Major digital programmes prompt surge in government spending on temps
Whitehall’s outlay on consultants and temporary workers rose by £267m in FY19
Government spending on consultants and temporary staff rose by nearly 20% last year to hit £1.8bn, as departments drafted in outside help for IT projects and Brexit preparations.
An analysis of spending figures across 18 government departments from PublicTechnology sister publication Civil Service World shows annual outlay on consultancy services and temporary staff has risen by £267m, or 17.9%, since 2017-18.
Departmental annual reports showed that the 2018-19 paybill for temporary staff alone reached £1.1bn, up 18.3% from £929.9m the previous year, with several ministries saying they needed all hands on deck to prepare for Brexit.
Around two-thirds of the total spent on hiring short-term staff was across six departments: the Ministry of Justice, the Ministry of Defence, the Department for Work and Pensions, the Department for Environment, Food and Rural Affairs, the Home Office and the Department for Business, Energy and Industrial Strategy.
The figures include all spending across departmental groups, which include both the core ministries and their various agencies and arm’s-length bodies, on workers drafted in on short-term contracts. The way spending is reported varies across departments, but is usually categorised under temporary or off-payroll staff, contractors or contingent labour.
The MoJ alone accounted for around a fifth of the total spending on temporary staff, shelling out £222.3m across all of its public bodies. The majority was in the core department and its agencies, which include HM Prisons and Probation Service, HM Courts and Tribunals Service and the Legal Aid Agency.
HMCTS, which is in the midst of a major courts digitisation programme to modernise the justice system and cut costs, spent £70m – nearly a third of the MoJ group’s total. Last year, HMCTS had the full-time equivalent of more than 2,000 agency workers and contractors on its books.
The MoD meanwhile spent £135.8m on temporary staff in 2018-19, which it called a “period of fundamental change in the way defence business is conducted”. However, its annual report added that private-sector expertise is of “enduring value to the department”, and that it does not make sense to permanently employ people with all of the specialist skills it needs.
DWP had not only the third-highest temporary staffing bill, at £128.9m, but also one of the sharpest increases in spending compared to 2017-18, when it spent £77.8m. The department brought its previously outsourced IT services in-house under a subsidiary called BPDTS in 2017, but said expanding the digital team’s capacity and skills had taken “longer than expected” and that external experts had been used to “bridge the gap”.
The team worked on several large-scale digital projects last year, including an online jobs board and a checking service for state pensions.
Spending on temporary staff also shot up at Defra, which has one of Whitehall's highest Brexit-related workloads. Costs across the Defra Group, which includes Natural England and the Environment Agency among others, came to £124.6m in 2018-19.
The core department alone spent £86.5m – double its 2017-18 total and more than the £73.2m spent across the entire group that year – on fixed-term staff. Defra said the increase was to support Brexit preparations, which affects 80% of its work, and UnITy, an IT programme dedicated to breaking up two major contracts between the department and the tech supplier IBM, and the Environment Agency and Capgemini.
The Home Office spent £96.7m, up 18% on the year before. Just over a third paid for agency staff at UK Visas and Immigration, the Passport Office and Immigration Enforcement “to deal with backlogs in migrant casework, passport application/examination, asylum applications and in preparation for exiting the EU”.
The rest was spent on contractors and interim managers to help deliver its transformation plans, Brexit preparations and digital strategy.
BEIS said its £70m spend – up from £60m – helped ensure it had “the right skills and capacity” to prepare for Brexit.
Several other departments with smaller budgets but sizeable Brexit-related workloads ramped up their spending on short-term staff as contingency planning intensified. The Department for Exiting the European Union’s spending more than doubled from £1.4m to £3.1m, while the figure at the Department for International Trade rose from £15.6m to £25.6m.
The Ministry for Housing, Communities and Local Government’s temporary workforce paybill doubled to £13.4m, with extra staff hired to help roll out new software, bolster its digital function, and meet “urgent resourcing requirements” for Brexit projects – including the central no-deal contingency structure Operation Yellowhammer.
Consultants cash in
The 18 departments analysed by CSW spent £663.7m on consultancy services in 2018-19, up from £581.6m the previous year, with Brexit preparations and IT projects driving up consultancy bills across several organised.
Government departments have come under scrutiny over the last three years as several have reported paying out substantial sums to consulting firms in EU exit-focused contracts. An analysis by the public contracts database Tussell in May found £160m worth of deals were signed in the latest wave of contracts, with some set to run until next spring.
Despite being lower down the spending table for temporary staff, the Department for Transport spent more than any other department on consulting services last year. Its bill hit £145.6m in 2018-19 – half as much again as the year before. The increase was driven mostly by Network Rail, the formation of the East West Rail company in 2017 and Brexit preparations.
The Treasury spent £144m – down from £166m the previous year – followed by the MoD at £65.2m and BEIS at £61.9m. Defra saw the biggest proportional increase in its consultancy bill, rising £17m to hit £54.5m, which it attributed to the same Brexit and IT projects that caused it to ramp up spending on temporary staff.
The Cabinet Office meanwhile saw a more than 50% increase in consultancy spending, to £36.9m, which it said was down to extra resources being put into the National Cyber Security Programme and Brexit preparations.
Lower down the spending table, MHCLG’s consultancy bill increased eightfold to £3.3m, while DIT's quadrupled to £2.8m. DIT said two large consultancy contracts were responsible for the increase: one for a learning and development programme at the Trade Remedies Authority, the post-Brexit watchdog it is in the process of establishing, and another to support the development of trade policy.
By contrast, DWP cut its consultancy bill by a third to £28.5m, having wrapped up several projects requiring external expertise the year before.
Asked about the overall spending figures, a government spokesperson said: “It is often more cost-efficient to draw upon the advice of external specialists for short-term projects requiring specialist skills, including work on our EU exit priorities."
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