Consultants of Swing
After a long, sleepy summer largely lacking in inspiration (apart from bomb-happy yahoos and trigger-happy cops, naturally), for me the first day of the new blogging season starts today, the day after Parliament returns from its (72 day) recess.
Just browsing some of the written answers in Hansard provides rich pickings worth returning to later. There’s a lot of meat on some of these bones. This is from September 12 this year:
Mr. Austin Mitchell: To ask the Secretary of State for International Development which five management consultancies received the highest value of contracts awarded by his Department in each of the last three years; and what the total value was of the contracts awarded to each. [12573]
Hilary Benn: The following table contains details about the value of contracts issued to all consultants. We do not keep a central record for management consultants and this information cannot be provided except by incurring a disproportionate cost.
Contracts are awarded in open competition according to the EU Procurement Regulations, based on best value for money.
That’s £85,795,031 for 2002-3 (2.5% of the Department for International Development’s resource budget for that year), £103,448,216 for 2003-04 (2.8% of the resource budget), and £80,964,430 for 2004-05 (2% of the resource budget). £270,207,677 in total.
That’s a quarter of a billion clams spent on consultants in three years. How much would it have cost if the work had been done in-house? Nobody knows - it would be too expensive to find out:
Mr. Austin Mitchell: To ask the Secretary of State for International Development what estimate he has made of the total expenditure saved in each of the last three years as a result of implementing recommendations by management consultancies within his Department. [13635]
Hilary Benn: DFID do not maintain central records of expenditure saved as a result of implementing recommendations from management consultants. DFID’s headquarters and overseas offices use consultants for a wide range of management tasks, mainly to increase the quality of our assistance to development partners. The financial value of these as savings could not be calculated without incurring a disproportionate cost.
We have no way of knowing if £270m of our money has been spent in any way efficiently. The £103,448,216 spent on consultants in 2003-4 was more than given in humanitarian assistance that year to Iraq (£102m).
“We do not keep a central record for management consultants and this information cannot be provided except by incurring a disproportionate cost,” say Hilary. It’s a curious thing to say. No central record for management consultants? What does he do when he needs one, reach for the Yellow Pages?
As for providing the information, his own department’s website kindly provides a comprehensive list of contracts awarded since January 2003. A lowly office wonk with a couple of hours to spare and an internet connection could tell Hilary exactly which contracts went to management consultants and for how much.
This is an issue that should appeal to observers on both the Left and the Right. Those of us on the Left suspect that much of this consultancy is conducted to identify privatisation opportunities for British companies in countries still on their knees. How are the people of Africa served, unless a dogmatic belief in privatisation as a force for good (in the face of a boatload of evidence to the contrary) on the part of Hilary Benn is the driving force? Why should the government be the middle man?
Which is a question those on the Right looking for smaller government should probably also ask. Shouldn’t businesses be providing their own opportunities in a free market? And: Is the British tax payer getting value for money? Using the reputation of some consultancies as a guide (Arthur Andersen/Accenture, anybody?), the answer would suggest itself as an emphatic no.
UPDATE: Owen writes a cracking rebuttal.
UPDATE: Repairing some wonky maths.
Posted on October 11th, 2005 at 9:46 am
| See also • Consultants of Swing II • UPI - Report: U.K. cheated Afghan poppy growers • Smell the glove |
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That’s an bloody outrageous amount of money - unless it saves a correspondingly huge amount of money or otherwise ‘adds value’ somehow - and they seem to have no way of measuring that, unless I missed something, so how can they possibly know, or think they know, that they have not poured a quarter of a bilion down the drain? Please tell me I’m missing something. Please?
I would be interested to know what the figures for various previous years were - pre-1997 for example? Do you know any way of finding that out?
Nope, you haven’t missed anything. DfID spent all that cash but have no way of telling if they’re getting value for money or if they could do it better themselves. I personally can’t see that it woulde be overly difficult to do the latter at least.
As for figures from previous years, this states that:
“In 1999-2000, DFID spent £267 million on consultancy contracts  £257 million through its Procurement Department in East Kilbride, and £10 million through its local offices in developing countries. This figure has been rising steadily for the past five years, having more than doubled over the period, from £115 million in 1994/95. It was equivalent in 1998/99 to just over 28 per cent of its bilateral country programme expenditure, and nine per cent of its total budget planning allocation.”
…and…
British Consultants’ Bureau complained that, because only a few DFID contracts are let through open competition, “too often firms and individuals hear after the event about a project being let for which they were eminently suitable  in some cases more suitable than the successful candidate  without there being an opportunity to either express an interest or be selected as one of several bidders”. This brings into question the value for money which is being achieved by DFID in electing not to advertise openly the majority of its contracts.
So, they seem to have reined their spending since the heady days of 1999-2000, but they’re still spending huge amounts particularly when compared to humanitarian assistance. And it makes the initial £1m assistance given to this week’s earthquake look, well, a bit tiny.
It is an outrageous amount of money, but id DfID is like most of the public sector, it’s probably partly an artifact of the ridiculous accounting rules they are bound by. Every time Gordon Brown gets up and announces another round of cuts, these are applied to revenue spending, which includes payroll. Large numbers of people are thus paid off.
But if the work they were doing still needs to be done (and since governments have been relentlessly cutting public sector budgets for 35 years that is often the case), they have to hire consultants under their capital account to do it. These consultants are often the very same people who were just made redundant, although of course they’re able to charge a lot more than a public sector salary.
Until a. the Treasury addresses the irrationality of this procedure, and b. the government recognises that there is a minimum of work that has to be carried out to implement its election winning brainwaves, and that this work requires people to do it, then numbers like this will continue to appear inn Hansard.
Chris
I started to read the postings with interest until I came across the comments on consultants. Whilst I agree that some consultants are clearly over paid and underworked and indeed deliver poor quality results in the form of reports and other outputs, I would caution against stating that all consultants are like this. Many struggle to get work and under EC contracts for example are certainly not well paid. I deplore the DFID attitude of opaque selection of the “preferred bidder”. I agree, there are favourites and these have tended to be ex-DFID staff members.
I also deplore the DFID claim that they are open, transparent and abide by EU rules. This is not the case. Whilst DFID will recruit from anywhere in the world, the EU contracts from the EU or beneficiary country/region only. Whilst DFID claims to be following the EU rules in actual fact they are not. The EU does not recruit from anywhere in the World.
Whilst I support open trade I wish there was more honesty by the donors and correct interpretation.
Consultant Economist