What's Happening?
The UK government has successfully exceeded its target for reducing consultancy spending, achieving a £602.7 million reduction over a nine-month period. This initiative was part of a broader effort by the incoming Labour administration to curb non-essential
spending on consultancy services. Initially, departments had planned to spend over £1.5 billion on consultancies between July 2024 and March 2025. However, under the new directive, the actual expenditure was reduced to £910.6 million. The Department of Health and Social Care was the largest spender, with a consultancy outlay of £251.9 million, while other departments like the Department for Energy Security and Net Zero and the Department for Transport also had significant expenditures. The government aims to continue this trend, with plans to further reduce spending across consultancy, professional services, and contingent labor by over £1.17 billion in real terms by 2030.
Why It's Important?
This reduction in consultancy spending is significant as it reflects the government's commitment to fiscal responsibility and efficient use of public funds. By cutting down on consultancy costs, the government can allocate resources to other critical areas such as healthcare, education, and infrastructure. This move also sets a precedent for future administrations to prioritize cost-effective governance. The reduction aligns with the Labour administration's broader economic strategy to streamline government operations and reduce reliance on external consultants. This could lead to increased scrutiny of government spending and encourage departments to develop in-house expertise, potentially leading to long-term savings and improved public service delivery.
What's Next?
The government plans to continue monitoring and reducing consultancy spending as part of its strategic workforce plan. Departments have been tasked with setting out plans for external resourcing over the next five years, with individual spending limits established by HM Treasury. The upcoming Civil Service Strategic Workforce Plan will provide further details on these initiatives. As the government moves forward, it will be crucial to ensure that the reduction in consultancy spending does not lead to increased costs in other areas, such as professional services or contingent labor. The success of this initiative may also prompt other governments to adopt similar cost-cutting measures.
