National Audit Office report on Departments’ use of consultants to support preparations for EU Exit

Friday, 7 June 2019 00:01

The National Audit Office (NAO) has today published its investigation into the use of consultants by government departments to support preparations for EU Exit. By April 2019, departments had spent at least £97 million on EU Exit consultancy. The Cabinet Office holds information on departments’ use of its support to access consultancy services for EU Exit work, but this does not represent all EU exit consultancy expenditure by departments. Cabinet Office...Request free trial

The National Audit Office (NAO) has today published its investigation into the use of consultants by government departments to support preparations for EU Exit.

By April 2019, departments had spent at least £97 million on EU Exit consultancy. The Cabinet Office holds information on departments’ use of its support to access consultancy services for EU Exit work, but this does not represent all EU exit consultancy expenditure by departments.

Cabinet Office information shows that £65 million had been spent or agreed to be spent on consultancy services in support of preparations for EU Exit from April 2018 to April 2019. The NAO reviewed data held by a sample of four departments and by the Crown Commercial Service and found an additional £32 million in EU Exit consultancy expenditure. This largely relates to contracts entered into before Cabinet Office began offering support to departments requiring consultancy support, and contracts with consultancy firms that departments are not able to access through the Cabinet Office arrangements.

Cabinet Office analysis found that overall spending on consultancy services has increased since 2015-16 from £0.5 billion to £1.5 billion in 2017-18. However, the figures reported in departments' annual reports for consultancy costs totalled £332 million for 2017-18, compared with £134 million for 2015-16. Cabinet Office informed the NAO that it was working to understand these differences and was planning to review trends in departments' spending on consultancy and other professional services.

Preparing for the UK's exit from the EU has been a significant challenge for departments and has required skills such as project delivery and commercial skills that are in short supply. In summer 2016, following the EU referendum, 12 of the then 17 main departments had identified a 'considerable' or 'significant' impact to their capability in policy, operational and specialist skill areas.

In early 2018, Cabinet Office identified that departments required support to access the consultancy services needed for EU Exit work and put in place a process to allow departments to access a range of consultancy support more quickly and with less effort than other procurement routes. Departments using this arrangement submit a bid to Cabinet Office, which assesses the request and decides which consultancy firm should be used.

Departments have used consultants for EU Exit activities to fill specific skills gaps and to meet immediate staffing needs. Around one quarter of the consultancy services accessed through the Cabinet Office provided project and programme management support. Almost a further one third of consultancy services relates to developing departments’ preparations, and in particular planning for if the UK left the EU without a deal. Consultants have also been used for departments' planning and development work, in some cases where the time available has constrained departments’ ability to recruit or train civil servants to carry out that work.

Six consultancy firms have received 96% of EU Exit work under the Cabinet Office arrangement. These were by value: Deloitte (22%); PA Consulting (19%); PricewaterhouseCoopers (18%); Ernst & Young (15%); Bain & Company (11%); and Boston Consulting Group (10%). Most individual pieces of work with consultants ran for less than three months, but departments have regularly extended these, with a peak in extensions in April 2019, following the extensions of Article 50 and the changes to the date when the UK is expected to leave the EU. Departments continue to prepare for EU Exit and total spend on consultancy support will rise.

The NAO found that departments have not met the standards of transparency expected by government when publishing details of contracts for EU Exit consultancy. In December 2017, the Crown Commercial Service issued guidance to encourage greater transparency in government procurement. It recommended that departments publish basic information about the award of contracts within 90 calendar days. However, the NAO found that it has taken on average 119 days for basic details of EU Exit consultancy contracts to be published, compared to 82 days for all consultancy contracts. The NAO also found that in its review of contracts for EU Exit consultancy that some had not been published as recommended, and all that had been published were significantly redacted.

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Key facts

£97m

the minimum expenditure by departments on EU Exit consultancy up to April 2019

119 days

the average time it took departments to publish the basic details about EU Exit-related consultancy contracts after they were awarded; guidance is to publish within 90 calendar days

43%

the proportion of engagements for EU Exit consultancy organised by the Cabinet Office which have been renewed at least once

5	organisations account for most EU Exit consultancy organised by the Cabinet Office. These are: Cabinet Office; Home Office; Border Delivery Group; Department of Health & Social Care; and Department for Environment, Food & Rural Affairs
6	consultancy firms have received 96% (by value) of the EU Exit consultancy work organised by the Cabinet Office. These are: Deloitte; PA Consulting; PricewaterhouseCoopers; Ernst & Young; Bain & Company; and Boston Consulting Group
3 months or less	the length of time for which most engagements (68%) for EU Exit consultancy run
£1 million	the threshold for the value of consultancy contracts above which departments must seek Cabinet Office approval

Notes for Editors

The Cabinet Office is responsible for improving the efficiency of spending on consultancy across government. Although departments are responsible for how they use consultants, the centre of government has a role in overseeing and supporting this type of expenditure. The Cabinet Office is responsible for operating a spending control that departments must follow when using consultants, which was designed to reduce spending on consultants and challenge departments to only use consultants when necessary. Departments have to obtain approval from the Cabinet Office for contracts over specified spending thresholds. The Crown Commercial Service, an arm’s-length body of the Cabinet Office, helps departments procure consultancy services.