0:00:02 > 0:00:04Our political leaders may have changed,
0:00:04 > 0:00:05but the message remains the same.
0:00:05 > 0:00:09He talks about austerity, I call it living within our means.
0:00:09 > 0:00:12We're being told to tighten our belts,
0:00:12 > 0:00:15but are our politicians practising what they preach?
0:00:15 > 0:00:19Welcome to Whitehall, to the heart of government.
0:00:21 > 0:00:24I'm Jacques Peretti, and I'm going to travel the length of Britain -
0:00:24 > 0:00:28from Westminster to local town halls.
0:00:28 > 0:00:32I'll be finding out where billions of pounds of taxpayers' cash
0:00:32 > 0:00:36is really going and who is policing the spending.
0:00:36 > 0:00:4130,000 to 50,000 and then another 100,000.
0:00:41 > 0:00:43From vast projects...
0:00:43 > 0:00:45It could end up costing as much as 12 billion.
0:00:45 > 0:00:48..to what's happening on our streets.
0:00:48 > 0:00:51It's just appalling! It really is.
0:00:51 > 0:00:54I'll be uncovering the growing army of hired-in experts
0:00:54 > 0:00:57making millions from the public purse.
0:00:57 > 0:00:58How I felt was, "It's a racket!"
0:00:58 > 0:01:01And revealing their tricks.
0:01:01 > 0:01:04We want to take him to what we call the Valley of Death. Are you there?
0:01:04 > 0:01:06Oh, my God.
0:01:06 > 0:01:08I'll be uncovering secretive deals...
0:01:08 > 0:01:10When we tried to challenge the council on it,
0:01:10 > 0:01:13they hid behind this term "commercial confidentiality."
0:01:13 > 0:01:15..involving our cash.
0:01:15 > 0:01:17Do you think it's right that a company should make...?
0:01:17 > 0:01:20Look, will you please get out of my room? The bloody lot of you.
0:01:20 > 0:01:23I want to find out who's turning Britain's hardship
0:01:23 > 0:01:25into a business opportunity,
0:01:25 > 0:01:30and behind the scenes, who's really spending our billions.
0:01:37 > 0:01:41I've come here, to the Firth of Forth, just outside Edinburgh.
0:01:43 > 0:01:46I'm in search of a controversial project
0:01:46 > 0:01:51that reveals just how government spends our money.
0:01:51 > 0:01:54The place I'm driving to is very significant,
0:01:54 > 0:01:57because it's the location of one of the most ambitious and expensive
0:01:57 > 0:02:00defence projects in Britain's history.
0:02:02 > 0:02:05It cost billions of pounds of public money,
0:02:05 > 0:02:08but getting a closer look won't be easy,
0:02:08 > 0:02:10because it's inside this heavily-guarded naval compound.
0:02:15 > 0:02:17It doesn't take long to get an answer.
0:02:18 > 0:02:20Well, I tried to visit and I was told
0:02:20 > 0:02:24that it's not open to members of the public, and if I try to film it,
0:02:24 > 0:02:26I'll be thrown off by the police.
0:02:26 > 0:02:28So I think I'm going to have to try and find another way.
0:02:35 > 0:02:37Even with heavy security,
0:02:37 > 0:02:41it's hard to conceal one of Britain's biggest-spending cock-ups.
0:02:54 > 0:02:58There it is, one of the two new huge aircraft carriers.
0:02:58 > 0:03:01The largest warship ever built in the UK.
0:03:01 > 0:03:03It's truly monumental.
0:03:03 > 0:03:05To give you an idea of scale,
0:03:05 > 0:03:08it is longer than the Houses of Parliament
0:03:08 > 0:03:10and taller than the Niagara Falls.
0:03:12 > 0:03:16When these two aircraft carriers got the go-ahead in 2008,
0:03:16 > 0:03:19they were supposed to cost £3.6 billion,
0:03:19 > 0:03:24but a series of delays and mistakes means it's now £6 billion,
0:03:24 > 0:03:26and they are still not in service.
0:03:28 > 0:03:31I'm going to meet local journalist, Ian Fraser,
0:03:31 > 0:03:34who's been digging into what's happened.
0:03:35 > 0:03:37So, Ian, where are we at now?
0:03:37 > 0:03:41There are some experts who estimate it could end up costing
0:03:41 > 0:03:44as much as 12 billion for the two carriers.
