Halve consultancy spending

Policy baseline

Party costings claim GBP 630m savings by 2028-29 from halving consultancy spending. Internal capability must replace some outsourced work.

• Targets central-government consultancy budgets.
• Savings are smaller if work returns in-house.
• Delivery risks appear in specialist projects.

Core trade-offs

The direct beneficiaries are taxpayers if lower spending is real. The costs fall mainly on consultancy firms and departments losing expertise. The main economic question is cuts may reduce project delivery quality.

• Taxpayers if lower spending is real gain most directly.
• Costs fall mainly on consultancy firms and departments losing expertise.
• Key risk: cuts may reduce project delivery quality.

Fiscal impact by 2028-29

-GBP 0.7bn to +GBP 0.2bn. Central estimate: -GBP 0.4bn.

• Positive numbers mean net fiscal cost; negative numbers mean Exchequer savings.
• Main channel is the scored tax, spending or delivery change.
• Offsets depend on tax receipts, behaviour and pass-through.
• Range reflects uncertain implementation and economic response.
• This is not an official costing.

Economic impact by 2028-29

• Jobs: Higher public employment or procurement demand; shortages may shift workers from private firms.
• Wages: Direct gains for funded staff or suppliers; taxes fund the transfer.
• Prices: Public prices rarely rise directly; private prices may rise if labour is scarce.
• GDP / productivity: Potentially positive if capacity improves; negative if bottlenecks or crowd-out dominate.

Assessment

This is a real trade-off, not a free gain. Taxpayers if lower spending is real benefit, while consultancy firms and departments losing expertise bear most costs. Overall output depends on behaviour, capacity and pass-through.

Confidence: Medium-low. Higher on the policy target and fiscal channel; lower on behaviour, pass-through and economy-wide effects.

Main risks

• Delivery bottlenecks: Staffing, procurement and capital constraints may stop extra money becoming better services.
• Crowding out: A tight labour market can shift workers from private firms rather than add capacity.
• Permanent baseline: Temporary programmes can become recurring spending commitments.

Safeguards

• Publish unit-cost benchmarks before rollout.
• Tie funding to measurable service capacity.
• Use staged delivery with independent audits.

Academic evidence

UK government evidence

Sources

• PolicyLens illustrative scenario methodology for halve consultancy spending Internal - PolicyLens, 2026
• Do Firms Want to Borrow More? Academic article - Banerjee and Duflo, Review of Economic Studies, 2014
• Funding a Fair Deal: Liberal Democrat Manifesto Costings Party costing - Liberal Democrats, 2024
• Tax by Design Academic review - Mirrlees and review team, Institute for Fiscal Studies, 2011
• For a Fair Deal: Liberal Democrat Manifesto 2024 Party policy source - Liberal Democrats, 2024

Other Liberal Democrats policies

• Introduce free personal care
• Raise Carer’s Allowance by GBP 20
• Create a Carer’s Minimum Wage
• Scrap two-child and benefit caps
• Recruit 8,000 more GPs
• Guarantee urgent NHS dentist access
• Put counsellors in schools
• Extend free school meals