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NAO points to upswing in consultancy spend

15/01/16

Report shows that departments continue to need temporary staff in ICT and project management

Government's annual spending on consultancy and temporary staff (C&TS) has risen since 2011-12, with ICT roles playing a significant part, according to a report by the National Audit Office (NAO).

iStock_Whitehall_Linda-StewardIt also warns that the demand for relevant skills will increase as departments have to push through transformation projects to deal with the restraints imposed by the 2015 Spending Review.

Use of consultants and temporary staff says that, while the relevant annual spending by 17 departments was down from £2.7 billion in 2010-11 to £1.0-1.3 billion in 2014-15, the reductions were achieved early and that since 2011-12 the figure has been creeping up from a low of £700 million.

Project management and ICT account for the most common types of specialist temporary staff. In terms of their share of the overall cost, project management has the largest slice with 29% and ICT the second largest with 25%.

Similarly, project managers are the most expensive type of temporary staff used by departments compared with full time equivalents, with a cost of 116 times that of a full time counterpart. ICT developers are the second most expensive with a figure of 61, followed by senior project managers (53), aeronautical engineers (37), programme managers (33) and technical architects (31).

Trend to continue

Despite the Government's aim of reducing spending on C&TS, the NAO suggests the trend could continue. It reports that Major Projects Authority has lost project management staff and is now relies more on external staff, and departments are struggling to retain permanent staff under the existing civil service pay rates.

There were also comments that the length of the recruitment process for full timers often made it necessary to use C&TS to achieve objectives.

The report also says that, although some elements departments' management of consultancy assignments have improved since 2010, there are still problems.

For example, the Cabinet Office recommends that consultancy assignments be paid according to a fixed price or on delivery of pre-agreed outcomes, rather than a daily rate, but only around half were in 2014-15. Also, departments appoint only about half of their consultancy and temporary staff through the Crown Commercial Service’s (CCS) agreements as in many cases they are still using long-standing and local arrangements, which in some instances are more expensive than the CCS agreements. This reduces CCS’s ability to negotiate fees by using government’s spending power.

Amyas Morse, head of the NAO, said: “Used well, 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 such specialist staff can be expensive, costing twice as much as their nearest permanent staff counterpart.

“Government spending on these staff has reduced significantly since 2010, when strict spending controls were introduced, but is now increasing once more. 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”.

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