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The government spent over £1 billion on consultants and interim specialist staff in the last financial year, and around 60 percent went on IT and project management.

That is the calculation of the National Audit Office, which found that in 2009-10 the government's 17 departments spent £789 million on consultants and an estimated £215 million on specialist interim staff.

In a report on the spending, the NAO criticised the way government departments have failed to properly manage consultants and measure the value of their work.
The NAO said departments "do not always follow best practice when buying and managing consultancy and interims". It also stated the price that departments pay is often based simply on time spent on a project, rather than being fixed in advance or related to the achievement of specific objectives.

"Most departments do not assess the performance of consultants or whether the work done was of benefit", it said.

The NAO approached the Management Consultancies Association to find out where the money was going. "Data from the Management Consultancies Association shows that in 2009, 40 percent of central government spending with the Association’s members was for programme or project management, and 22 percent was for IT consulting," it said.

The NAO said the proportion of spending on IT consulting has fallen since 2006, whilst spending on programme and project management consulting has approximately doubled. The two consulting categories - which often see some crossover between the IT and the business side - remain the top two services for consultancy business, said the NAO. “Overall, demand for these two services has increased from 50 to 60 percent of all consultancy", it said.

In response to the so-called "discretionary spending", the coalition government in May announced immediate plans to save £1.1 billion on such spending, of which consultancy is to contribute an unspecified amount.

New measures were introduced across government to control the use of consultants and the recruitment of interim staff. The Cabinet Office is now collecting monthly data on the use of consultants, and, said the NAO: "Initial analysis indicates that the new measures are reducing the number and value of contracts being placed".

Prior to 24 May some 478 contracts were in place. Since then, a further 50 new contracts have been issued up to 13 August.

Amyas Morse, head of the National Audit Office, said: “Although total spending on consultants has fallen in recent years, this is not the result of effective management and control. Departments need better information and skills in order to achieve good value for money from their use of consultants."