| | 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 | |
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| | in the past. 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, but
“lack of progress...in | |
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| | 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 be
incredibly costly if the
project isn’t managed | |
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| | 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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