Why research this topic?

Consultancy is important because there has been £7 billion in three years spent by the UK public sector (National Audit Office, 2006). In 1980, it was only £61m and £1.2bn in 1995 [i]. UK expenditure is high compared to other countries. For example, in 2003-4 Australia spent only $259,768 on 9 consultants (Senate Annual Report 2003-4). The top nine UK consultancies made £12 billion revenues according to the Management Consultancy Association. The world wide market for consultancy is over £100 billion according to the MCA Industry page. So there is a lot of money spent on consultancy, and a lot spent in the public sector.

Who accounts for this spending? There is much criticism in the media for the expenditure:

From the BBC:

1. 
   2004 Thursday, 10 June, 2004 A NAO Report criticised consultancy bill in N. Ireland suggested there was no proven need for consultancy and that government guidelines on the use of consultants were not being followed.


2. Monday, 26 September 2005 Consultancy cash 'out of control' when government spent £1.86bn on private consultancy firms.


3. Tuesday, 31 January 2006 Secrecy over government consultants At the beginning of 2006, Austin Mitchell, MP, said that auditors estimated that the Department for Education and Skills was spending £4m on external consultants. But the File On 4 programme obtained a confidential internal audit report on consultancy in the DfES which showed the figure to be between £20m to £30m, so there is some discrepancy and that has not been accounted for. Members of Parliament have asked for that accountability. E.g. The National Audit Office sets guidelines.


4. Friday, 17 November 2006 Defra's '£170m consultants’ bill'


5. Friday, 15 December 2006, Spending on consultants at £2.8bn “The public sector paid £2.8bn to outside consultants last year, the government's spending watchdog says.” But central government departments’ expenditure fell from £2bn to £1.8bn during the same period. NAO report () says around £7.2bn was spent.


6. Wednesday, 3 September, 2003, union leaders were sceptical of local government plans to use consultants (Consultants to help social services).


7. Monday, 5 August, 2002, there was criticism of another public body for spending on consultants, yet still losing money (Railtrack in 'consultancy spending spree').
   This is not an issue of the 21st century. Even earlier, there were queries about the need for management consultants.


8. Wednesday, July 28, 1999 Business: The Company File Who needs management consultants?

From Newspapers:

1. In the Telegraph, Government pays double for consultants for instance, but that is actually about an outsourcing contract, not consultancy, which goes to show the level of misunderstanding of what consultants do, and of the difference between outsourcing and consultancy.


2. Financial Times 2007 Drive to get better value from consultants

All accessed 31/01/2007

The number of these articles and the level of interest show that the business of consultancy is significant to the economy. However, the tones of the articles indicate concern at the level of public expenditure.

Members of Parliament and the National Audit Office express interest in justifying use of consultants and accounting for money spent on consultancies. (House of Lords, MPs questions on use of consultants 2005, National Audit Office report 2006 on Central Government’s Use of Consultants). The demand is that the public bodies account for their use of consultancies, (Select Committee Enquiry into Inland Revenue and Tax Credits 2004), but there is little evidence of that accountability.




[i] Craig, D., 2006, Plundering the Public Sector,