0:03:44 > 0:03:48- Four times what it was supposed to cost?- Nearly four times.
0:03:51 > 0:03:55To save money, the MoD considered scrapping the second carrier,
0:03:55 > 0:03:58until they realised it would cost even more.
0:04:01 > 0:04:04Huge government projects like this often overspend,
0:04:04 > 0:04:09but is there a tipping point after which they're impossible to stop?
0:04:09 > 0:04:12What do you think this says about, you know,
0:04:12 > 0:04:16the potential of governments of whatever political persuasion
0:04:16 > 0:04:17to waste our money?
0:04:17 > 0:04:21Well, I suppose it speaks volumes about our inability
0:04:21 > 0:04:24to rein in government spending.
0:04:24 > 0:04:28If even with a flagship project of this scale,
0:04:28 > 0:04:32things can go so badly wrong and so much money can be wasted,
0:04:32 > 0:04:36how many small projects actually end up costing four times as much
0:04:36 > 0:04:39as they were originally supposed to cost
0:04:39 > 0:04:41and no-one really bats an eyelid?
0:04:42 > 0:04:44The overspend alone on these carriers
0:04:44 > 0:04:47could have bought us dozens of new hospitals.
0:04:48 > 0:04:53But I wonder how much more spending in Whitehall goes under the radar.
0:04:57 > 0:05:01When Boris Johnson was mayor, he introduced these - Boris Bikes.
0:05:01 > 0:05:05But he also bought three water cannons from the German police.
0:05:05 > 0:05:10They were never used and they cost the taxpayer more than £300,000.
0:05:12 > 0:05:15Here at the Department of Work and Pensions,
0:05:15 > 0:05:19they blew 34 million on an IT project and it didn't even work.
0:05:21 > 0:05:22The Department of Transport
0:05:22 > 0:05:25took part of Richard Branson's train line off him.
0:05:25 > 0:05:29He took them to court and the department lost,
0:05:29 > 0:05:32and it cost us, the taxpayer, £50 million.
0:05:38 > 0:05:41Beyond Whitehall lies local government,
0:05:41 > 0:05:46and town halls are responsible for nearly a quarter of public spending.
0:05:46 > 0:05:50Though budgets have been cut, they still spend nearly £60 billion
0:05:50 > 0:05:54on everything from street cleaning to libraries.
0:05:54 > 0:05:57So who's keeping an eye on how THEY spend their cash?
0:05:57 > 0:05:59The answer might surprise you.
0:06:02 > 0:06:06Up until last year, that building housed the Audit Commission,
0:06:06 > 0:06:11the watchdog that kept a check on public spending by councils.
0:06:11 > 0:06:15But the Government got rid of it to save money.
0:06:17 > 0:06:21The idea was that a new group of people would step into the breach
0:06:21 > 0:06:25to keep an eye on councils - armchair auditors.
0:06:25 > 0:06:26Yep, that's you and me.
0:06:28 > 0:06:32The Government released all this data so that we could keep a check
0:06:32 > 0:06:35on their spending, but wading through all this stuff takes time,
0:06:35 > 0:06:37which most of us don't have,
0:06:37 > 0:06:40and so this army of armchair auditors never emerged
0:06:40 > 0:06:45and this spending could now go unscrutinised.
0:06:50 > 0:06:52Well, I'm going to take up the Government's kind offer
0:06:52 > 0:06:55and become an armchair auditor myself
0:06:55 > 0:06:58to see what councils are up to.
0:06:58 > 0:07:01I'm going to begin by looking at some ingenious ways
0:07:01 > 0:07:04they are finding of spending money in the name of saving it.
0:07:04 > 0:07:07OK. That's reception, over there.
0:07:07 > 0:07:10And I'm looking for registration and nationality,
0:07:10 > 0:07:12which is over there.
0:07:12 > 0:07:15Visitors to Brent Council's registration department
0:07:15 > 0:07:21are greeted by Shanice, a virtual receptionist costing £15,000.
0:07:21 > 0:07:24If you are here to attend a wedding ceremony,
0:07:24 > 0:07:27please take a seat in the waiting room on my left.
0:07:27 > 0:07:28Please remember...
0:07:28 > 0:07:31I don't think I can interact with her.
0:07:31 > 0:07:33Pressing this button...
