Meg Hillier said it is unacceptable that a lack of planning and inability to recruit and retain permanent staff with the right skills had left departments overly reliant on external staff in areas such as project management and IT.
A report by the National Audit Office today found that spending on temporary staff across 17 Whitehall departments had fallen from around £2.7bn in 2009/10 to around £700m in 2011/12.
However, costs had since began to increase again, the analysis found, with auditors estimating that in 2014/15, the main 17 departments spent between £1.0bn and £1.3bn on temporary staff and consultants.
Today’s review said that better scrutiny of proposals within government since 2010 had initially helped to reduce spending levels. However, the subsequent increase suggested this had been a short-term reduction rather than a sustainable strategy.
Auditor general Amyas Morse said consultants and temporary staff can be an important source of specialist skills and capabilities for departments when used well to transform how they do business.
“But such specialist staff can be expensive, costing twice as much as their nearest permanent staff counterpart,” he highlighted.
“Government spending on these staff has reduced significantly since 2010, when strict spending controls were introduced, but is now increasing once more. This suggests that the underlying issues have not been fixed. Professional workforce planning to address skills and capacity gaps in key areas is essential to drive down dependency on consultants and temporary staff.”
The NAO concluded departments might have higher demand for specialist skills to deliver the transformation plans in the Spending Review. Therefore, strategic workforce planning, which is currently under-developed in Whitehall, must be improved.
In addition, the NAO found that the internal approval process for hiring temporary staff was weak in some departments and the Cabinet Office itself did not always follow its own procedures to control these posts. There was therefore limited evidence so far that departments are reducing their dependence on consultants and temporary staff.
Hillier said taxpayers risked losing out twice when temporary staff were used. Employment costs were often twice as high as employing permanent staff members, while there was also a loss of skills when their contract ends, perpetuating existing shortages.
“I am concerned that some departments are playing fast and loose with taxpayers’ money in their use of consultants and temporary staff,” she stated.
“Short-term external expertise has its place, but departments should be more rigorous when deciding whether this is the best option. It costs the taxpayer dear and too many of these temporary arrangements become long term.”
Responding to the report, a Cabinet Office spokeswoman insisted the government was scrutinising spending “like never before”.
She added: “This government is scrutinising spend like never before. We've stamped out excessive spending on consultants and put in place stringent spending controls. The total spend on consultants is still less than half of that in 2009/10.
“Of course we'll need specialist expertise, especially where government is undertaking complex transformative projects and needs to draw on experienced minds. But we only do this when the key skills are not readily available within the Civil Service and where it delivers better value for taxpayers.”
Responding to the report, the Management Consultants Association, which represents consultancy firms, said that the value firms deliver by helping to transform government services and drive massive efficiency savings.
Chief executive Alan Leaman added: “It would be a waste of money for government to recruit all the people it needs to implement change and keep them on the payroll when it has access to the UK’s outstanding consulting industry.”
