Why Labour can’t kick Whitehall’s consultancy habit
Since coming to power, Labour has been vocal about cutting spending on external consultants to save taxpayers money. However, data suggests it has actually moved in the opposite direction, as the private sector shows it is a necessity and not a luxury, writes Maria Ward-Brennan. The pledge to cut back on external consultants was first [...]
Labour's commitment to cutting spending on external consultants, which was initially announced by Rachel Reeves as shadow chancellor, appears to have been contradicted by recent data. Despite promising to slash government consultancy spending, which has increased fourfold in six years, Labour's 2024/25 spending on public sector management consultancy procurement rose to £3.7bn, marking a £150m increase from the previous year alone.
The government has defended its spending, claiming it has reduced consultancy spending by £600m in 2024/25, staying below its £550m target. However, a National Audit Office report highlighted the lack of clear data on consultancy spending, emphasizing the challenge of reducing this bill. Emma Carroll, a consultant at Source Global Research, pointed out that while the civil service has seen a significant growth in headcount, there is still a shortage of expertise in certain areas due to AI advancements and defense pressures.
This reliance on external consultants is likely to continue, given the high-skilled nature of many public sector roles that offer lower pay in the private sector. The consultancy sector contributing approximately 14% to the UK's professional services industry, projected to grow by 5% this year, underscores its importance to the government's operational capacity.
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