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Swollen temporary staff pay shows ‘unacceptable’ short-term planning – NAO

Although Whitehall has reduced annual spending on consultants and temporary staff (C&TS) by £1.5bn, continuous hikes since 2011-12 – despite departments’ shrinking workforce – suggest measures were of a short-term reduction rather than a sustainable strategy to cut spend.

In its latest report, the National Audit Office (NAO) blasted departments for overusing C&TS as a result of underdeveloped workforce planning and assessment of current staff and skills against future needs.

Across the Cabinet Office – responsible for recommendations around reviewing requests for C&TS – the use of agency staff was at its highest, hitting 35% in 2014-15. The auditor argued the department was not following its own procedures.

In total, departments spent an average of 6-8% of the cost of their civil servants on C&TS, and many had weak approval processes in place. There was limited evidence that any of them were reducing their dependence on temporary staff.

While C&TS can be a cost-effective part of a department’s workforce when used correctly, costs have soared by between £400m and £600m since 2011-12 with departments employing more temporary staff despite efforts to reduce their own staffing pool.

Amyas Morse, NAO head, said: “Used well, consultants and temporary staff can be an important source of specialist skills and capabilities for departments that need to transform how they do business. But such specialist staff can be expensive, costing twice as much as their nearest permanent staff counterpart.

“Government spending on these staff has reduced significantly since 2010, when strict spending controls were introduced, but is now increasing once more. This suggests that the underlying issues have not been fixed. Professional workforce planning to address skills and capacity gaps in key areas is essential to drive down dependency on consultants and temporary staff.”

Whitehall departments are also generating limited competition for consultancy and temporary staff assignments, choosing to use single-tender action or extend existing contracts for nearly half of C&TS work last year.

The largest six consultancy firms also won the majority of work let through the Crown Commercial Service (CCS) consultancy agreement, with small and medium-sized firms only participating in 9% of work. Around half of temporary staff appointed through CCS’s temporary staff agreement happen without competition.

The auditor’s analysis also suggested that specialist staff are generally paid twice as much as departments’ comparable in-house staff. Some departments, such as the Home Office and Defra, often need to pump up rates in face of recruitment issues.

No active management of temporary staff

Despite the higher pay rates, the Cabinet Office does not frequently monitor or actively manage the number of temporary staff who have been in post for extended periods of time. In May of last year, for example, 47 temporary workers were on a daily pay rate of £1,000 compared to just 30 senior civil servants.

But a spokesperson for the Cabinet Office said the government was “scrutinising spend like never before”, adding: “We’ve stamped out excessive spending on consultants and put in place stringent spending controls. The total spend on consultants is still less than half of that in 2009-10.

“Of course we’ll need specialist expertise, especially where government is undertaking complex transformative projects and needs to draw on experienced minds. But we only do this when the key skills are not readily available within the civil service and where it delivers better value for taxpayers.”

Commenting on the NAO report, the Commons Public Accounts Committee chair, Meg Hillier MP, claimed to be concerned that some departments were playing “fast and loose” with public money.

“It is unacceptable that a lack of planning and an inability to recruit and retain permanent staff with the right skills at the right time means that departments are overly reliant on external staff in key areas such as project management and IT,” she said.

“Short-term external expertise has its place, but departments should be more rigorous when deciding whether this is the best option. It costs the taxpayer dear and too many of these temporary arrangements become long term.”