Whitehall spending criticised as some consultants net £1,000 a day

Whitehall has been accused of playing "fast and loose" with public money by spending up to £1.3 billion on consultants and temporary staff, with dozens of outside experts paid more than £1,000 a day.

The National Audit Office found that spending on consultants was increasing again after being cut back as a result of austerity measures imposed in 2010.

Spending has increased by up to £600 million since 2011/12 and could rise again as departments invest in "transformation projects" aimed at cutting overall costs following George Osborne's 2015 spending review.

In 2014/15 the main 17 government departments spent between £1 billion and £1.3 billion on consultants and temporary staff, the NAO reported, compared with £2.7 billion in 2009-10.

But the NAO found that "reported spending has, however, increased since 2011-12 and there will continue to be upward pressure on consultant and temporary spending".

The report said: "Since 2009-10, the government has used spending controls to reduce its use of consultants and temporary staff, and by 2014-15 spending had fallen by £1.5 billion. However, spending has increased by between £400 million and £600 million since 2011-12, suggesting that this was more of a short-term reduction than a sustainable strategy.

"Departments must now manage significant further cuts in their budgets. They will have to make major changes to achieve the required cash savings and to deliver services in new ways.

"The skills needed to manage and deliver change are essential to making that transformation successfully.

"In the short term, departments will need to draw on consultants and temporary staff to make up for shortages in these skills in the civil service. In the longer term, departments will need to develop workforce, skills and capacity plans to reduce their dependence on external skills."

In 2014-15, ministries spent an average of 6% to 8% of the cost of their civil servants on outside staff, with individual departments ranging from 1% at HMRC to 35% at the Cabinet Office.

The Cabinet Office recommends that departments review requests for outside work, but the NAO found that this internal approval process is weak in some departments and even the Cabinet Office itself did not always follow its own procedures.

NAO chief Sir Amyas Morse 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."

There were 47 temporary staff in central government being paid more than £1,000 a day in May 2015, the NAO found.

Meg Hillier, chairwoman of the Commons Public Accounts Committee, said: "I am concerned that some departments are playing fast and loose with taxpayers' money in their use of consultants and temporary staff.

"It is unacceptable that a lack of planning and an inability to recruit and retain permanent staff with the right skills at the right time means that departments are overly reliant on external staff in key areas such as project management and IT.

"The taxpayer risks losing out twice - with employment costs often twice those of employing a permanent member of staff and a loss of skills when their contract ends, perpetuating existing shortages.

"Short-term external expertise has its place, but departments should be more rigorous when deciding whether this is the best option. It costs the taxpayer dear and too many of these temporary arrangements become long term."

A Cabinet Office spokeswoman said: "This Government is scrutinising spend like never before. We've stamped out excessive spending on consultants and put in place stringent spending controls. The total spend on consultants is still less than half of that in 2009-10.

"Of course we'll need specialist expertise, especially where government is undertaking complex transformative projects and needs to draw on experienced minds. But we only do this when the key skills are not readily available within the civil service and where it delivers better value for taxpayers."