UK ministers award KPMG a £223 million contract despite pledge to cut consultancy spending

26 August 2024 , 18:31

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UK ministers award KPMG a £223 million contract despite pledge to cut consultancy spending

Professional services firm to oversee training and development courses across civil service in 15-month deal

The UK government has awarded KPMG a £223m contract to train civil servants despite pledging to slash state spending on external consultants.

Under the 15-month deal with the Cabinet Office, which is reportedly the second-largest public sector contract ever won by KPMG, the firm will manage training and development services across the civil service. 

This includes overseeing courses on policymaking, communications and career development, as well as training for assessed or accredited qualifications run by universities, business schools and specialist providers.

News of the contract, which was first reported by the Financial Times, comes after the new Labour government announced last month it would take immediate action to stop all non-essential government consultancy spending in 2024-25 as part of a move to halve the government consultancy bill in future years.

The cost-saving initiative will save £550m in 2024-25 and £680m in 2025-26, according to Treasury estimates. The government said the civil service headcount cap would be lifted to help departments achieve the target.

The KPMG contract was awarded just days before the government set out its cost-saving proposals, the official record of the contract award sets out. Its maximum value represents nearly 8% of KPMG’s annual UK revenues, making it the second-biggest public sector contract awarded to the firm, according to the data provider Tussell.

Three years ago, the professional services firm took the unusual step of temporarily withdrawing from bidding on contracts after a series of corporate scandals.

Then, in 2022, it was penalised with one of the largest fines in UK audit history, after former staff were found to have forged documents and misled the regulator over audits for companies including the collapsed outsourcer Carillion.

KPMG resumed bidding for public sector contracts in 2022.

A government spokesperson said: “This contract was agreed before the general election. The contract’s value represents a maximum limit, not the total cost or likely spend. Any expenditure under the contract must represent good value for money.”

KPMG declined to comment.

Sophia Martinez