Is your money being wasted on consultants?

These are austere times for local councils, and residents of Hammersmith and Fulham are feeling the pinch. Parking charges have shot up by 55 per cent in a year and the elderly, sick and disabled have to pay £12.40 an hour for their care, according to the Labour opposition, who also claim that it is harder for people who say they’re homeless to get council help.

But one group continues to attract millions of pounds of council funding even if nobody seems quite sure what they do – and they are management consultants.

The council spends total £1.9million a year on consultancy, according to its own figures – and some claim the true cost could be far higher. A significant part of the official figure, £218,000, went to one company, RedQuadrant. When its managing director, Ben Taylor, who founded the consultancy two years ago is asked to explain his job, he admits it’s a challenge.

Portrait photo of Ben Taylor

Ben Taylor says his consultancy can help the council save money

“I try and follow that hoary old advice of saying what you achieve – or try to achieve – rather than what you do,” he says. “So I usually just say that we try to help councils save money by doing things more sensibly.”

Mr Taylor’s qualifications only add to the mystique. On the business networking website LinkedIn he describes himself as a “Lean Six Sigma Black Belt.” Six Sigma is “a form of working on process to improve their effectiveness and their predictability,” he says. Another string to his bow is expertise in “PRINCE2” – a “project management methodology” designed to stop public sector projects going wrong.

He says: “It’s actually quite a formal and quite a complex framework for making sure that you define what you’re trying to achieve, you have governance in place – people to make decisions and check that things are going right – and you formally make changes. It is quite complicated but it does have in it very good principles for how to manage projects.”

If RedQuadrant really achieves what Mr Taylor claims it would mean that organising the council’s work more efficiently could save money without cutting services. Anne Mitchell, of the Unison trade union says that council bosses find this prospect hard to resist, but she remains sceptical. “There’s a lot of the emperor’s new clothes around what results from them coming in. I think that they always over-claim what they can do.

“The reality is probably somewhere a little bit in the middle, but most people would say that they would rather have a particular service kept than pay out for somebody who usually comes in a lot higher paid than anybody else in the organisation.

“They come in at vast expense and there is very little done in the way of checking, because frankly anybody can save money if you go in and say, ‘Right, we’re gonna cut a load of jobs’ or close down services. The consequences of that on the people who are using those services and losing those jobs are quite substantial.”

Mr Taylor is aware of this point of view. “I think consultants, like everybody else, need to be prepared to justify what they get their money for.” He even advertises a Campaign Against Consultancy on his website, which rails against “costly consultants who are only in it for the money.”

“Campaign Against Consultancy is a bit of an in-joke,” he explains. “We don’t expect the public to be very interested in it. It’s really our way of saying that consultancy can be good or bad, and being completely honest.”

So what has Mr Taylor achieved for the taxpayers of Hammersmith & Fulham? He says that in some cases involving “complex reorganisation” the savings are difficult to quantify, but in others the figures speak for themselves. He describes one project called ‘SmartWorking’: “”It wasn’t just us but it did save well over £1.5 million a year. By moving people into better, smaller offices, [the council] were able to give up a lease on a very expensive building. Of course, you could argue that it could have been done without the consultants.” He says that that in this case, council chiefs made a “professional decision” that they needed outside help.

UNISON says consultants could be used to cut jobs

But Ms Mitchell is not so sure: “I think a lot of people will feel that the reason the management consultants are being brought in is to simply put another layer between [workers] and the management when it comes to cutting jobs.”

Robert Oxley, of the pressure group the TaxPayers’ Alliance, says councils are too quick to turn to consultants: “If consultants are brought in, it should be on payment by results – so that they’re only receiving taxpayers’ money if they’re saving taxpayers cash. Otherwise it is self-defeating.”

Doubts were cast on Hammersmith & Fulham’s use of consultants when a confidential report leaked to the BBC this year revealed that a former council employee was rehired on a consultancy contract despite having taken early retirement on health grounds. It also casts doubt on the council’s official figures for spending on consultants – the Labour opposition estimates the true figure could be from £5 million to £12 million – and found that consultants were hired without written contracts or proper checks that they were delivering the work they promised. Labour has demanded an investigation.

A document published by the council on its website in response to a Freedom of Information request appears to confirm that hundreds of thousands of pounds spent on consultancy is not recorded in the official figures. It reveals that in the 12 months to September, £548,000 was spent on consultants employed through 16 “personal service companies” (PSCs). The council defines PSCs as limited companies that supply the personal services of one or two contractors, who are also the sole directors and principal shareholders of the company.

The council says in the document that “in the main” the PSCs provide “interim managers” who are kept off the consultancy figures because they temporarily fill posts that would otherwise be occupied by employees. But five of the PSCs engaged in the past 12 months have been on the council’s books for more than a year, and two for more than three years. The document also reveals spending of more than £881,000 on 57 independent self-employed contractors, who are not referred to as consultants but “provided a variety of services from independent assessments of children carried out on behalf of the Children’s Services Department to sports coaching as part of the work of the Residents’ Services Department”.

The document adds: “The Council recognises that its use of consultants employed through personal service companies has been the source of some media interest. Over the course of the last three months it has carried out a comprehensive review of this aspect of its operations and as a result introduced improved procedures and processes.”

The council told the BBC that it had accepted the content of the leaked report and was making changes.

Spending on consultants could be a big issue in the next council election in 2014 when voters will be able to judge how the present Conservative leadership has managed its ever-scarcer resources. As Mr Taylor puts it: “If we think that a public sector organisation is wasting our money, then we are likely to rate it much lower.”

Hammersmith & Fulham’s top five management consultants

Company Services offered Spend in financial
year 2009-10
1. EC Harris Building management consultancy £400,000
2. Redquadrant General consultancy £218,000
3. Capita Business Services Outsourcing £164,000
4. Workstyle Consultancy Flexible working consultancy £104,000
5. HousingDelivery Social housing consultancy £62,000
Total consultancy spend for financial year 2009-10 £1.9m

Source: London Borough of Hammersmith & Fulham/Spotlight on Spend