Home Office spent £400m on consultants in four years

The Home Office has spent a “shocking” £400m on consultancy fees over the past four years, it emerged today.

The National Policing Improvement Agency (NPIA), set up in 2007 to help implement efficiency savings across police forces, also spent £71.4m on consultants in its first year of operation – with some earning £3,000 a day.

The revelations came during the Home Affairs Select Committee session on the work of the agency and the Whitehall department.

David Normington, permanent secretary at the Home Office, told MPs his department spent £118m this year on consultancy fees, 15% less than last year. But he conceded that during his four years as chief civil servant at the department, he oversaw consultancy spend of £400m.

Normington defended the use of consultants, claiming it was essential to employ external advisers to help deliver key services. However, he called into question the Civil Service’s internal development schemes.

He said: “I would prefer it if we could employ civil servants [to do work of consultants], but we would never be able to get the IT and communications skills simply from employing civil servants.”

Meanwhile, Peter Neyroud, chief constable and chief executive of the NPIA, blamed the body’s consultancy bill on the legacy of the previous agencies which merged to form the NPIA two years ago. He said: “I inherited a pretty shocking over-reliance on consultants, I have spent the past two and half years clearing that up.”

Two policing bodies, training body Centrex and technology provider Pito, merged to form the NPIA in April 2007. It has an annual budget of £567m.

Neyroud admitted that some consultants were paid “considerably more than the prime minister”, at day rates of between £2,000 and £3,000, because managers preferred to employ external services rather than “make their own minds up”.

The chief executive has significantly clamped down on consultancy fees, however, taking the overall bill from £71.4m to £19m this year. Every consultant, contractor and day rate is approved by Neyroud, which has helped to reign in costs, he said. “We have blazed a trail in making sure that we use consultants for doing the right thing,” he said.

Home secretary Alan Johnson, also at the committee, said the government had called for departments to dramatically reduce their consultancy spend.

Normington said he was committed to spending less on consultancies. “We are determined to bring down spend on consultants year-on-year, and the government wants to see it down by 50%,” he said.

But Keith Vaz, chair of the Home Affairs select committee, told Personnel Today that the consultancy fees at the Home Office were “shocking”.

“We are spending far too much money on consultancies: £400m at the Home Office in four years, £71m from the NPIA. They shouldn’t have to wait for a White Paper to address that, should they?” he said.

“I perfectly understand why people under pressure, on budgets, are looking outside, but if the private sector can do it [provide consultancy] so can the public sector.”

He called on Whitehall to do more to make efficiency savings, and said he expected back-office functions, including HR, to be downsized as budgets were squeezed.

A polciing white paper, Protecting the Public, earlier this month said forces should be capable of saving at least £75m per year by 2013-14, by rationalising back-office support services.

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