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Government spending on consultants and temporary staff not sustainable

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Annual spending on C&TS has risen by between £400 million and £600 million since 2011-12

Government spending on consultants and temporary staff (C&TS) is still not sustainable, according to a report from the National Audit Office.

Though these latest figures showed the government has reduced annual spending on C&TS by £1.5 billion since 2010, they also revealed that annual spending here has risen by between £400 million and £600 million since 2011-12 while departments reduced their permanent workforce, suggesting that the bigger, longer term picture is not one of reduced C&TS spending.

In 2014-15, departments spent an average of 6% to 8% of the cost of their civil servants on C&TS, with individual departments ranging from 1% (HMRC) to 35% (Cabinet Office).

Departments chose to use single-tender action, or extend existing contracts for 43% of consultancy work during this period. However, small- and medium-sized enterprises won only 9% of this work (and 5% of all government consultancy work), with the largest six suppliers winning 76% of the work.

Amyas Morse, comptroller and auditor general of the National Audit Office, said that when used well C&TS can be an important source of specialist skills for departments that need to transform how they do business, but cautioned that “such specialist staff can be expensive, costing twice as much as their nearest permanent counterpart".

“Government spending on these workers has reduced significantly since 2010, when strict spending controls were introduced, but is now increasing once more," he said. "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.”

REC head of policy Kate Shoesmith said that using C&TS can be a cost-effective option, pointing out that when certain skillsets are in particularly high demand and supply is low the government will have to pay market rates in line with those paid in the private sector. “Employers will often be prepared to pay temps a higher rate to attract the best people, and in recognition that they won’t be eligible for all of the employment benefits on offer to permanent staff,” she said.

“So you may have temporary workers costing more per day but temps are normally hired for short-term projects and the employer avoids incurring the costs of taking on a permanent employee – which is why they can be a cost-effective alternative to creating permanent positions.”