The House of Commons Public Accounts Committee has accused government departments of forking out nearly £3bn annually for external consultants without monitoring their effectiveness.
A report by the committee said departments were appointing consultants before checking whether their own in-house staff had the skills to do the job.
It added that departments and the Office of Government Commerce (OGC) did not know how much was being spent on consultancy and therefore could not assess whether the benefits justified the cost.
Committee chairman Edward Leigh said central government alone was paying nearly £2bn a year for consultants.
“It is impossible to believe that the public are receiving anything like full value for money from this expenditure. In fact, a good proportion of it looks like sheer profligacy,” he said.
“Departments routinely do not agree with the consultants any measurable benefits to be expected from the contracts. And consultants are often paid simply on the basis of the amount of time worked and not on what the work has achieved,” he added.
Leigh said efficiency savings of more than £500m a year were possible.
“Departments must become commercially much sharper in procuring consultants and in drawing up fixed price contracts or ones containing incentives for achieving the desired outputs.”
In the past three years public sector spending on consultants has risen by one third, from £2.1bn in 2003–04 to £2.8bn in 2005–06, largely due to increases in spending by the NHS.
Central government was repeatedly using consultants for core skills, including project and programme management and IT, and increasingly turning to a select list of suppliers, the report said.
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