When the Labour Party were in opposition, they lambasted the ruling Conservative government for spending up to £500m a year on management and IT systems consultants. This was, they thundered, “a disgraceful waste of taxpayers’ money – money that should be spent on frontline services like hospitals and schools” rather than being handed over to a few already wealthy consultants. Now New Labour are in power, they seem to have changed their minds. However, New Labour have not just spent a mere £500m a year on consultants – they had much more ambitious plans than that. In their grand plan to modernise the delivery of public services, they seem to have sidelined the Civil Service and have decided to both make their new policies and implement them using their favourite management and IT systems consultants. This is turning out to be an expensive exercise – it will cost us, the taxpayers, well over £70bn – more than £20bn for management consultants and at least another £50bn for IT systems consultants
The vast amounts of taxpayers’ money being handed over to consultants could be seen as evidence of a dynamic, forward-looking government investing in modernising their country. At least, it would be positive were these massive investments successful. However, experience to date is less than promising. Judging by what has happened, New Labour’s investments in management and IT systems consulting appear to have just been a series of unmitigated and shameful disasters. So bad was the situation, that in an all-party committee of MPs criticised the British Government for both wasting taxpayers’ money and trying to cover up the truth about its financial mismanagement. The committee concluded that the British Government’s record on IT consulting projects was ‘an appalling waste of public money which Whitehall was trying to conceal behind a cloak of commercial confidentiality’. There have been so many disasters like the Child Support Agency – £1bn wasted on consultants, the National Offender Management Service – about £300m wasted and the Ministry of Defence – at least £500m spent on consulting that gave absolutely no results. The most shameful project of all must be the new NHS IT system which was planned to take 3 years to complete and cost just £2.3bn – it will actually take over 10 years, will cost over £12bn and won’t even work properly.
IT’S A MORAL, NOT JUST A MANAGERIAL, ISSUE advice
Management and IT systems consultancies are businesses. As businesses, their aim is profit maximisation. This means they must try and sell as much of their product as they can at the highest price possible. Just like any other business – manufacturers of soft drinks, breakfast cereals, photocopiers, paperclips, cars, burgers, cigarettes or whatever. When you sell management or IT systems consulting to another commercial company like a bank, insurance company or an oil company, you are playing a commercial game, where you both know the rules. You try and get as much of their money as possible by thinking up all kinds of ‘essential’ services and new IT systems you can sell them and you charge them as much as you think you can get away with. As everybody knows, that’s how business works. And anyway most banks, insurance companies and oil companies are hugely wasteful bureaucracies that have more money than they know what to do with.