Government consultancy spend is increasing again, warns NAO

Annual spending on temp staff and consultants has gone back up by between £400m and £600m in just a few years

The government's annual spend on consultants and temporary staff (C&TS) has shot up again, but it isn't a sustainable strategy for the long term, the National Audit Office (NAO) has warned.

Strict spending controls were introduced in 2010 and this helped to reduce annual spending on consultants in government by £1.5bn - but since 2011-12, annual spending on C&TS has gone back up by between £400m and £600m, while departments were reducing their permanent workforce.

According to Amyas Morse, head of the National Audit Office (NAO), this suggests that the underlying issues have not been fixed.

"Professional workforce planning to address skills and capacity gaps in key areas is essential to drive down dependency on consultants and temporary staff," he said.

ICT and project management staff account for 54 per cent of the government's annual spend on C&TS, but only 24 per cent of the total of full-time equivalent temporary staff. ICT alone accounted for 11 per cent of the C&TS brought in, and 25 per cent of the spend.

In comparison, administrative and clerical roles accounted for 52 per cent of temporary staff but only had 19 per cent of the spend.

According to the NAO, temporary developers in the civil service are likely to be paid an average fee rate of £603 per day, compared to a permanent civil service developer who would earn between £242 and £323 per day. The NAO suggests that the government could make an annual saving of between £3.7m and £4.7m by filling these 61 full-time equivalent posts with permanent staff.

Similarly a technical architect hired on a contract basis would be paid an average fee of £589 per day, with the Civil Service equivalent staff cost being between £244 and £323 per day. The NAO suggests that the government could make an annual saving of between £1.8m to £2.5m by filling the 31 full-time equivalent staff who are there on a temporary basis with permanent staff.

The NAO said that ICT and project management skills had been identified in the Civil Service Capabilities Plan as priorities to develop internally. The Home Office told the NAO that it was trying to attract ICT specialists on a permanent basis to reduce its reliance on temporary staff.

The NAO said that consultants and temporary staff can be an important source of specialist skills and capabilities for departments that need to transform how they do business, but stated that such specialist staff can be expensive - costing twice as much as their nearest permanent staff counterpart.

For the longer term, the NAO has urged departments to develop a strategic plan that covers all bodies within their group, identifies their current skills and expected "skills gaps" , and determines how best to fill those gaps, including likely future demand for C&TS.