KPMG wins £223mn UK authorities contract amid plans to chop guide spend

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KPMG has received a UK authorities contract price as much as £223mn to coach civil servants, the second-largest public sector contract ever awarded to the Large 4 agency, earlier than the Treasury set out plans to drastically scale back Whitehall’s reliance on exterior consultants final month.

Below the 14-month cope with the Cupboard Workplace, which commenced this month, the consulting agency will handle studying and growth companies throughout Whitehall, together with overseeing programs on policymaking, communications and profession growth.

The utmost worth of the contract represents shut to eight per cent of KPMG’s annual UK revenues, making it the second-biggest public sector contract ever awarded to the agency, in accordance with information supplier Tussell.

Probably the most precious piece of public sector work awarded to KPMG was a separate studying and growth cope with the Cupboard Workplace price £237mn, Tussell mentioned. That four-year contract, which expires in October, entails the agency overseeing technical coaching for civil servants, comparable to skilled {qualifications}.

The profitable contracts exhibit a return to constructive relations between the federal government and KPMG. The Large 4 agency stopped bidding for UK authorities contracts in 2021 following a risk by the Cupboard Workplace to ban it from successful public sector work after its involvement in a collection of scandals. It resumed bidding for public sector contracts in 2022.

It additionally comes because the Labour authorities has dedicated to halving Whitehall spending on consulting corporations throughout this Parliament, with chancellor Rachel Reeves final month ordering departments to cease all “non-essential spending” on exterior consultants.

A authorities spokesperson mentioned that the KPMG contract was agreed earlier than July’s normal election. The Conservative get together additionally pledged to halve Whitehall spending on exterior advisory corporations in its election manifesto.

The Treasury estimated in July that decreasing the federal government’s reliance on advisory corporations would save £550mn within the 2024-25 monetary 12 months and an additional £680mn in 2025-26, when the coverage to halve complete spend on consultants got here into pressure. The financial savings would, partly, assist fund vital public sector pay rises, the chancellor mentioned.

The federal government spokesperson added: “The [KPMG] contract’s worth represents a most restrict, not the full value or doubtless spend. Any expenditure below the contract should symbolize good worth for cash.

“We now have taken motion to cease all non-essential authorities consultancy spending in 2024-25 and halve authorities spending on consultancy in future years.”

One particular person aware of the contract mentioned that whereas KPMG would “handle {the catalogue} of services and products” outlined within the deal, issues comparable to coaching for accredited {qualifications} could be delivered by universities, enterprise faculties and specialist suppliers.

The consulting business argues that bringing in specialists for short-term tasks is less expensive than using them in authorities departments full time. Nonetheless, critics counter that Whitehall’s reliance on costly exterior advisory corporations wastes cash and prevents the UK’s civil service growing precious abilities in-house.

KPMG declined to remark.