Consultants: Cost (Hansard, 21 December 2004)

§ The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey)
My Lords, no statistic is held centrally about the cost to public funds of the advice sought from private sector consultants in each year. The Government have put in place an efficiency programme with strong controls on the engagement of external service providers to ensure that procurement of professional services will deliver value for money.

§ Lord Peyton of Yeovil
How very interesting, my Lords. An efficiency programme is surely overdue, with action taken on it. The question that I want to ask the noble Lord is a very simple one. Why on earth continue to spend such astronomical sums on advice that, of the same quality and at a tenth of the price, ought to be available from the public sector's own resources? I wonder whether the time has not come for the Government generally to remember the opinion expressed by Mark Twain that the first consultant was 1653 Satan. I am sure that the noble Lord will recall the advice that Satan tendered to Eve—that she could safely eat of the fruit.

§ Lord McIntosh of Haringey
My Lords, I am grateful to the noble Lord for his literary references. Unfortunately, the facts do not bear out his argument. The National Audit Office carried out a survey of the use of private sector consultants in 2000, and found that expenditure was equivalent to 0.17 per cent of total public spending. It is also a fact that use of consultants by the public sector is lower than use of consultants by the private sector; clearly, private sector business finds it worth while to use consultants on occasion. Consultancy rates paid by the public sector are lower than those of the private sector.
I suppose that I ought to have prefaced my remarks by saying that I ran a market research consultancy company for 30 years and had very valued clients in the public sector.

§ Lord Hughes of Woodside
My Lords, does my noble friend share my shock and horror at the damning indictment of private consultants from the noble Lord, Lord Peyton of Yeovil?

§ Lord McIntosh of Haringey
My Lords, I am rarely shocked or horrified by anything in this House.

§ Lord Marlesford
My Lords, I am reminded that the penalty for the bad advice given to Eve was that the consultant was to crawl on his belly for eternity—but that does not always happen in our system. AP Herbert once wrote a letter to the Times, pointing out that the Government were like an elderly hypochondriac—always asking for a second opinion, but never taking it.
That said, does the Minister at least accept that some of the best and virtually free advice available to the executive is from Parliament, particularly from this House? Given that we now face the major controversy over identity cards, will the Minister agree that there might be a good case for having a Joint Committee of both Houses to consider the matter in detail?

§ Lord McIntosh of Haringey
My Lords, the noble Lord, Lord Marlesford, began with some useful quotations which related to the Question on the Order Paper, but he escaped as fast as he could from the subject under discussion.

§ Lord Maclennan of Rogart
My Lords, when the Freedom of Information Act comes into force at the beginning of the new calendar year, will it be possible for the public to inspect closely the private consultants' advice in many cases to enable the public, including Parliament, to form a view on whether we obtain value for money?

§ Lord McIntosh of Haringey
My Lords, the Question is about expenditure on professional services and I can respond positively to the noble Lord, Lord Maclennan, on that score. The Office of Government Commerce encourages departments to make public the details of 1654 their expenditure on the use of external professional services. That will become statutory when the Freedom of Information Act comes into force on 1 January. I can go along with the noble Lord to that extent.
As to the detail of advice that consultants give, I imagine that that will vary according to the type of advice—whether, for example, it is legal, professional or business advice. I do not think that it will be possible to generalise in the way that the noble Lord suggested.

§ Lord Peyton of Yeovil
My Lords, does the Minister agree that, to use the words of a distinguished Prime Minister, consultants have "never had it so good"?

§ Lord McIntosh of Haringey
My Lords, I am not aware of the origin of that quote. Some consultants have it good if they give good advice. If they do not give good advice, then, presumably, they do not have it so good.

§ Lord Maginnis of Drumglass
My Lords, is it not the case that the noble Lord, Lord Peyton of Yeovil, has given good advice to the Government in that there should be greater discrimination in the extent to which consultants are engaged by departments? Can the Minister say whether some consultation documents coming from within departments are not quite as ridiculous and useless as those coming from paid consultants? I refer to one document, for example, where the department said that 3,000 young people and children were consulted—some as young as three years old.

§ Lord McIntosh of Haringey
My Lords, I agree with the first part of the noble Lord's question. The view of the Office of Government Commerce, which is charged with such matters, is that there should be very severe scrutiny of the use of external professional services, because, clearly, one should use those services only when it is less expensive than providing the advice internally. That is why the procurement work of the Office of Government Commerce concentrates heavily on value for money from external professional services. I do not know that I can comment on the noble Lord's example of internal consultation.

§ Lord Newby
My Lords, the Government have already accepted that deferring expenditure on IT projects counts as an efficiency saving, because it avoids subsequent cost overruns. Does the same principle apply to IT consultants?

§ Lord McIntosh of Haringey
My Lords, that is a "Have you stopped beating your wife?" question. There is no assumption that not using IT consultants produces efficiency savings, although if you read the public press you would think otherwise.

§ Lord Skelmersdale
My Lords, the Minister says that he cannot give figures for the cost to the Government of private consultants. Has he read the Management Consultancies Association's report of April, which said that public sector work has now reached £1.3 billion, 1655 accounts for 22 per cent of its members' incomes and that central government is the largest single market for consultants? Given that some 5,000 people a year die from hospital-acquired infections and consultants have been used to try to drive that figure down, does the Minister think that this is really value for money?

§ Lord McIntosh of Haringey
My Lords, the Management Consultancies Association represents only one part of the range of professional service advisers who give advice to the Government. Earlier, I gave the example of legal advice, but the Management Consultancies Association does not cover that. It does not cover market research services or a range of other areas. Therefore, the association's figures would not have enabled me to give a more positive answer to the original Question put by the noble Lord, Lord Peyton.