0:07:36 > 0:07:38It's kind of amazing.
0:07:38 > 0:07:40Can I ask a question?
0:07:40 > 0:07:41Do you get job satisfaction?
0:07:41 > 0:07:44Maybe you are here to register a birth or death?
0:07:44 > 0:07:46I'm here for none of those things.
0:07:46 > 0:07:50I'm here to find out if you are worth spending £15,000 on?
0:07:50 > 0:07:54She just waved goodbye to me!
0:07:56 > 0:07:59What Shanice does is essentially the job of a sign,
0:07:59 > 0:08:01and you would have a sign saying marriages this way,
0:08:01 > 0:08:04births that way, deaths that way,
0:08:04 > 0:08:07and that would sort of do the job and you'd do it in three seconds.
0:08:07 > 0:08:11But what you do do is you feel obliged to engage with her
0:08:11 > 0:08:13and then you kind of weirdly get distracted by the fact
0:08:13 > 0:08:17she's got virtual from here up and kind of cardboard trousers.
0:08:17 > 0:08:19It's all a bit odd.
0:08:19 > 0:08:23I'm a little perplexed, but what do other people think?
0:08:23 > 0:08:25If you are here to attend a wedding ceremony,
0:08:25 > 0:08:28please take a seat in the waiting room on my left.
0:08:28 > 0:08:29- Hi.- Hi.
0:08:29 > 0:08:31- You look a bit confused.- Yeah...
0:08:31 > 0:08:33It just feels so weird.
0:08:33 > 0:08:36Is it a human being...? I keep looking at her arms...
0:08:36 > 0:08:40What do you think? Do you think she's a human being?
0:08:40 > 0:08:41She's so thin.
0:08:41 > 0:08:43LAUGHTER
0:08:43 > 0:08:44- For a human being.- Are you jealous?
0:08:47 > 0:08:50So how does Mark Rimmer, the man responsible for Shanice,
0:08:50 > 0:08:55justify spending 15 grand when money is so tight?
0:08:57 > 0:08:59Why did you think you needed a hologram
0:08:59 > 0:09:02or something other than a real person to do that job?
0:09:02 > 0:09:04I think we actually did need a real person,
0:09:04 > 0:09:06but we couldn't afford a real person.
0:09:06 > 0:09:07If you just put a sign up,
0:09:07 > 0:09:11that would do the same job as the job Shanice is doing.
0:09:11 > 0:09:14You know, a piece of plastic will cost £2.50.
0:09:14 > 0:09:17The community we have in Brent is obviously very diverse.
0:09:17 > 0:09:21English is not their first language for the majority of people.
0:09:21 > 0:09:23They do respond to spoken English,
0:09:23 > 0:09:26so I think a person would have been the ideal,
0:09:26 > 0:09:28so therefore the interim was Shanice,
0:09:28 > 0:09:30the holographic virtual assistant.
0:09:30 > 0:09:33She is just great. I mean, she is one of my favourite employees.
0:09:37 > 0:09:41Cash-strapped councils aren't just replacing people with holograms.
0:09:41 > 0:09:45Here in Staffordshire, they're raising money by cracking down
0:09:45 > 0:09:49on one of the great First World scourges of our time.
0:09:49 > 0:09:52But you have to wait until after dark to see it in action.
0:09:56 > 0:09:59Enforcement officers slapping fines on dog walkers
0:09:59 > 0:10:02who don't clear up their pet's poo,
0:10:02 > 0:10:04spotted with the kind of night-vision goggles
0:10:04 > 0:10:06usually used in a war zone.
0:10:10 > 0:10:13I decided to try them for myself.
0:10:15 > 0:10:19Oh, so I'm sitting in a bush in Staffordshire
0:10:19 > 0:10:24in the middle of the night to see if I can spot persistent dog foulers.
0:10:25 > 0:10:30And I think I've actually spotted someone.
0:10:30 > 0:10:33OK, I'm going to confront them.
0:10:33 > 0:10:35I can get out of this bush.
0:10:35 > 0:10:37Armed with these goggles, the council can hand out
0:10:37 > 0:10:43£75 on-the-spot fines to anyone not clearing up their dog's mess.
0:10:44 > 0:10:47- Good girl!- Excuse me.
0:10:47 > 0:10:50I know this sounds a bit strange, but I've been watching you
0:10:50 > 0:10:53walking your dog through these night-vision goggles.
