Two of the leading technology web sites, silicon.com and its sister site, ZDNet.co.uk, recently reported that spending on consultants by the Home Office had reached £147m in 2006/07 – up from £7.6m when new Labour came to power in 1997. This figure includes spending by the Identity and Passport Service (IPS) – responsible for the soon to be launched ID card – of £30m. The two reports quote Home Office Minister Liam Byrne’s response to criticism of this huge increase. Byrne argued that it was necessary to buy in ‘…specialist knowledge, skill, capacity and technical expertise that would not otherwise be available.’ and that the vast majority was attributed to large outsourcing contracts and IT projects.

Photograph by stevecadman, used under Creative Commons license

The Home Office’s spending on consultants is only a small part of the total amount of public money that flows to the consultancy industry, of course. In its 2006 report Central Government’s use of Consultants, The National Audit Office (NAO) stated that spending hit a high point of £2 billion in 2003/04 – up from £217 million in 1997. The authors of Plundering the Public Sector estimate that around two-thirds of this amount goes on IT systems consultants; a claim borne out by the NAO’s finding that the five consultancy companies with the highest earning from government are all primarily IT focused.

There are understandable reasons why the consultancy industry occupies such a powerful position in government and public services in the UK – particularly in IT. One of the most significant, as Helen Margetts points out in 'E-Government in Britain — A Decade On' (in Parliamentary Affairs), was the 1990s pursuit of ‘…a particularly radical form of IT outsourcing (or “totalsourcing”), in which government agencies retained very little expertise internally.’ The upshot, as Margetts goes on to note, was that by the early 2000s this had created a situation where five IT services and supply companies held 90 percent of the government market in the UK.

However, there's a second dimension to this relationship that lies beyond the often reported scale and scope of operations. This is the rise of what's been called the ‘consultocracy’: the number of senior personnel in government and the civil service who have a consultancy background and/or interests. In fact Liam Byrne will be familiar with this situation as he previously worked for Accenture (formerly Andersen Consulting), as did James Hall, the current Chief Executive of the IPS. There are many other past and present examples I could cite but space prevent this. Suffice to note that this is not a new development. The process started in the late 1960s through the Fulton Committee’s review of the civil service. By the early 1980s the relationship had developed to such an extent that the Management Consultancies Association (MCA) had begun to arrange a regular series of meetings between its representatives and senior civil servants. And by the early 1990s the head of the Prime Minister’s policy unit was a consultant from McKinsey.

There are several ways in which we can examine the significance of this relationship. One relatively straightforward approach is to analyse how many of the bases or sources of organisational and institutional power the industry and its stakeholders and supporters in government can utilise. I’d argue it’s all of the following: formal authority, the use of organizational structure, rules and regulations, the ability to cope with uncertainty, symbolism and the management of meaning, structural factors that define the stage of action and interpersonal alliances, networks, and “informal organisation”. Six further bases relate specifically to control and of these the control of scarce resources, decision processes, knowledge and information, boundaries, and technology are also highly significant.

In short, when both dimensions of the relationship are combined it's doubtful whether any other stakeholder group enjoys such a potentially influential position in central government policy making and implementation, particularly if it's IT related - which is nowadays pretty much everything. This raises a number of significant questions, two of which I’d highlight.

The first stems from comparative research reported in Digital Era Governance, that ‘…the greater the overall power of the IT industry in a country, the lower the performance of government IT systems.’ The question posed, therefore, is whether in countries where we also have to contend with the power and influence of a largely IT-centred consultancy industry  does this create a double wammy - aggravating this situation further, therefore making the development and implementation of best value, effective, government and public sector IT systems even less likely? 

The second relates to a long standing concern of scholars of policy studies and political science, and a good number of ordinary citizens as well: is the credibility, legitimacy and function of the policy process in a democracy undermined when the formulation, implementation and evaluation of public policy is dominated by one set of stakeholders? Furthermore, is this situation compounded where the basis of this relationship is such that transparency and oversight - even by Parliamentary bodies - can be significantly restricted by claiming commercial confidentiality? Call me naive or lacking a grasp of real politic but my reading of the evidence suggests the answer is yes, yes and yes. 

About the author

Ivan Horrocks is a lecturer and member of the Technology Management Group at The Open University. He has written many publications about the relationship between information and communication technologies (ICTs) and government and politics.