Government seeks to bring consultancy in house

By Fraser Raleigh

Last week the Cabinet Office announced the launch of the Government Consulting Hub, a new initiative designed to reduce the scale (and cost) of government departments’ use of external management consultants.

It will be based in London, Birmingham and Glasgow, in line with the government’s push to spread the civil service’s footprint across the country (see Joe Cooper’s recent article for more on this) and will, according to the Cabinet Office, improve the government’s ability “to reuse thinking and work, and to be our own experts where it is reasonable to do so”.

The new Hub is a passion project of Minister for Efficiency and Transformation Lord Agnew, a long-standing ally of Cabinet Office Minister Michael Gove. He has been working quietly behind the scenes over recent months to look at options to reform the way Whitehall does things, from procurement to project management.

The government’s use of management consultants has long been on Agnew’s radar. He briefly made headlines last September thanks to a leaked cross-government letter in which he claimed that a reliance on consultants “infantilises the civil service”, adding that “we seem to be ineffectual at harnessing our fast-streamers to do work that is then outsourced to consultants using similar people at a vastly inflated cost. This is unacceptable.”

While the Cabinet Office insisted that the new Government Consulting Hub is not simply about saving money, the cost of external consultants has been thrown into the spotlight by the pandemic, with Labour – and in particular the new Shadow Chancellor Rachel Reeves – criticising the government for the extent to which it has turned to the private sector for support, expertise and capacity. Public attention was also grabbed by reports of some consultants being paid the equivalent of up to £1,000 a day.

Even before COVID, however, spending was high, with the government’s figures showing £700m was spent on external consultants in 2019/20. In order to get a grip on that spending, departments are to be put on a far tighter leash. From now on, they will need approval for any spending on consultancy services above £500,000 – far below the previous threshold of £10 million. A new Consultancy Playbook, launched alongside the Hub, will also define the process departments need to follow when bringing in consultants.

The emphasis on keeping expertise in house fits within a broader push on Whitehall reform. Gove in particular has been an advocate of tacking the churn within the civil service by incentivising officials to build up specialist knowledge by remaining in post for longer, rather than bouncing between policy areas and departments just as they start to get to grips with them. Earlier this week he welcomed a significant new report, Government Reimagined, from Policy Exchange (of which he was founding Chair) that called for this to happen “so expertise is built and collective memory achieved”.

The new Government Consulting Hub is part of that pattern. Whether it ends up succeeding in weaning Whitehall off external management consultants will depend on how seriously government departments are forced to take it. A strong push from the centre of government to insist on the culture change the Hub is designed to create will need to be sustained in order to be effective, and not abandoned as another experiment a few years down the line.