New Labour Goes Consulting Crazy

When the Labour Get together have been in opposition, they lambasted the ruling Conservative authorities for spending as much as £500m a yr on administration and IT methods consultants. This was, they thundered, “a disgraceful waste of taxpayers’ cash – cash that ought to be spent on frontline companies like hospitals and colleges” somewhat than being handed over to some already rich consultants. Now New Labour are in energy, they appear to have modified their minds. Nevertheless, New Labour haven’t simply spent a mere £500m a yr on consultants – that they had rather more formidable plans than that. Of their grand plan to modernise the supply of public companies, they appear to have sidelined the Civil Service and have determined to each make their new insurance policies and implement them utilizing their favorite administration and IT methods consultants. That is turning out to be an costly train – it should price us, the taxpayers, properly over £70bn – greater than £20bn for administration consultants and a minimum of one other £50bn for IT methods consultants

The huge quantities of taxpayers’ cash being handed over to consultants could possibly be seen as proof of a dynamic, forward-looking authorities investing in modernising their nation. Not less than, it will be optimistic have been these huge investments profitable. Nevertheless, expertise up to now is lower than promising. Judging by what has occurred, New Labour’s investments in administration and IT methods performance management seem to have simply been a sequence of unmitigated and shameful disasters. So unhealthy was the state of affairs, that in an all-party committee of MPs criticised the British Authorities for each losing taxpayers’ cash and attempting to cowl up the reality about its monetary mismanagement. The committee concluded that the British Authorities’s file on IT consulting tasks was ‘an appalling waste of public cash which Whitehall was attempting to hide behind a cloak of business confidentiality’. There have been so many disasters just like the Youngster Assist Company – £1bn wasted on consultants, the Nationwide Offender Administration Service – about £300m wasted and the Ministry of Defence – a minimum of £500m spent on consulting that gave completely no outcomes. Probably the most shameful undertaking of all have to be the brand new NHS IT system which was deliberate to take 3 years to finish and value simply £2.3bn – it should really take over 10 years, will price over £12bn and will not even work correctly.


Administration and IT methods consultancies are companies. As companies, their goal is revenue maximisation. This implies they need to attempt to promote as a lot of their product as they will on the highest worth doable. Similar to every other enterprise – producers of soppy drinks, breakfast cereals, photocopiers, paperclips, automobiles, burgers, cigarettes or no matter. While you promote administration or IT methods consulting to a different business firm like a financial institution, insurance coverage firm or an oil firm, you might be taking part in a business sport, the place you each know the foundations. You attempt to get as a lot of their cash as doable by considering up all types of ‘important’ companies and new IT methods you may promote them and also you cost them as a lot as you assume you will get away with. As everyone is aware of, that is how enterprise works. And anyway most banks, insurance coverage firms and oil firms are massively wasteful bureaucracies which have extra money than they know what to do with.

Nevertheless, having spent over twenty years promoting consulting to many firms and authorities departments, I consider that this example adjustments when a profit-maximising firm like a consultancy sells its companies to public sector organisations. As a result of right here, each hundred million that’s channelled into administration and IT methods consultancies’ pockets means 100 million much less that may be spent on offering important companies in areas like well being, defence, colleges, social companies and police. So if a administration consultancy knowingly sells a undertaking the place it locations twenty to thirty to forty inexperienced consultants in some authorities division or different, when two or three skilled consultants may have finished the undertaking extra rapidly and rather more cheaply, you need to ask whether or not that is simply nifty enterprise or whether or not the consultancy could possibly be accused of unethical follow. Equally, if an IT methods consultancy manages to persuade a authorities division that it ought to spend say £400m on constructing a totally new IT system, when it is aware of that an current system may have simply been upgraded for lower than £40m – is that this only a case of the consultancy being canny businessmen or is it nearer to theft of public funds? Furthermore, if these consultancies additionally systematically overcharge the Authorities for his or her consultants’ time, invoice for fictitious administration, cost the Authorities the complete price of journey bills whereas retaining kickbacks from journey firms and make the Authorities pay for time consultants and their managers spend on inside consultancy actions – once more the query, is that this merely good enterprise or a fraudulent rip-off?

There’s one other dimension to the ethical points arising from how consultancies work within the public sector. If a consultancy or methods supplier fails to attain the promised outcomes for a personal sector firm, no person actually will get harm. But when inexperienced junior consultants set meaningless targets for the well being service which result in ward closures and fewer sufferers being handled. Or if consultancies produce IT methods fiascos for presidency departments that forestall folks from travelling on account of them not having passports, that depart over 176,000 immigrants caught in limbo for months as a result of their purposes can’t be processed, that forestall courts prosecuting criminals, that trigger households to lose their properties or that impoverish tons of of 1000’s of low revenue households, then it appears cheap to query the ethics of consultancies which can be completely happy to take the money and but are seemingly impervious to all of the struggling attributable to their incompetence and greed.


At a dinner just lately, I used to be sitting subsequent to a gentleman who shall stay anonymous. He had a knighthood and at varied instances had been a professor at a number one enterprise faculty, a director of the Financial institution of England, a former member of the Cupboard Workplace Central Coverage Assessment Employees (the ‘Suppose Tank’), a director of the Treasury and a director of a serious financial institution. I began speaking to him about my issues over the quantity of taxpayers’ cash being handed over to consultants and the sequence of catastrophes that had ensued. I then steered that the Authorities was being taken for a really costly trip by its consultants. The gentleman seemed disdainfully at me and mentioned dismissively, ‘I discover your arguments fallacious and missing in mental rigour – the folks on the Treasury and the Financial institution of England should not silly’.

Having seen a lot consultancy offered to so many authorities departments yielding so laughably little in the way in which of outcomes, I’ve written a ebook to inform the story of what actually occurs when administration and IT methods consultants are paid to convey their magic into public sector organizations. Now taxpayers could make up their very own minds concerning the gumption or in any other case of the folks on the Financial institution of England, the Treasury and the two,500 different authorities departments who’re contributing so generously to the welfare of already rich administration and IT methods consultants by giving them nearly unbelievable quantities of our cash.

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