UK government scraps in-house consultancy as departments prefer Big Four

The UK government has scrapped an in-house consultancy arm that was supposed to cut taxpayer spending on private sector firms such as Deloitte and EY.

Launched less than two years ago and backed by former Downing Street adviser Dominic Cummings, the unit was intended to provide strategic advice and to train public sector staff.

But the project — unofficially named “Crown Consultancy” — has been axed after insiders admitted it “didn’t work” and that government departments preferred to use external consultants.

While there has been no official announcement, the government will shut the hub on Tuesday, people familiar with the matter told the Financial Times.

Staff drinks have already been planned to mark the closure, one of the people added. The Cabinet Office said that the 40 people working there in its final days would be deployed to other roles. A year ago the hub had a team of 60 with plans to grow.

Jacob Rees-Mogg, former Cabinet Office minister, was a champion of the unit but his allies admitted that it was “a good idea that didn’t work”.

One said: “Departments did not use the hub because it didn’t have the range of external consultants. But the basic premise that external consultants are used too much is still valid, as is the idea that expertise ought to be in house.”

The consulting hub, which was part of the Cabinet Office and had bases in Glasgow, Birmingham and London, was a specialist unit staffed by civil servants and providing advice to departments across government.

It also developed a “consultancy playbook” to guide civil servants on getting value for money when hiring advisers.

The hub had already lost the patronage of Lord Theodore Agnew, the minister who oversaw its launch, when he resigned in January 2022. Agnew said in 2020 that an “unacceptable” over-reliance on advisers wastes taxpayer money and “infantilises” civil servants.

Despite the intent to take a knife to government spending on consultants, expenditure soared in recent years as a civil service hit by cutbacks battled to respond to Brexit and the coronavirus pandemic.

The UK public sector awarded £2.8bn worth of consulting contracts in 2022, according to data provider Tussell. The figure is 75 per cent higher than the £1.6bn of contracts awarded in 2019, the final year before a surge in procurement as part of the UK’s Covid response. Contract awards were as low as £700mn in 2016.

The high spending has been a boon to consulting firms. Deloitte was awarded contracts worth £278mn in 2022, a significant decrease on 2021 but still more than any other consultancy, according to Tussell’s analysis.

Its Big Four rivals PwC and EY won £152mn and £101mn, respectively, while KPMG was awarded contracts worth £12mn, having voluntarily withdrawn from bidding for work for much of the year after its involvement in a series of scandals.

Actual spending is usually significantly lower than the value of contracts awarded because many projects run over several years and because Tussell’s data sometimes include contracts for projects such as IT upgrades, which the government does not classify as consultancy.

Consultants have argued that hiring them temporarily through competitive tenders is more cost effective than employing specialists in Whitehall full time.

The Cabinet Office said: “The Government Consulting Hub was established to ensure the government built more in-house capability while continuing to deliver efficient public services.

“As part of the next phase of work, training on the use of consultants has now been integrated into the core curriculum, including through the consultancy playbook.” It said it would continue to ensure the government only used consultants “when absolutely necessary”.