Gee, Ya Think?

After billions of dollars (or ₤ in this case) wasted, and surprise, government relying expensive private consultants is less useful than tits on a bull.

This is encapsulated in a quote from Taavi Kotka, former CIO of Estonia, who, when asked how he created such an effective IT infrastructure for such a low cost, "If you don’t use Accenture or McKinsey, you’d be amazed at what you can get done." 

The privatization of core government services, what Bill Clinton and Al Gore called, "Reinventing Government," has been an miserable failure:

When he was leader of the opposition, David Cameron did not mince his criticism of the Labour government’s dependency on consultancy companies. Speaking in 2008, he lambasted how, “for the last decade or so, in the name of modernisation, rationalisation and efficiency, we have been living under a regime of government by management consultant and policy by PowerPoint.”

Fast forward 13 years, and those words could have been said by any politician about the decisions of Conservative governments since. As one Tory minister put it last year, Whitehall has been “infantilised” by an “unacceptable” reliance on expensive management consultants.

Lord Agnew’s comments came in the wake of revelations that the government was spending tens of millions of pounds on private sector consultants to deliver England’s test and trace system. Rather than see the challenge of developing this as an opportunity for public sector and NHS employees to put their expertise to use, ministers and civil servants relied on companies including Deloitte and Boston Consulting Group. The approach led to test result delays, IT system bugs and laboratory bottlenecks.

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The UK state’s spending on consultancy has ballooned, notably in the past five years: Brexit and the pandemic have proved to be incredibly lucrative. Between 2017 and 2020, approximately £450m was spent on consulting fees related to Brexit by government departments, with the receipts for Covid-19 contracts coming in at over £600m. These figures alone could pay the salaries of more than 10,000 civil servants for three years – and total spending on consultants across the public sector is much higher. The bulk of this money has gone to large multinational firms, including the big four accounting consultancies – Deloitte, PwC, EY and KPMG.

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The consulting industry has its roots in the late 19th century and the electrochemical revolution in the United States, but it was only in the postwar decades that the large, multinational firms characterising consulting today emerged. The rise of multidivisional companies and then the “shareholder revolution” of the 1980s created ample opportunities for management advice.

For much of the 20th century, consultants working for government did just that: consulted. All this began to change with the advent of neoliberalism in the 1980s and its public sector surrogate, new public management. The liberalising and privatising reforms of politicians in the UK and the United States during this time were premised on an assumption that governments are, at best, “market fixers”, which should take up as little space as possible in the economy. The idea that government failure is even worse than market failure made states fear risk taking, and thus pass responsibility on to others. Under Margaret Thatcher, government spending on consulting services soared from around £6m annually in 1979 to £246m, with companies even contracted to help deliver the privatisation of state-owned enterprises.

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What we do discover about the activities of these companies is nonetheless often cause for alarm. Barely a week goes by without some reporting of a new consulting car crash, whether it’s BCG and Deloitte’s involvement in the test and trace programme; KPMG signing off on Carillion’s accounts months before its collapse; or McKinsey advising the manufacturer of OxyContin how to increase its sales of the opioid now at the heart of the US overdose crisis.

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The pandemic has highlighted just how important it is to have governments that are adaptable, capable and accountable. The more we rely on the consulting industry to deliver critical policy and service functions, the less our democratic system is able to maintain the dynamic capabilities and capacity that will enable us to confront the challenges of the future – from climate breakdown to health emergencies. It is time to put an end to today’s “regime of government by management consultant and policy by PowerPoint” – and instead invest inside our public sector, building an economy that serves the common good.

That last sentence should be placed on a branding iron, and burnt into the ass of any bureaucrat who wants to hire private consultants to do core government functions.

The incentives for private industry, and private charities, are generally antithetical to good governance.