Government tightens consultancy spending to save £1.2 bn by 2026

The UK government has announced stringent new controls on consultancy spending across Whitehall, aiming to save taxpayers over £1.2 billion by 2026. The measures, unveiled as part of the Autumn Statement, are designed to curb unnecessary expenditure while enhancing efficiency and value for money in public sector procurement.

Departments are already on track to achieve the £550 million savings targeted for this financial year, with further cuts to follow. The initiative seeks to reduce reliance on consultancy services, particularly from larger firms, while creating opportunities for small and medium-sized enterprises (SMEs) to contribute to the public sector. This, officials say, will bring greater diversity, innovation, social value, and flexibility to the market.

Ministerial oversight & streamlined procurement

Under the new rules, ministerial approval will be required for any consultancy spending exceeding £600,000 or for contracts lasting longer than nine months. Permanent secretaries must approve contracts worth more than £100,000 or lasting longer than three months. These measures will impose tighter controls and ensure greater accountability across government departments.

Georgia Gould, Parliamentary Secretary at the Cabinet Office, said "We’re taking immediate action to stop all non-essential government consultancy spend in 2024-25 and halve government spending on consultancy in future years, saving the taxpayer over £1.2 billion by 2026. It comes alongside our work to develop a strategic plan to make the Civil Service more efficient and effective, with bold measures to improve skills and harness digital technology."

New Framework to ensure value for money

A central part of the initiative is the introduction of a new framework agreement to streamline the use of consultancy services across the public sector. This framework will establish a single, centralised list of suppliers who have undergone rigorous vetting, enabling departments to save time and resources on procurement processes. The government is inviting companies to bid for this revamped framework, which will be managed by the Crown Commercial Service (CCS), the UK’s largest public procurement organisation and an executive agency of the Cabinet Office.

The framework’s total value has been reduced significantly, from £5.7 billion over four years to £1.7 billion over two years, aligning with the government’s cost-cutting goals. The CCS will play a pivotal role in consolidating consultancy spending and ensuring that all contracts represent value for money.

Sam Ulyatt, CEO of Crown Commercial Service, commented: "Consultancy services are sometimes needed to support Government to deliver for citizens, but taxpayers must get value for money. This agreement will help to ensure a behavioural and cultural change of how consultancy is procured throughout the UK public sector."

The agreement also aims to increase opportunities for SMEs to win public sector contracts. SMEs will be encouraged to participate as part of consortiums or as subcontractors, helping diversify the supply chain and promoting innovation.

Focus on performance-based contracts

The framework includes enhanced terms and conditions, such as alternative fee arrangements tied to supplier performance, ensuring better outcomes for taxpayers. The government has developed the agreement in consultation with departments to address their needs while maintaining rigorous standards.

These reforms underscore the government’s commitment to efficiency and fiscal responsibility, paving the way for a leaner and more effective Civil Service. By fostering collaboration with SMEs and introducing smarter procurement practices, officials hope to strike a balance between cost-cutting and delivering high-quality public services.