KPMG has won a UK government contract worth up to £223mn to train civil servants, the second-largest public sector contract awarded to the Big Four firm and agreed before the Treasury set out plans to drastically reduce Whitehall’s reliance on external consultants last month.
Under the 14-month deal with the Cabinet Office, which commenced this month, the consulting firm will manage learning and development services across Whitehall, including overseeing courses on policymaking, communications and career development.
The maximum value of the contract represents close to 8 per cent of KPMG’s annual UK revenues, making it the second-biggest public sector contract awarded to the firm, according to data provider Tussell.
The most valuable piece of public sector work awarded to KPMG was a separate learning and development deal with the Cabinet Office worth £237mn, Tussell said. That four-year contract, which expires in October, involves the firm overseeing technical training for civil servants, such as professional qualifications.
The lucrative contracts demonstrate a return to positive relations between the government and KPMG. The Big Four firm stopped bidding for UK government contracts in 2021 following a threat by the Cabinet Office to ban it from winning public sector work after its involvement in a series of scandals. It resumed bidding for public sector contracts in 2022.
They also come as the Labour government has committed to halving Whitehall spending on consulting firms during this parliament, with chancellor Rachel Reeves last month ordering departments to stop all “non-essential spending” on external consultants.
A government spokesperson said the KPMG contract was agreed before July’s general election. The Conservative party also pledged to halve Whitehall spending on external advisory firms in its election manifesto.
The Treasury estimated in July that reducing the government’s reliance on advisory groups would save £550mn in the 2024-25 financial year and a further £680mn in 2025-26, when the policy to halve total spending on consultants came into force. The savings would, in part, help fund significant public sector pay rises, the chancellor said.
The government spokesperson added: “The [KPMG] 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.
“We have taken action to stop all non-essential government consultancy spending in 2024-25 and halve government spending on consultancy in future years.”
One person familiar with the contract said that while KPMG would “manage the catalogue of products and services” outlined in the deal, parts such as training for accredited qualifications would be delivered by universities, business schools and specialist providers.
The consulting industry argues that bringing in specialists for short-term projects is more cost-effective than employing them in government departments full time.
Critics counter that Whitehall’s reliance on expensive external advisory firms wastes money and prevents the UK’s civil service developing valuable skills in-house.
KPMG declined to comment.
