by Ministers have quietly removed restrictions on spending controls, allowing Whitehall departments to spend millions more on outside consultants.
The limits were introduced under David Cameron in 2011, requiring central clearance if contracts with firms like Deloitte or KPMG lasted longer than nine months or exceeded £20,000. The value of contracts has been rising, with the cap set earlier this year at £600,000.
But now those spending limits have been lifted entirely, paving the way for the department to spend millions more of taxpayer money on outside advice.
Labor said the change was “simply staggering” and indefensible that it had been made during a cost-of-living crisis when government budgets were being tightened in other areas of public spending.
Cabinet Office Minister Jeremy Quin and Chief Treasury Secretary John Glen wrote to the departments this month to end restrictions on consulting “from 31 January 2023 in accordance with the agreed lifting of loads”. [and] realignment of the focus and impact of Cabinet Office spending controls”.
The update concluded that “following workshops during January at the operational level, the removal of controls is welcomed.”
The move was not announced but changed on the guidance page of the Cabinet Office website, which said spending controls on “consultancy and professional services” had been lifted as a requirement. All government contracts worth more than £20m still require central authorization.
The Cabinet Office says that advice from management consultants will be “limited in time” and likely “related to business change or transformation,” and that people employed as consultants “will operate outside the structure of the customer organization and staff”.
Spending on outside consultants has skyrocketed in recent years, although some additional spending was Covid-related. The UK public sector awarded £2.8bn in consultancy contracts in 2022, according to data from contract analysts Tussell Ltd in the FT last week. That number increased 75% in 2019.
Deloitte received £278m worth of contracts in 2022, more than any other consultancy, although spending was down to levels during the height of the UK pandemic.
Other “big four” accountancy firms also received millions in contracts, including £152m for PwC and £101m for EY. KPMG had withdrawn from bidding for works due to a series of exposed scandals last year, but was still awarded £12m worth of contracts.
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Shadow Chief Treasury Secretary Pat McFadden said: “It is simply astonishing that a government that has collapsed the economy, crippled the finances of millions of households and brought our NHS to breaking point, has decided that it is now the It’s time to loosen the strings on Whitehall’s bag when it comes to hiring outside consultants.
“Ministers already spend billions every year hiring consultants to tell them how to do their jobs, so who knows what that bill will look like when these checks are removed. Making this change at any time would be inexplicable, but during the worst cost-of-living crisis in decades, it’s frankly indefensible.”
The Financial Times reported last month that the government’s internal consulting center was being phased out at the end of January because government departments still preferred to enlist the support of major external consulting firms.
A Cabinet Office spokesman said: “We are committed to improving efficiency and reducing consultancy spending across government.
“Recent changes eliminated a number of administrative processes and the Cabinet Office will continue to assess data on departmental consultancy spending.”
