Recommendation 3

The Cabinet Office is unable to demonstrate that the target to halve consultancy spend is an effective way to reduce spending on external providers. The Chancellor announced her intention to stop all non- essential spending on consultancy immediately and halve the government’s spend on consultants in 2025–26. Cabinet Office wrote to all departments, requiring them to ensure they had internal controls in place for consultancy spending and to follow existing government guidance for procuring consultants. However, departments often hire a consultancy firm to provide a package of services. Firms may provide consultancy, professional services and contingent labour within the same contract. This makes it difficult to isolate the amount spent and departments sometimes struggle to report in their accounts how they allocate portions of such contracts to consultancy. As a result, government bodies may be under- or over-reporting their consultancy spending. The variability in definition and lack of rigour in reporting consultancy spend may also allow departments to reclassify spending and under-report rather than reduce spending. recommendation The Cabinet Office should update the Committee by July 2026 with data on the past three years of spend on all external resourcing, including consultants, professional services, and contingent labour, to demonstrate reduction in expenditure.