Management Consultancy Fees Cost Taxpayers millions: But there’s another way

As 31st January looms for anyone who completes a self assessment tax return the amount of money government departments spend on multinational management consultancy firms has been revealed.

Each year, millions of pounds from most Whitehall departments are spent on external consultants to deal with issues of governance.

But the scale of the spending in an area which has not overwhelmed with its efficiency drives may leave some wondering why the civil service are going back to the same companies and paying the big bucks for change which is not – at least not immediately obviously – benefitting the people paying the bills.

For example, the Department of Health and Social Care spent £12.4 million pounds in consultancy services in 2017/18: enough money to pay an extra 566 nurses* whilst the DWP spent enough last year to fund the carer allowance for 1600 people for a year.

A report by the King’s Fund shows that in 2017/18 performance remains below the set standard for many health indicators and data shows that in general, performance has been deteriorating across the board.

‘The 18 week referral-to-treatment standard for planned care has not been met since February 2016, the A&E four-hour standard since July 2015 and the 62-day cancer standard for more than three years.’

Yet in their long term plan for the NHS there was a gaping hole where the plans for digitalising healthcare and using machine learning should have been.

This is something we are working on at Trust level and our pilot project is about to be rolled out into phase 2.

The biggest government department spender which was prepared to reveal their figures was the Cabinet Office, the so called ‘Corporate Headquarters’ of the government, which spent an astonishing £23.9 million last year alone in consultants.

The figures for the Department of Health were almost three times as high as for the previous year and the biggest providers were Ernst and Young, one of the ‘Big Four’ accounting firms which negotiated controversial tax arrangements for multinational corporations known as the ‘Luxembourg Leaks’.

Meanwhile, the Cabinet Office’s spend jumped from £10.2 million in 2016/17 – an increase of over 100 per cent.

Other departments, including the Department for Transport and the Treasury, declined to give details of their spending.

Last June the Prime Minister announced the NHS in England is to get an extra £20 billion a year by 2023 as a 70th “birthday present” which Mrs May hinted may be funded by tax rises.

The figures have been slammed by Andrew Bird, CEO of GSM, a leading provider of technology solutions across industry sectors who described them as “unforgivable”.

“Taxation is supposed to redistribute wealth but these figures show it is being taken from the pay packets of British workers and given in large sums to multimillion pound companies for undisclosed day rates – but amounts I would guess would be around £1000 a day per person plus expenses on average.

“We are spending more than ever before on the NHS – we spend ten times more now than we did 50-60 years ago. More of this money is coming from the public purse – currently this is around 30 pence of every £1 the government spends on services. This was around 11 pence 50-60 years ago.

“Given the amount coming directly from people’s pockets the Department of Health and Social Care should be making sure every penny is going to the right places: people have repeatedly been polled showing they do not mind extra tax to fund health so long as it actually goes on the things they view as ‘health spending’ such as doctors, nurses and an ambulance service.’

“But we can see from these figures that an increasing percentage of this is being spent on very highly priced, very highly profitable organisations such as ‘the Big Four’ accountancy and advisory firms which is not what people expect from their hard earned taxes.

“At a time when our population is ageing and the demands on the NHS are increasing, it is clear that the actual performance of the NHS is declining sharply, despite the money being spent on these advisors. That says to me that that money has been wasted.

“It really does beggar belief that we seem happy to pile more and more taxpayers’ money into the pockets of wealthy external advisors, without seeing – demanding – tangible and positive outcomes.

“There will always be a need for external consultants but there is another way – a smarter way which delivers tangible results rather than funding flashy cars.

“The fascinating and arguably very sad aspect of all of this is that we see through the work that we do, an increasing number of Trusts, hospitals and some of exceptional talent we have in the NHS actively seeking to do something to change this tide of wastefulness. Our doctors and clinicians want to see change; they want to implement improvement.

*based on a Band 5 nurse