0:10:53 > 0:10:55OK. Whatever!
0:10:55 > 0:10:58- Are you walking your dog there? - I am.
0:10:58 > 0:11:02Because I spotted you with these night-vision goggles that I have here.
0:11:02 > 0:11:05How do you think most people, most dog walkers, would respond
0:11:05 > 0:11:08if someone like me jumped out of the bushes with one of these on?
0:11:08 > 0:11:11I think you'd frighten them to death!
0:11:11 > 0:11:16The council only needs to issue five fines to pay for the goggles,
0:11:16 > 0:11:20but so far, they haven't handed out a single one.
0:11:20 > 0:11:22I mean, these things cost 200 quid a time.
0:11:22 > 0:11:24Does that sound like a good use of money?
0:11:24 > 0:11:27I'm surprised they've gone that far, but, hey-ho, if it works...
0:11:30 > 0:11:34Though there's been no fines, there has been a 62% reduction in dog poo,
0:11:34 > 0:11:38so maybe these strange glasses are not a waste of money after all.
0:11:39 > 0:11:44This thing, it seems to weirdly work.
0:11:44 > 0:11:47I mean, the place seems to have less dog shit
0:11:47 > 0:11:52and people seem genuinely to be fearful
0:11:52 > 0:11:55of a slightly creepy man jumping out from a bush
0:11:55 > 0:11:58and slapping them with a £75 fine.
0:11:58 > 0:12:01So even though it's collected no fines,
0:12:01 > 0:12:06it's sort of done the job of making the area a bit more hygienic.
0:12:06 > 0:12:09Maybe it works, maybe it's a decent use of money.
0:12:12 > 0:12:16Budget cuts have forced councils to come up with out-there schemes
0:12:16 > 0:12:20like the poo patrol that attract tabloid wrath and people like me,
0:12:20 > 0:12:23but the big money is being spent on something less visible
0:12:23 > 0:12:25to us armchair auditors -
0:12:25 > 0:12:28an army of professionals who have turned the cuts
0:12:28 > 0:12:30into a business opportunity.
0:12:30 > 0:12:32The management consultants.
0:12:32 > 0:12:34- Morning, everybody. - ALL:- Morning.
0:12:34 > 0:12:36In this school near Plymouth,
0:12:36 > 0:12:40management consultant Shay McConnon is working the room.
0:12:40 > 0:12:44Performance is linked to high self-esteem, is that right?
0:12:44 > 0:12:48Shay makes his living re-energising council workers,
0:12:48 > 0:12:51teachers and other public servants
0:12:51 > 0:12:52with the power of magic.
0:12:52 > 0:12:56It's like I've got one, two, three, four, five, six cards.
0:12:56 > 0:13:00If I throw away one, two, three, you wouldn't expect me
0:13:00 > 0:13:03to still have one, two, three, four, five six cards.
0:13:04 > 0:13:09I want to find out if it works or if Shay is just conjuring an illusion.
0:13:11 > 0:13:14So, in our relationships, we invest.
0:13:14 > 0:13:17So, I work late when I don't feel like working,
0:13:17 > 0:13:19I smile when I don't feel like smiling.
0:13:19 > 0:13:24And all of that investment can go for nothing.
0:13:24 > 0:13:30However, at a time maybe when you most need it...
0:13:31 > 0:13:33..and least expect it, guess what?
0:13:33 > 0:13:35It'll be there for you.
0:13:35 > 0:13:37Miracles happen every day.
0:13:38 > 0:13:42So, Shay, you're a magician, but you're also a management consultant,
0:13:42 > 0:13:45so how would you describe yourself?
0:13:45 > 0:13:50Most of my work is in organisations helping people to develop
0:13:50 > 0:13:51collaborative relationships,
0:13:51 > 0:13:55and it improves an organisation's efficiency, their productivity,
0:13:55 > 0:13:56their bottom line...
0:13:56 > 0:13:59You see, you know, you haven't come in with a whiteboard
0:13:59 > 0:14:02and said, "Sack everyone," you've come in with a magic wand!
0:14:02 > 0:14:06- It's a different approach. - Let's be gentle with each other.
0:14:06 > 0:14:10- Yeah.- Let's look at this together, and how we can move forward?- Yeah.
