Public spending on consultants down but value for money questioned

21 Feb 2013 - 12:00am

Welsh public bodies are spending less on consultants but cannot demonstrate value for money in how they plan, obtain and manage consultancy services, says a report published today by the Auditor General.

Public bodies spent £133 million on consultants in 2010-11, £40 million less than in 2007-08. All sectors - local government, health and the Welsh Government - recorded significant drops in spending. But despite these reductions very few public bodies were able to demonstrate that their expenditure represented good value for money. This is largely due to inadequate data, insufficient collaboration and a failure to adopt widely accepted good practice.

Adopting good practice in procuring and managing consultancy services can help public bodies achieve better value for money, and today's report identifies potential efficiency savings of more than £23 million if all public bodies were to follow good practice. However, few public bodies routinely collect and analyse data to assist in obtaining and using consultancy services more efficiently, and the data on expenditure is often unreliable. The report also found that:

  • there is scope for more collaboration between public bodies;
  • business cases were not widely used and, where they were used, they often left out key information such as estimated costs and benefits;
  • public bodies rarely consider alternatives to consultants, including using internal staff instead of consultants; and
  • there is considerable scope to improve the management of contracts, including the monitoring and evaluation of consultant performance.

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Welsh public bodies are spending less on consultants but cannot demonstrate value for money in how they plan, obtain and manage consultancy services, says a report published today by the Auditor General for Wales.

Public bodies spent £133 million on consultants in 2010-11, £40 million less than in 2007-08. All sectors - local government, health and the Welsh Government - recorded significant drops in spending. But despite these reductions very few public bodies were able to demonstrate that their expenditure represented good value for money. This is largely due to inadequate data, insufficient collaboration and a failure to adopt widely accepted good practice.

Adopting good practice in procuring and managing consultancy services can help public bodies achieve better value for money, and today's report identifies potential efficiency savings of more than £23 million if all public bodies were to follow good practice. However, few public bodies routinely collect and analyse data to assist in obtaining and using consultancy services more efficiently, and the data on expenditure is often unreliable. The report also found that:

  • there is scope for more collaboration between public bodies;
  • business cases were not widely used and, where they were used, they often left out key information such as estimated costs and benefits;
  • public bodies rarely consider alternatives to consultants, including using internal staff instead of consultants; and
  • there is considerable scope to improve the management of contracts, including the monitoring and evaluation of consultant performance.

Initiatives aimed at encouraging more consistent and coherent approaches to procuring and managing consultancy services have had limited impact. However, a new Consultancy Advice Service, which will be part of a planned National Procurement Service, will offer public bodies guidance and share examples of best practice. The National Procurement Service aims to strengthen collaborative procurement across the Welsh public sector. Consultancy services have been identified as a key category for potential savings of up to £5.6 million a year.

The report makes a number of recommendations including:

  • developing comprehensive business cases;
  • improving the quality and consistency of data;
  • improving the procurement of consultancy services;
  • analysing the use of consultancy services to help inform workforce planning; and
  • evaluating completed consultancy projects to demonstrate value for money and learn lessons.

The Auditor General for Wales, Huw Vaughan Thomas, said today:

Consultants can be a great help to public bodies in offering specialist advice to help deliver new services and initiatives quickly, but there are risks if they are not managed effectively. Although expenditure on consultants has reduced since 2007-08, public bodies need to adopt the good practice identified in this report to improve value for money and deliver efficiency savings.

ENDS

Notes to Editors:

  • The audit analysed data collected by Spikes Cavell, a private company which analysed consultancy spending in 2007-08 by the Welsh Government and all 22 councils. The Welsh Government commissioned the data collection.
  • Spikes Cavell repeated the same exercise to cover 2010-11 which also included data from the Forestry Commission, South Wales Fire and Rescue Authority, and Mid and West Wales Fire and Rescue Authority. The company also analysed data for 2011-12 from the seven health boards and two health trusts.
  • Consultancy is work contracted to an external supplier which is project-based, separate from the client's usual business and has a clear time limit.
  • Consultancy services in 2010-11 represented around four per cent of all spending on goods and services in the Welsh public sector.
  • Property and construction was the largest category of consultancy spending in 2010-11 at £54 million, followed by management consultants at £46 million.
  • In 2010-11, local government spent £86 million on consultancy, followed by the Welsh Government at £42 million and health at £6 million.
  • The Wales Audit Office's mission is to promote improvement, so that people in Wales benefit from accountable, well-managed public services that offer the best possible value for money. It is also committed to identify and spreading good practice across the Welsh public sector.