Watchdog Raises Serious Doubts Over Government's £1.2bn Consultancy Savings Plan
Despite Chancellor Rachel Reeves' strong focus on dramatically reducing government expenditure on external consultancy services, a damning new report from the Public Accounts Committee (PAC) has revealed that the government appears unable to set meaningful targets to cut its reliance on private firms. The report, published this week, questions the entire foundation of the savings strategy.
Ambitious Targets Meet Harsh Reality
The UK government has publicly stated its intention to implement an immediate halt to all non-essential consultancy spending. Furthermore, it aims to slash consultancy expenditure by half in future years, with an ambitious goal of saving £1.2 billion by the year 2026. The Cabinet Office has previously claimed success in meeting a £550 million savings target for the 2024-25 period.
However, the PAC report delivers a starkly different assessment. It not only casts significant doubt on the government's ability to achieve its aspiration of stopping non-essential consultant spending but also highlights that there is no clear, effective approach from the Chancellor's office to actually achieve the stated savings target. The path to £1.2bn in savings appears murky at best.
A System Built on Inaccurate Data and Weak Controls
The report identifies a fundamental flaw at the heart of the issue: a severe lack of accurate data. It found that both the Cabinet Office and the Treasury lack precise figures on how much the government actually spends on consultants, making it impossible to properly gauge the scale of the problem or measure progress.
The latest official estimate suggests the Treasury spent around £1.36 billion on external consultants in 2022-23. Alarmingly, the report notes that other sources indicate the true figure could be as high as £2.23 billion, revealing a massive discrepancy and a system operating in the dark.
Compounding the data issue is a breakdown in control. The previous government withdrew central spending controls from Number 10 in 2023, ostensibly to reduce administrative burdens on individual departments. This shifted responsibility to departments to develop their own internal controls, a system the PAC suggests is failing.
Non-Compliance and a Call for Action
The committee's investigation established that Andrew Forzani, the government's chief commercial officer, admitted some departments are not following official guidance when defining their consultancy requirements. While the Cabinet Office issues procurement rules and guidance, it does not actively monitor departmental compliance.
Committee members, including Sir Geoffrey Clifton-Brown, have now demanded the government identify which departments are failing to comply with consultancy procurement requests and outline concrete steps to address this widespread non-compliance. The PAC has also called for a detailed, department-by-department breakdown of spending on individual private professional service firms.
The Evolving Role of Consultants and Technology
The report further notes that the consultancy and professional services sector has been transformed by emerging technologies like artificial intelligence (AI) since 2022. In response, the PAC calls for new guidance to be published for departments on how to manage and assess the use of these advanced technologies by their external providers.
Clive Betts MP, deputy chair of the PAC, summarized the daunting challenge. "With consultancy spend now wound so tightly into how Departments run their contracted-out work, and with so little and such inconsistent data available, actually bearing down on this spending will be a tough knot to unpick," he stated.
Betts acknowledged the continued, legitimate role for consultants, adding, "The consulting sector will of course continue to play an important role in filling any specialist gaps where government truly does not have the requisite skills for project delivery, as well as demonstrating cutting-edge practice in the use of new technologies from which the public sector can learn lessons."
The report paints a picture of a well-intentioned savings plan hamstrung by systemic failures in data collection, oversight, and enforcement, leaving the government's £1.2bn ambition in serious doubt.