0:14:11 > 0:14:15Like all consultants, Shay has a clever business plan.
0:14:15 > 0:14:17Once he's magicked his way into the room,
0:14:17 > 0:14:21he makes more money selling his very own management programme.
0:14:24 > 0:14:27You're driving a lovely Jaguar, you've not done badly for yourself!
0:14:27 > 0:14:31For Shay, helping the browbeaten public sector
0:14:31 > 0:14:34has given him an executive lifestyle.
0:14:34 > 0:14:38The real fulfilment has come from being able to follow my passion.
0:14:38 > 0:14:41I do know it's actually making a difference to people's lives.
0:14:41 > 0:14:44And that's the primary driver.
0:14:46 > 0:14:48After a hard day's motivational magic,
0:14:48 > 0:14:52there's even time for a 1970s-style management workout.
0:14:53 > 0:14:55Good return!
0:14:55 > 0:14:56Oh-ho!
0:14:59 > 0:15:02Oh, yes! 1-1.
0:15:02 > 0:15:04In these times, you know, these hard-pressed times,
0:15:04 > 0:15:08the public sector is so squeezed, is it really a good use of money,
0:15:08 > 0:15:09management consultants being brought in?
0:15:09 > 0:15:13We're all about getting people's needs met who are at work,
0:15:13 > 0:15:17and, of course, the consequence of that is higher levels of productivity.
0:15:17 > 0:15:19Whatever you think of Shay's shtick,
0:15:19 > 0:15:22he's just one of thousands of consultants
0:15:22 > 0:15:24being parachuted into the public sector.
0:15:28 > 0:15:31Together, they're being paid millions by councils
0:15:31 > 0:15:33struggling to cope with the cuts.
0:15:35 > 0:15:38I'm heading to Wales to meet a fellow armchair auditor
0:15:38 > 0:15:41who's become alarmed by how much is being spent
0:15:41 > 0:15:43on consultants in their area.
0:15:45 > 0:15:47- Hi, there.- Hi!
0:15:47 > 0:15:49- Is that Liz?- I am.- I'm Jacques.
0:15:49 > 0:15:51- Hello, Jacques, how are you? - Nice to meet you.- And you.
0:15:51 > 0:15:54Liz Haynes is an independent local councillor
0:15:54 > 0:15:56who also runs her own catering business.
0:15:56 > 0:15:59How long have you had the burger van?
0:15:59 > 0:16:02We've been on site here now almost 23 years,
0:16:02 > 0:16:04and of course we're award-winning.
0:16:04 > 0:16:06LAUGHING: Excellent!
0:16:06 > 0:16:08Recently, Liz discovered her local council
0:16:08 > 0:16:10had hired a firm of consultants.
0:16:10 > 0:16:16They were paid £30,000 to help them find internal savings.
0:16:16 > 0:16:19So you've got here some minutes from a meeting
0:16:19 > 0:16:22and it's headed here "strategic operating model assessment".
0:16:22 > 0:16:23What does that mean?
0:16:23 > 0:16:27Well, it's a piece of work that the council have commissioned.
0:16:27 > 0:16:32My understanding is that it is a review
0:16:32 > 0:16:37on how to make savings in back office services.
0:16:37 > 0:16:41The report was written by consultants PricewaterhouseCoopers,
0:16:41 > 0:16:44known as PwC.
0:16:44 > 0:16:48Over the following months, Liz spotted something alarming.
0:16:48 > 0:16:51The council were asking for more money for PwC,
0:16:51 > 0:16:55from £30,000 to more than £100,000.
0:16:55 > 0:16:58This was a dramatic ramping up in how much they were going to get.
0:16:58 > 0:17:00- Absolutely.- What did you think?
0:17:00 > 0:17:06Hiring in consultants to do work in times of austerity
0:17:06 > 0:17:09just really sits uncomfortable with me.
0:17:09 > 0:17:10So, very concerned.
0:17:18 > 0:17:21I want to find out what's really going on here, so I've arranged
0:17:21 > 0:17:25to meet the deputy leader of Torfaen Council, Anthony Hunt.
0:17:25 > 0:17:28I want to know why, when they're told to make savings,
0:17:28 > 0:17:31they are hiring expensive consultants
0:17:31 > 0:17:33to tell them how to do it.
