servants could perform.
A Cabinet Office source told Public Finance that O'Donnell's letter stressed consultants should be hired 'where there is an obvious need for specialist advice', such as with architects.
'But there is a need to refocus on value for money. There should not be a prior assumption that consultants are the best first choice for departments — it should be that… in-house advice is,' the source said.
O'Donnell's intervention follows a critical report by the National Audit Office, published last December, which found that spending on external advice across Whitehall had risen to £1.8bn in 2005/06.
Total public sector use of consultants reached £2.8bn. Much of Whitehall's increased bill was attributed to the Department of Health and the NHS.
'It is not possible to make an assessment of the benefits that have resulted from the money spent on consultants, partly because departments rarely collect information on what has been achieved. There is some way to go before good value for money is achieved,' the NAO study concluded.
Auditors called on departments to 'make a proper assessment of whether internal resources could have been used instead of consultants'. They claimed that Whitehall's bill could be cut by £540m.
Delegates at the FDA senior civil service union conference last week urged O'Donnell to ban the use of consultants completely.
PFmay2007
