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Home Office spending on external advisers increased tenfold during the last parliament, driven by immigration policy, signalling the new government faces difficult choices if it wants to slash consultancy costs.
A Financial Times analysis of the department’s workforce reports found spending on consultants reached almost £230mn in the year ending June 2024, compared with just £23.4mn in the year ending June 2019.
Efforts to tackle illegal immigration, including handling small boat arrivals and implementing the Rwanda plan, were key drivers of increased spending on outside expertise, according to the 2023-24 annual report which was published last month.
The data comes as the new Labour government pursues an ambitious target of halving spending on consultants from 2025-26. Last month the Treasury also outlined plans to stop all non-essential consultancy contracts during the current financial year, delivering an estimated £550mn in savings to help fund public sector pay rises.
Jack Worlidge, senior researcher at the Institute for Government think-tank, said the plan “looks very difficult” to achieve.
“Whitehall’s consultancy spending is clearly bloated — but it will be difficult to clearly define what ‘non-essential’ spend is, and particularly challenging to make such significant cuts this year without risking disruption,” he added.
“In the Home Office, what is clear is that the pressures and policy choices around migration have driven a lot of the significant spending on external support in recent years.”
Deloitte won Home Office contracts worth £369mn over the last parliament, more than any other professional services firm, according to FT analysis of contract database Tussell.
This included £22mn for providing “transition and transformation leadership services” for the Future Borders and Immigration System programme, a £3.9mn contract to “support for the delivery of small boats arrivals”, and £3.2mn for “strategic consultancy services” to help to deliver the economic crime plan.
Deloitte said it provides “valuable insights, skills and experiences” from the private sector and other parts of the public sector to support the delivery of “complex and critical” government programmes under tight timescales.
Consultants and temporary workers accounted for 16 per cent of the Home Office wage bill on average over the year to June 2024, a rise from 7 per cent at the start of the last parliament, according to the department’s workforce reports.
Spending on temporary workers tripled to £283mn over the past five years, far outpacing the rate of inflation. The department’s annual report said agency staff were retained to handle migrant backlogs, asylum applications and support digital transformation plans.
Tamzen Isacsson, chief executive of the Management Consultancies Association, said private sector expertise was often needed to address a lack of capacity or specialist knowledge.
“It is unrealistic to expect government to employ a vast pool of private sector experts and resources and far more cost efficient to use them for short term projects helping improve the efficiency and delivery of critical national services,” she added.
IfG’s Worlidge said bringing in external expertise could sometimes be justified, but Whitehall had become “over-reliant” on both consultants and temporary labour.
“Rising spend on external support in many departments suggests that over-reliance is tipping into expensive dependency,” he added. “The civil service can save money by doing more to develop in-house capacity.”
The Home Office said: “We are committed to saving taxpayer money, which is why this new government is taking immediate action by stopping all non-essential government consultancy spending, to meet a target of halving spending on consultancy.”
Additional reporting by Anna Gross and Simon Foy
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