0:17:33 > 0:17:37One of the solutions that many councils are coming to
0:17:37 > 0:17:41is to bring in independent management consultants,
0:17:41 > 0:17:42and I believe you've done that here.
0:17:42 > 0:17:43Yeah, that's correct.
0:17:43 > 0:17:46I think it's good to get an external opinion in,
0:17:46 > 0:17:48to have a look at how you're doing things,
0:17:48 > 0:17:50if you could do things more efficiently.
0:17:50 > 0:17:54We've made a 25% saving in the cost of senior management
0:17:54 > 0:17:55in the last half a dozen years.
0:17:55 > 0:17:58That means we've got less capacity within the organisation
0:17:58 > 0:18:02to do some of this transformational stuff, and so every now and again,
0:18:02 > 0:18:04I think it's worth having an external view in,
0:18:04 > 0:18:08but only if you can demonstrate that gives taxpayers value for money, I think.
0:18:08 > 0:18:10They do come up with quite a lot of gobbledygook.
0:18:10 > 0:18:12One of the things they think you should do is,
0:18:12 > 0:18:15"We will support and enable services to focus on delivery
0:18:15 > 0:18:18"by providing an effective service."
0:18:18 > 0:18:20- Mm-hm.- I mean...- Yeah. - It's like a classic.
0:18:20 > 0:18:22I mean, I certainly don't get fooled
0:18:22 > 0:18:24by gobbledygook and management-speak.
0:18:26 > 0:18:32Although Torfaen Council paid PwC £140,000 in total,
0:18:32 > 0:18:35they said it's led to significant efficiency savings.
0:18:37 > 0:18:39DIALLING TONES
0:18:39 > 0:18:41Could I have the press office...?
0:18:41 > 0:18:43Hi, is that the press office...?
0:18:43 > 0:18:45Jacques Peretti here from the BBC.
0:18:45 > 0:18:47It seems they're not the only local council
0:18:47 > 0:18:49to have paid for a PwC report.
0:18:49 > 0:18:51Hi, is that the press office?
0:18:51 > 0:18:55I was phoning to find out a bit about some work that's been done.
0:18:55 > 0:18:58Would you be able to tell me now how much this report cost?
0:18:58 > 0:19:02What's more, these reports have a familiar ring about them.
0:19:02 > 0:19:04It's called the operating model assessment.
0:19:06 > 0:19:09Operating model assessment...
0:19:09 > 0:19:13Finally, I've made contact with someone who can tell me more.
0:19:13 > 0:19:17Great, yeah, great. Thank you, take care, bye-bye.
0:19:23 > 0:19:27Councillor Jacob Williams has been single-handedly investigating
0:19:27 > 0:19:30PwC's activities here in Pembrokeshire.
0:19:32 > 0:19:36He's discovered the local council paid the company £70,000
0:19:36 > 0:19:38to help THEM find savings.
0:19:40 > 0:19:43We've received a report which was 180 pages long.
0:19:43 > 0:19:45I've got it here.
0:19:45 > 0:19:49It's gobbledygook, you could call it. Corporate jargon.
0:19:49 > 0:19:51The report's called Operating Model Assessment.
0:19:51 > 0:19:53What does that mean?
0:19:53 > 0:19:56Well, it really, for me, sets the tone for the rest of the document.
0:19:56 > 0:20:00I suppose it's just looking at the council's way of operation,
0:20:00 > 0:20:03the way... The culture, I suppose.
0:20:03 > 0:20:06But the information within the report, really,
0:20:06 > 0:20:10some of it is so basic that you'd have to wonder why
0:20:10 > 0:20:13council officers couldn't identify this themselves.
0:20:13 > 0:20:15Give me an example of the sort of thing that they uncovered
0:20:15 > 0:20:17in their report.
0:20:17 > 0:20:20Well, some departments still fax an attachment
0:20:20 > 0:20:21after sending an e-mail.
0:20:21 > 0:20:25Absolutely anyone could basically find that out.
0:20:25 > 0:20:26These sort of things, yes.
0:20:26 > 0:20:28I would suggest a lot of what's in here
0:20:28 > 0:20:32is just a blueprint where the companies would just copy and paste
0:20:32 > 0:20:34the name of the local authority into them.
0:20:38 > 0:20:42So why are all these councils paying firms of consultants
0:20:42 > 0:20:45hundreds of thousands of pounds for reports
0:20:45 > 0:20:47that all sound the same?
