12% rise in government spend on Big Four consultancy

The Big Four accountancy firms signed £307m worth of contracts for new government consultancy projects in 2018, with PwC  taking the largest slice

An analysis by Tussell, which provides data on UK government expenditure, found that PwC gained the largest share of government consultancy contracts allocated to the Big Four, taking £102.1m worth. It was followed by Deloitte on £74.9m, EY on £68.9m and KPMG with £61.9m.

Central government accounted for £261.1m (85%) of the spend and local government £46.7m (15%). PwC dominated the local government market, taking £20.3m (43%) of the available pot, leaving the others to divide the balance in nearly equal proportions (16%-21% each).

The total number of consultancy contracts awarded to the Big Four in 2018 was 386, up 67 on the previous year. Lifetime contract value was £325m, up £34m (12%).

The biggest government customer was the Department for International Development (DfID) which allocated contracts worth £66m in year, with PwC taking the lion’s share with £49.5m (75%). Other notable spenders were the Ministry of Defence which allocated £20.7m (50% of its total spend) to KPMG, the Home Office which awarded £15.3m (84% of its total) to Deloitte, the Department of Health which sent 78% of its business (£12.6m) to EY and Highways England which awarded contracts worth £13.4m (89% of its total) to EY.

Gus Tugendhat, founder of Tussell, said, ‘It’s clear from the data that each government department tends to have its own favourite consulting firm. This carries the risk that some relationships may become too cosy – as appears to have been  the case between the auditing arms of the Big Four and other auditors with some of their corporate clients.’

Of the ten biggest contracts, Deloitte won five covering the Home Office (£23.7m over two years), the East Midlands Strategic Commercial  Unit (£17.8m over three years), the Cabinet Office (£10m to support EU exit) and two contracts at Treasury (£11.6m over five  years and £9.3m over two years). EY and PwC also each won a £10m contract covering EU exit at the Cabinet Office.

Research by Source Global Research published in April found that 70% of Big Four consulting projects end up costing more than the original estimate, with 18% costing significantly more.

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