KPMG signs $223m contract with UK government amid plans to cut consultant spending

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KPMG has won a contract worth up to $223 million to train the UK government's civil servants. It is the second-largest public sector contract ever awarded to a Big Four firm and comes ahead of Treasury plans last month to drastically reduce Whitehall's reliance on external consultants.

Under a 14-month contract with the Cabinet Office, which began this month, the consultancy will manage learning and development services across Whitehall, including overseeing processes for policy-making, communications and career development.

The full value of the contract is equivalent to around 8% of KPMG's annual UK revenue, making it the firm's second-largest public sector contract ever, according to data provider Tussell.

The most valuable public sector work awarded to KPMG was a separate $237 million learning and development contract with the Cabinet Office, Tussell said. The four-year contract, which expires in October, involves the firm overseeing technical training for civil servants, such as professional qualifications.

The lucrative contract marks a return to positive relations between the government and KPMG. The Big Four firm stopped bidding for UK government contracts in 2021 after the Cabinet Office threatened to ban it from bidding for public sector work following a series of scandals. It resumed bidding for public sector contracts in 2022.

The Labour government has pledged to halve Whitehall spending on consultancies in this parliament, and Chancellor Rachel Reeves last month ordered departments to stop all non-essential spending on external consultants.

A government spokesman said the KPMG contract was agreed before the July general election. The Conservatives also pledged in their election manifesto to halve Whitehall spending on external consultancies.

The Treasury estimated in July that reducing the government's reliance on advisory groups would save $550 million in 2024-25 and a further $680 million in 2025-26 when a policy to halve overall spending on consultants comes into effect. The Treasurer said the savings would partly be helped by significant wage growth in the public sector.

A government spokesperson added: [KPMG] The contract value represents a maximum limit, not the total cost or expected expenditure. All expenditures under the contract must represent good value for money.

We have taken steps to halt all non-essential government consulting spending by 2024–2025 and to halve government spending on consulting over the next several years.

A person familiar with the deal said KPMG would manage the catalog of products and services outlined in the deal, but parts such as training to obtain accredited qualifications would be provided by universities, business schools and professional providers.

The consulting industry argues that it is more cost-effective to assign experts to short-term projects than to hire them full-time for government departments.

Critics argue that Whitehall's reliance on expensive external consultancies is not only a waste of money, but also prevents the British civil service from developing valuable skills internally.

KPMG declined to comment.

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