In 2023-24, public bodies spent a ‘staggering’ £3.4 billion on private consultants, according to data from outsourcing company Tussell
This amount represents a 62% increase compared to the £2.1 billion spent in the 2019-20 financial year, just before the Covid-19 pandemic. Despite reports indicating the health crisis is easing, consultant spending has not returned to pre-pandemic levels. This shows an ongoing reliance on private consultants for government projects.
The increase in consultant spending will create challenges for the government, as Keir Starmer has committed to cutting consultant spending to save £550 million in 2024-25 and £680 million in 2025-26.
Since Labour took power, nearly £650 million worth of government contracts have been awarded to consultants, with many deals pre-dating the change in leadership. Notably, a significant portion of this spending includes the contract with KPMG, which is the second-largest public sector contract awarded to the firm and will focus on overseeing civil service training over the next 15 months. For example, KPMG has recently been awarded a government contract worth up to £223 million to train civil servants.
Experts and campaigners now argue that the extensive use of consultants is a ‘scandalous’ misuse of public funds. Prem Sikka, a finance expert and Labour peer, criticised the growing reliance on consultants, stating that this approach shows a lack of in-house expertise. He told The Observer that consultants, often working only for a short period, can’t develop a deep understanding of complex issues within government departments.
The Department of Health and Social Care, its agencies, and NHS bodies spent more than £570 million on consultants in 2023-24, a decrease from peak pandemic levels but still significantly higher than the £310 million spent in 2019-20. Other departments have also seen sharp increases in consultant spending. For example, the Home Office spent £237 million on consultants last year, almost double the £121 million recorded the previous year, largely to address asylum backlogs and manage the now-abandoned Rwanda immigration plan. The Department for Transport spent £165 million, primarily on infrastructure projects like the HS2 railway, while the Ministry of Defence allocated £86 million for consultant services.
A significant portion of government spending on consultants has gone to a few firms, including PA Consulting and Accenture, which earned £247 million and £240 million, respectively, from government contracts in 2023-24. The ‘big four’ consulting firms—KPMG, Deloitte, PricewaterhouseCoopers, and EY—together received nearly £900 million in the same period.
A government source told The Observer: “We are taking immediate action to stop all non-essential government spending on external consultants as we tackle the £22bn black hole in the public finances this year, which was left because of the recklessness of the previous government.”
