A recent book exposes just how much of our money is being thrown at consultants, while services starve...
Blair's (seventy) billions for the consultants
WORKERS, NOV 2006 ISSUE
Plundering the public sector: how New Labour are letting consultants run off with £70 billion of our money, by David Craig, with Richard Brooks, paperback, 264 pages, ISBN-10 1-84529-374-6, Constable, 2005, £9.99.
David Craig, a management consultant with 20 years' experience, has written an outstanding book together with Richard Brooks, a tax inspector for 16 years and now a journalist with Private Eye. They show how the Blair government helps consultants to loot and wreck our public services and take our hard-earned tax money. This relationship is increasingly corrupt, as the authors show in their detailed account of the government's relations with accountancy firm Arthur Andersen.
Consultancy is basically a rip-off. As a recent book, Business Consulting by Toppin and Czerniawska, admitted, "$200 billion a year is spent on business consulting, much of it ineffectively." Yet the Blair government has given £70 billion to these useless mercenaries to "modernise" our public services. The effect? Between 1997 and 2004, public sector productivity fell by 10 per cent, while spending on consultants rose by seven times.
The Private Finance Initiative and Public Private Partnership policies have both meant giving huge sums of public money to private contractors. By the end of 2005, the government had signed PFI contracts worth £50 billion, which committed us taxpayers to paying consultants £7.5 billion every year for the next 20 years – £150 billion overall.
While wards close, the government has spent over £50 million on a failed NHS IT system.
The government has wasted billions on worthless IT systems, for example £50 billion on the NHS's Connecting for Health programme and £19 billion on ID cards. An all-party committee said that the 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".
These consultants' projects are almost always over budget and over schedule. They produce only administrative chaos and huge increases in management costs, leading to cuts in services.
In our NHS, they have closed wards, sacked staff and cancelled operations. Three-quarters of hospitals are cutting patient care due to budget constraints, while shareholders in the early PFI hospital schemes got returns of over 100 per cent.
Consultants have also damaged the Criminal Records Bureau, Customs & Excise, the Child Support Agency, the Passport Office, Inland Revenue tax credits, National Air Traffic Services and local government. The Department for Work and Pensions has just scrapped a new computer system, which was supposed to streamline benefits payments, at a cost to the taxpayer of £141 million.
The government hired the accountants KPMG to review tax havens in British overseas dependencies, just before a US Senate Financial Committee exposed KPMG's involvement in "the largest criminal tax fraud in history". The MoD spent several hundred millions on PricewaterhouseCoopers and £53 million on McKinsey, yet the Public Accounts Committee reported that the MoD's "cost overruns in 2003 and 2004 are worse than at any time in the last decade".
Consultancy journals crow, "Consultancy fees have risen to their highest level", and "Consultants toast feast of work from Whitehall." A management consultant advises his fellows to vote Labour because "Labour have been reasonably consultant-friendly."
On the book's cover the publishers quote Nick Cohen of the Observer: "Gordon Brown and Tony Blair should invite Craig into Whitehall to reveal the many ingenious ways taxpayers are being compelled to provide welfare for the wealthy." But Brown and Blair know the effects of their policies. The problem is not their ignorance, but our unwillingness to act against a failed system, which plunders the many to enrich the few.