Set a crook...

From today's Times:

Management consultancy firms have lost more than £800 million in revenues during the past year as the Government has slashed public contracts and renegotiated far lower fees, it emerged yesterday.

Francis Maude, the Cabinet Office Minister, disclosed yesterday that the central government consultancy bill has been cut from £1.6 billion to £800 million this year because Whitehall has stopped hiring consultants at £2,500 a day. In the previous Parliament the bill rose to £3 billion a year for consultancy because firms with financial or IT skills were routinely hired by Whitehall departments.

Mr Maude told The Times that departments could no longer hire consultants to advise on procurement contracts and daily rates of £1,600 to £2,500 were no longer acceptable.

“Consultants were being regularly hired on daily rates by departments to run the procurement process,” Mr Maude said. “Not surprisingly the negotiations were very protracted and very expensive.”

Instead consultants will be hired on “blended rates” for three to six-month contracts where no premium can be added if a very senior adviser is part of the team.

The contract is also tied much more tightly to performance targets rather than to time and materials as in the past. All consultancy contracts have to be reviewed by departments within three months and have to be re-signed by the Government’s procurement chief, John Collington, every nine months.

Research compiled by the Management Consultancies Association shows that fees in central government have fallen by 11 per cent while fees for local government contracts have dropped by 35 per cent.

Mr Maude also disclosed that big government contracts including IT deals were being renegotiated to save up to £3 billion a year by cutting profits and centralising purchasing deals. More than £1 billion has already been saved since last June after expensive deals by individual departments had been banned, he said.

Profit margins are being cut by up to 50 per cent after market research showed that company margins with European governments were much lower, at 7 to 15 per cent, than those with the British Government, which were routinely more than 20 per cent.

The move to centralise purchasing follows an efficiency review carried out by Sir Philip Green last autumn that uncovered huge variations in the cost of Whitehall contracts.

The move to centralise purchasing follows an efficiency review carried out by Sir Philip Green last autumn that uncovered huge variations in the cost of Whitehall contracts.

“We are putting a stop to this madness,” Mr Maude said.

It makes one wonder what New Labour thought it was buying with all our money. Philip Green has been much criticised for putting his assets in his wife's name while she is domiciled in the tax-haven of Monte Carlo. However, it it is good principle to set a crook to catch a crook and the savings that his report have engendered probably outweigh whatever he might have paid in income tax