| | By Mick James
It’s sad but true
that when the media
reports on the public
sector there is pretty
much only lies and
damned lies and precious
little in the way of
statistics. The only
bright spot in the
prevailing gloom are the
regular interventions
from the National Audit
Office which are nearly
always models of
accuracy and integrity.
So it was with some
alarm that I returned
from a lengthy winter
break to find that not
only had the National
Audit Office published
its long awaited report
on the government’s use
of consultants but that
the news was all bad.
According to The
Times, the “damning”
report “argues that
almost £1bn is wasted
through inefficient use
of management
consultants by
government and other
public bodies”, going on
to claim that such
spending has “soared” –
“consultants have cost
£7.2bn of taxpayers’
money across the public
sector in the past three
years, with no proof of
any benefits”. It even
quotes the report
itself: “when used
incorrectly consultants
can drain budgets very
quickly, with little or
no productive results”.
That’s pretty strong
stuff, so I immediately
downloaded the report
from the NAO website and
started going through
it. It is no surprise
to learn that that this
magic £1bn figure is
cited nowhere in the
report, nor does it ever
use the words
“inefficiency” or waste. | |
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| | Or that the quote above
is the back half of a
paragraph which begins:
“Consultants, when used
correctly and in the
appropriate
circumstances, can
provide great benefit to
clients”.
It’s weaselly stuff,
particularly that
“£7.2bn of taxpayers’
money...with no proof of
benefits” statement. The
implication is that
there have been no
benefits at all whereas
what the report merely
explains is that it is
difficult to assess the
benefits of consultants’
work because of its wide
variety, the fact that
it only forms a part of
larger projects, and,
crucially, because civil
servants don’t collect
any data or create
business cases which
make it possible to
assess benefits.
But it’s that billion
pounds that bothers me.
After all, a billion
pounds here and a
billion pounds there –
pretty soon you’re
talking serious money.
The Times provides a
possible clue when it
says later on that “the
report calculates that
the annual bill could be
slashed by £270m
immediately by making
more use of in-house
staff, negotiating
better contracts and
getting improved results
for money spent. The
savings could rise by
30% to £540m in three
years time – a total of
£1bn over the period”.
Aha – so what we’re
talking about is a
potential saving of £1bn
over the next three
years – not an actual
billion pounds wasted
somewhere in the past. | |
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| | That’s a different
proposition, and even
then it’s still a
misrepresentation of
what the report says.
Here’s the actual
wording, with my
italics:
“We consider that
annual efficiency gains
(achieving the same
results by spending less
or better results by
spending the same) in
the region of 15% in the
first year rising to 30%
by the third year can be
made by central
government.”
Amazing how a billion
pounds can just
evaporate before your
eyes. I experience
something similar every
time they draw the first
ball on the National
Lottery.
So what does the
report really hold?
Remarkably – in the
context of The
Timesreport, but not
the NAO’s track record –
it’s a sober,
well-balanced and
remarkably useful
document. It should be
required reading, not
just for any civil
servant, but for anyone
hoping to sell work into
the public sector.
Here’s an example of
that balance in action:
“There have been some
important improvements
in using consultants,
for example procuring
them more economically
and efficiently using
framework agreements,
there is some way to go
before central
government overall is
achieving good value for
money from its use of
consultants.”
Because of the lack
of data alluded to the
above, this judgement is
not based on figures, | |
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| | but “lack of
progress...in
implementing good
practice” which in many
cases is already in
place or at least
available in some areas
of government. This
means that government
departments are:
? failing to collect
or aggregate adequate
management information;
? not assessing
whether internal
resources could be used
instead;
? not having adequate
controls on awarding
contracts by single
tender;
? not adequately
managing relationships
with key consultancy
suppliers;
? not planning for
transfer of skills.
This, I suspect, will
be music to the ears of
many smaller
consultancies who are
hoping to break the
stranglehold that the
bigger firms have on
government work. I’ve
met many firms whose
ideas could be the
solution to public
sector needs but don’t
feel it’s worth the
effort of trying to sell
to government. By
contrast, the report
contains a couple of
case studies which
comment favourably on
how both public and
private bodies have
benefited from the more
targeted use of smaller
or even individual
consultants.
It will also be
welcomed by those firms
who use more creative
fee structures such as
payment-by-results or
fixed price. It rightly
notes that time and
materials charging can | |
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| | be incredibly costly if
the project isn’t
managed properly. I’m a
great fan of fixed price
tendering in this
context, because it’s a
great way of finding out
if you’re a rubbish
client – consultants
will either walk away or
quote a ridiculously
high price if they feel
you don’t know what
you’re doing.
Many of the report’s
recommendations strike
to the heart of the way
government is
structured. Ministerial
spin-doctors may be good
at reminding us that
“change is a constant”
but the civil service is
certainly not structured
on that premise. The NAO
recommends that
government works harder
to identify persistent
skills gaps – I suggest
one area that is
urgently explored is
programme management.
The NAO also
recognises that reward
structures be looked at
to ensure that the right
skills can be found.
This will be
controversial, but what
private organisation
would start from the
premise that the
individuals with the
skills needed to make a
success of projects like
Connecting for Health or
ID cards can be found
for Civil Service
wages?
There’s a lot more to
digest in this report,
for civil servants and
consultants alike.
Hopefully, we can all
look beyond its
misrepresentation in the
media and start to act
on its many useful
recommendations.
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