Breaking Whitehall’s addiction to consultants can fund Burnham’s spending pledges

A bold new cabinet and three major spending pledges in the space of 72 hours set the tone for his new Labour era. The major question now is - how does he pay for them?

So far, Burnham has committed well over a billion combined on ending rough sleeping, cutting energy bills and capping bus fares. And more is expected. He’s asked his new top team to take a “hard look” at budgets to find the extra cash to deliver these pledges. But staring at spreadsheets is unlikely to produce the savings to match this spending.

Instead, we must revisit the basics of how we spend taxpayers' money. And a good place to start is Whitehall’s well-documented reliance on long-term consulting arrangements.

The National Audit Office found public sector spending on consultants exceeded £1.3 billion in 2022-23, yet the Public Accounts Committee recently suggested the true figure could be anywhere between £1.3 billion and £2.2 billion - and the reality, many suspect, is even higher than that.

At the lower estimate, that is enough to cover the majority of Burnham’s early promises. But it’s unlikely to mean cheaper bus fares or lower energy bills. Instead it will likely loop back to the same suppliers, year after year, with little to show for it inside government.

Labour have tried to fix this. They set a target of £14 billion in efficiency savings by 2029 - but delivering it will depend on a crucial shift. Departments must finally break free from the billions spent on the same external consultants year after year. Until that cycle of dependency is broken, costs will keep rising and departments will have less cash to fund their new PM’s political priorities.

As public services have grown more complex and the pace of technological change accelerates, departments across Whitehall have turned to external contractors to fill the gap. It’s the natural and obvious choice when you don’t have the skills in-house.

Often, civil servants are handed a system, but rarely the skills to run it independently. So when something goes wrong, or needs updating, as all systems inevitably do, there is only one person they can call. It’s this dependency - and lack of true capability ownership - that causes such deep-rooted problems.

We need to stop spending money with consulting partners that don’t also build department expertise.

The true solution is not finding minor efficiencies - whether that is delaying contracts with the same companies or trimming around the edges. Instead, it is leveraging supplier expertise to build enduring capabilities in-house. That means working with sovereign companies to train civil servants to deliver their own services independently, transferring knowledge throughout delivery rather than gesturing at it during handover, and choosing partners whose measure of success is whether the department still needs them.

It is a solution we call Zero Dependency - and it is deliberately different from the model it is designed to replace. At HMRC, working this way cut delivery times from ten months to ten weeks and saved an estimated £2.25 million per software application annually. At DESNZ, we launched a business grants portal in just four weeks during the energy crisis, enabling civil servants to maintain and reuse the platform themselves rather than relying on external suppliers. In both cases, we ensured the teams that remained could run what we’d built together.

Building sovereign British capability - knowledge that stays inside government rather than walking out with a consultancy - is not just the fiscally responsible option. It is the only one. Burnham knows this - and has already made very welcome signs that his clear intention is to back the British firms who can deliver his ambitions.

That, as is his dynamism, is good news. Burnham has got out of the traps fast. He wants savings that we can feel in our pockets. But if his new cabinet is to deliver them, they should look again at the culture of consultancy dependency and instead truly back British businesses brave enough to transfer knowledge and skills so civil servants can run public services independently.

The cycle of dependency is currently costing taxpayers billions while failing to deliver the services we expect. Burnham can break it.

____________________

Katie Carruthers is the Managing Director of Tecknuovo.

LBC Opinion provides a platform for diverse opinions on current affairs and matters of public interest.

The views expressed are those of the authors and do not necessarily reflect the official LBC position.

To contact us email opinion@lbc.co.uk