Prudent or Parochial

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Councils resist rush to call in consultants

25 November, 2014 | By Mark Smulian

Councils seeking efficiencies have held their spending on management consultants steady, while both Whitehall and the NHS substantially increased their use.

That finding has come from a survey of spending on consultants by Porge Research, which monitors the public sector market and said this restraint could see councils miss out on valuable advice.

Its report Prudent or Parochial?, shared with LGC, found public spending on management consultants steadily increased from a monthly average of £60m in April 2012 to some £100m by March 2014.

Central government spending went from just under £40m to nearly £70m and the NHS’s doubled to £12m.

Local government’s average spending though held steady throughout the period at around £16m, though with sharp monthly ‘spikes’ that Porge said probably reflected consultants being employed on a project basis rather than long term.

The survey included consultants working in transformation, audit, finance and economics, but not specialists such as property and highways.

Porge director Alice Watson told LGC: “I am not surprised at the restraint exercised by local authorities. They have been under the financial cosh for such a long time, and are well used to intense public scrutiny.

“This is probably laudable in many ways, except for the fact that there is sometimes a lost opportunity cost. An injection of external consultative expertise could be transformative”.

Grant Thornton partner Jon Roberts told LGC: “With demand-led services like health and social care financial pressures mean providers seek extra [consultancy] support, but with other services in local government they are managing the financial position through general savings and not necessarily looking for the extra support. “They may do in future if local government gets to the point where it decides it should be more transformative.”

Management Consultancies Association chief executive Alan Leaman told LGC: “Local government has traditionally been cautious about engaging consulting firms, but we have seen some uplift in the last year or so. “The challenges facing the sector are significant, and will require some fundamental changes in structures, services and organisation. As the report says, the sector would be foolish not to take advantage of the expertise and skills that consulting firms provide.”

The top six consultancies used by market share across the public sector were: PwC 16%, Grant Thornton 12%, Deloitte and Adam Smith International (used only by the Department for International Development) both on 7%, and EY and KPMG both on 6%.

Ms Watson said: “In fairness to the big consultancies that you see dominating the market, they have invested in specialised public sector practices and the contracts they have won have doubtless been awarded to them because their tenders were judged to be the most advantageous by the public sector commissioners.”

Alice Watson

by Alice Watson

Alice founded Porge Research in 1999. She continues to run the business from their offices in Cheltenham.

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