Alan Leaman is the CEO of the UK’s Management Consultancies Association (MCA). At a time when the relationship between consultancies and government is perhaps more important than ever, we spoke with Alan about how his organisation is helping to drive the savings agenda – and what challenges still lie ahead…
outsource:Alan, how closely is the MCA working with the UK’s new coalition government on driving its savings agenda?
Alan Leaman: It is very much the focus of what we’re doing. Since the election they have done two things – both of which were sensible: one of which was to put a moratorium on the majority of the use of consulting. Because new management has come in, and done the stock check, and also they felt the need to make some very quick early savings. I understand why they did that. And since then they have been primarily focused on the numbers, for each individual contract. That debate is opening up but it will take time. This government – which has been very critical of past practices – has the opportunity to move things onto a better footing.
So one of the things we’ve been doing is talking with the National Audit Office’s new Efficiency & Reform Group about making sure they have the processes in place to ensure it becomes about delivering value rather than just inputs. That has to be the focus of what consultancies are used for. We need to start by differentiating consultancy from staff substitution, and we would focus on genuine value-adding projects for which you need outside capacity and capability and expertise. So we are talking to the government about generating a procurement process which focuses on the value generation aspects, with a proper evaluation process afterwards, using more contingency fee contracts. And there is a whole reform agenda around that which will hopefully get us to the point where ministers and senior civil servants will be confident that when they engage with consultants it is done on the right terms.
Then there is a much broader debate around the ambitious targets for closing the deficit. Those are of the order of magnitude that the private sector has undertaken in the past. But they are going to have to think really radically about the nature of the change that they are going to introduce to public services. It won’t be a question of taking the existing model and shrinking it; you have got to think of a new model in many cases. That will require not just heavy lifting; it will take attention and management, thinking creatively, drawing on experience from outside and getting some really quite fundamental changes to how the public sector works. A lot of it will be about introducing new players into the market, taking existing services and giving them to other people to run, and inviting people to think of new ways of doing things and delivering the outcomes. Because I don’t think that it is going to be acceptable for the public, if the standard of public services drop as a result of the spending cuts.
Before the election we published a document that showed how consultants can help cut the deficit; we produced ten sets of proposals which we calculated added up to about £25 billion in savings – so there is no shortage of ideas, it is really about bringing in the consulting industry together with the decision-makers and making all that happen.
o: One of the biggest criticisms levelled at the previous administration was that relationships could have been a bit too cosy between New Labour and the big consultancies. Do you think that was an institutional problem with the New Labour project, and if so are you finding it relatively simple to work with the new government to overturn some of those structural issues?
AL: The context is that actually over the New Labour period of about a decade or so, there was a fantastic amount of change – what they call modernisation – that went on, and the scale of that was very ambitious. I don’t think that that could have been contemplated without the extensive use of management consultancies. Indeed when my members sit around the table and they look at the list of achievements which the last government was most proud of, they know that they did them. There is a big record of major achievement to be credited to the industry.
Now, I think what happens, as a result of that, is that the opposition begins to worry that the existing civil service is being bypassed – and there are structural reasons to why that gets exaggerated because too many civil servants are moved on. Who you think is your client turns into somebody else. I think one of the worries I have had especially about consultancies is the way that they became the continuity rather than the consultant. So you are right to say that there are some serious issues about: what is your service planning? What do you want consultancies to do? What is there for them to deliver themselves? Which is a serious structural issue. Good consultancy results from good buying. I think there is a common agenda there which we shall be working on together.
And then I think you get into a world where, because it is difficult to recruit good people into the civil service – the processes are too lengthy; are you paying the right salary to attract the right people in? – it becomes too easy to take the option of just getting consultants in to fill the role. And often those are the appointments which create the most controversy, because it is an expensive way of filling up staff places. And I think we did get that out of hand, and it is costly for the taxpayer, and I am not even sure it is delivering what public services need either. And it washes over onto the really good work which is also going on.
o: Moving onto an area of particular interest for many Outsource readers: do you see a challenge facing SME providers – which the government maintains it’s keen to engage – in terms of cost-per-bid?
AL: It is a very real challenge, and we feel it quite keenly as many of our members’ services are of course procured by the public sector. There is a great debate about the role of frameworks: how valid they are; how useful they are; how you can possibly do it so that the smaller companies – who are often creating innovative new thinking, and fleet of foot and nimble – can have access. Greater minds than mine are wrestling with this one and how you can actually pull it off in a way which is cost-effective as well. We’re looking at ways simply to reduce the cost of bidding all-round – we’re obviously keen on that. Public-sector processes are pretty gold plated and often require people to provide the same information countless times, to lots of different people. This has pushed the cost of bidding up so that our members say to us, “we have to be very choosy about where we put our effort” – and therefore the buyers are losing out in terms of the choices they have.
o: What is the MCA’s main task for the next 12 months?
AL: I think it is to establish the open respectful relationship between the industry and the new government, and the key players in the public sector that the country needs. It is very easy for both sides to think in terms of stereotypes and general assumptions: “There are consultancies on one side and politicians who don’t understand, and public sector managers who are only interested in their own concerns on the other.” But there is a need for a productive and constructive relationship to be forged, and if the MCA can play a role in getting to that point, then I think we will have done a good job.
Management Consultancies Association members make up some 70 per cent of the UK’s consultancy industry, employing over 40,000 members. (Source: MCA)