Public sector contractors earned more than £19 billion last year

'Strategic suppliers' earned £19 billion from the UK public sector in the 12 months to September 2021.

That represents 11% of overall public sector spending, despite making up just 0.3% of all suppliers.

That's according to a new report by UK government spending research firm Tussell, which found that UK government expenditure on these firms climbed 24% in 2020-21.

The Ministry of Defence spent the highest amount (£4.2 billion), followed by the Department of Health and Social Care (£2.5bn) and Network Rail (£1.4bn).

Four local authorities (Kent County Council, Lincolnshire County Council, Staffordshire County Council and Wokingham Borough Council) and an NHS Trust (Sandwell and West Birmingham Hospitals NHS Trust) were also among the top 20 spenders, although none spent more than £200 million.

Strategic suppliers are private sector firms that provide key products and services to government bodies. As of May there were 40 firms counted as strategic suppliers, including Accenture, AWS, IBM, Microsoft, Amey, Capegemini, BAE Systems, G4S, and Capita.

Amey (£1.5 billion), Balfour Beatty (£1.4 billion), Serco (£1.3 billion), Mitie, Babcock, and BAE Systems are the highest-earning vendors in the list, each receiving more than £1 billion from the UK government.

Outsourcing and facilities management earned the most (£6.3 billion, up 59% year-on-year), followed by construction & engineering (£4.7 billion) and technology (£4.7 billion).

Consulting grew faster than any other area, up 91%, bringing in a total of £1 billion.

Tussell's report shows that IT services provider Capita will see a greater number of public sector contracts ending within the next three years than any other strategic supplier, worth about £700 million.

However, that pales in comparison to the value of the 30 contracts expiring for facilities management company G4S, with a combined worth of £1.8 billion.

These suppliers could claw some of that money back, however. There is concern in Whitehall that the Government will use external contractors to fill the gaps left after proposed cuts to the civil service, potentially at a much higher cost to the taxpayer.