06 July 2007
The army of external consultants advising Whitehall departments should be tied to performance-related contracts under plans to secure better value for taxpayers, a senior auditor said this week.
Keith Davis, head of efficiency at the National Audit Office, told Public Finance that departments should offer contracts whereby consultants receive 'payments by incentives or fixed outcomes' as part of plans to slash the £2.5bn annual bill for external advice.
Cabinet secretary Sir Gus O'Donnell recently wrote to all Whitehall bodies warning them to reduce their use of consultants. It followed an NAO report last December which revealed that Whitehall alone spent £1.8m on advice in 2005/06.
The auditors claimed that public bodies could make £500m in annual efficiency gains – a mixture of direct cash savings and improved contracting – by using consultants selectively. Civil service trade unions have long claimed that most organisations have sufficient in-house expertise to slash the bill for external advice.
The NAO last week launched an online interactive service to help departments choose when to use consultants and when to rely on in-house expertise. It is based on the methodology used to assess five departments' use of consultants in the NAO study last year.
Assessors answer questions about the use of consultants and the service analyses areas of weakness and provides guidance on how to improve value for money.
Davis said: 'Consultants can provide valuable expertise to government. But too often departments rush into using consultants properly before thinking about whether resources are available in-house.'
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