SShortly after Margaret Thatcher came to power, her environment secretary, Michael Heseltine, wrote: “Management ethics must pervade our national life: public and private companies, civil service, nationalized industries, local government, the National Health Service”. Since 1980, ministers have remained true to his word. Great Britain is the outsourcing capital of Europe. No other country on the continent depends so much on the consulting industry to do the work of the state. Earlier this year, ministers quietly lifted restrictions on spending controls, allowing Whitehall departments to potentially spend even more on external consultants.
Those controls were the product of David Cameron’s 2008 pledge to end what he called the reign of “PowerPoint politics.” Cameron correctly argued that the use of consultancies had exploded under New Labour, whose faith in the New Public Management creed, an agenda that sought to make the public sector run more like a business, produced lucrative opportunities for consultancies. However, history was no different under the conservatives. While spending on consultants initially fell under the Cameron government, economists Mariana Mazzucato and Rosie Collington point out that consulting firms are bidding for cut-price contracts in an attempt to gain a foothold in government. When the time came for the state to spend big, the consultants would be ready.
That moment came in 2020. As reporters Walt Bogdanich and Michael Forsythe point out in their book When McKinsey Comes to Town, the Covid-19 test-and-trace program, led by former McKinsey consultant Dido Harding, was an expensive fiasco. McKinsey was charged £563,400 to outline the programme’s “vision, purpose and narrative”, while Deloitte won £298m worth of contracts. Around 2,500 consultants were recruited, but the program failed to meet the most basic goals and returned less than half of the test results in 24 hours. The case for this industry is that it creates efficiencies and imports expertise where it would otherwise be lacking. The test-and-trace scandal exposed the holes in this argument.
The pervasiveness of consultancies across government is not just a sign of speculation. It is also a symptom of waning faith in the public sector. As austerity has decimated public sector agencies, consultants have stepped in to fill the gaps. Between 2016 and 2019, spending on management consultancies in the SNS tripled. Due to this erosion of state capacity, some argue that the state should partner with business to provide everything from NHS services to climate infrastructure. This gullible faith in the superiority of the private sector supports a self-fulfilling prophecy: if its functions are outsourced, the public sector loses its ability to do things well.
In 2021, Labor Rachel Reeves criticized Conservative spending on private consultants during the pandemic and said her ruling party would push for a sweeping program of “insourcing” to bring public services back under democratic control. Two years is a long time in politics. Today, as shadow chancellor, Ms Reeves wants to implement her policies through public-private partnerships. Meanwhile, shadow health secretary Wes Streeting has written effusively about the role private healthcare providers can play in reducing NHS waiting lists. In Britain, it seems that, regardless of party color, politicians will continue to blindly believe that public sector functions can be bought off the shelf.