Consultants defended in wake of Newsnight pay probe

Eye-catching headlines about a BBC probe into the daily pay of Whitehall consultants fail to factor in the value for money such skilled specialists offer, an accountant has calculated.

ClearSky Accounting points out that a government employee on, say, half the starting rate ‘exposed’ by the BBC programme could actually cost the government significantly more.

“The day rates being paid to consultants…[attract] no employer NICs, no holiday pay and – most importantly - no pension costs”, explains ClearSky’s Derek Kelly.

“Conversely, a permanent employee earning £500 a day could actually be costing the government – and therefore taxpayers – an additional 35% or 40% on top of this.”

He was responding to a Newsnight “investigation” claiming to have “lifted the lid” on the “hidden existence of an elite” – consultants whose “time is worth more than anyone else’s” in Whitehall.

Figures obtained by the corporation show that at least 30 consultants worked in government departments last year on daily rates of between £1,000 and £2,000.

The MoD was positioned as a major offender, as it pays up to £3,000 a day to one consultant, who may be among the department’s “technical consultants” cited as costing £137m.

Unions and lobbyists such as the Taxpayers’ Alliance reacted angrily to the figures, obtained by the BBC under freedom of information rules, but Kelly thinks they’re missing the point.

“Consultants play an important role in ensuring complex and important projects are delivered on time, and are a vital cog in the Whitehall machine,” he said.

“Their contribution should be recognised and valued. In time of austerity they actually deliver value for money, despite the eye-catching headlines.”

As to why the accountant is speaking up, he said that following the ‘Ed Lester controversy’ and its knock-on effects, “the last thing public sector contractors need is another witch-hunt.”

Persecution is most unfair as, assuming a full-time employee of the state gets daily pay of £500, such a permanent role may cost taxpayers up to 40% more than a freelance one would.

“Sadly,” Kelly said, reflecting of his calculations “such nuances are rarely reflected in mainstream media coverage and the wider public debate.” 

Profile picture for user Simon Moore

Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
Printer Friendly, PDF & Email

Sign up to our Weekly Newsletter

Keep up to date with everything in the world of contracting.


Contractor's Question

If you have a question about contracting please feel free to ask us!

Ask a question