0:20:49 > 0:20:54Industry insider and former PwC consultant John Bennett
0:20:54 > 0:20:57has agreed to meet me to tell me why.
0:20:57 > 0:21:00So talk me through what's going on in Wales.
0:21:00 > 0:21:04We've got a number of reports here
0:21:04 > 0:21:07and they all seem to have a similar title,
0:21:07 > 0:21:10which is the Operating Model Assessment.
0:21:10 > 0:21:11Could you tell me what that means?
0:21:11 > 0:21:14Well, essentially, that means that you're going in to
0:21:14 > 0:21:18perform a diagnosis on the organisation. An overview.
0:21:18 > 0:21:22Very similar to if you take your car into the garage
0:21:22 > 0:21:24and you get a service from a mechanic.
0:21:24 > 0:21:27It's a standard approach, short piece of work.
0:21:27 > 0:21:30It's what's called a repeatable proposition, so...
0:21:30 > 0:21:32So it's like a template?
0:21:32 > 0:21:35Absolutely like a template, and individuals in junior grades
0:21:35 > 0:21:37are trained in delivering a repeatable template.
0:21:37 > 0:21:40And so when they go into Pembrokeshire or they go to Cardiff,
0:21:40 > 0:21:43they'll all be working to a specific template that you can,
0:21:43 > 0:21:45in effect, just put...
0:21:45 > 0:21:48LAUGHING: A different council's name on the front?
0:21:48 > 0:21:50Yeah, and the same methodology.
0:21:52 > 0:21:55I'm amazed that all the reports I've seen,
0:21:55 > 0:21:58costing hundreds of thousands of pounds,
0:21:58 > 0:21:59are based on a template.
0:22:01 > 0:22:04So how do these consultants manage to persuade all these councils
0:22:04 > 0:22:05to part with our cash?
0:22:05 > 0:22:09I'm going to meet someone who knows all the tricks of the trade.
0:22:11 > 0:22:15Former consultant, David Craig, has years of experience
0:22:15 > 0:22:19persuading clients to pay big money for his services.
0:22:19 > 0:22:22He's going to give me a masterclass.
0:22:22 > 0:22:25So, David, once, as a management consultant,
0:22:25 > 0:22:28you've got your foot in the door of a government department,
0:22:28 > 0:22:30what do you do to get more business?
0:22:30 > 0:22:33The first week or two, you haven't a clue what's going on,
0:22:33 > 0:22:35so you're fumbling around in the dark,
0:22:35 > 0:22:37trying to find out what's happening.
0:22:37 > 0:22:38So to buy yourself time,
0:22:38 > 0:22:40you do a whole load of general interviews,
0:22:40 > 0:22:42all the way through the organisation.
0:22:42 > 0:22:45Step two, pile on the pressure.
0:22:45 > 0:22:49The interviews have given you an idea of where to look for the dirt.
0:22:49 > 0:22:52So then you do studies in those areas.
0:22:52 > 0:22:56What you're looking for is something that gives a big emotional shock.
0:22:56 > 0:22:58We want to take him to what we call the Valley of Death.
0:22:58 > 0:22:59The Valley of Death?
0:22:59 > 0:23:02Yes, where he loses confidence in his people.
0:23:02 > 0:23:04He says, "Well, how can this be happening?
0:23:04 > 0:23:06"How could my salesmen not be selling?"
0:23:06 > 0:23:09He has to feel his world has moved
0:23:09 > 0:23:11and he really has to do something,
0:23:11 > 0:23:14because if there's no pain, he's not going to buy.
0:23:14 > 0:23:16So down into the Valley of Death we go.
0:23:16 > 0:23:18- This is a dark place.- Yes.
0:23:18 > 0:23:21But, for you, as a management consultant,
0:23:21 > 0:23:23- this is the boom. This is the moment.- It's pure heaven.
0:23:23 > 0:23:26- This is ka-ching. - Yeah. So once we've taken them
0:23:26 > 0:23:28into the Valley of Death, now it's time for salvation.
0:23:28 > 0:23:31Now we go to the sunny uplands of,
0:23:31 > 0:23:35"It's bad, it's really bad, but don't worry,
0:23:35 > 0:23:38"together, working together, we can save the situation."
0:23:38 > 0:23:40It'll only cost you two or three million,
0:23:40 > 0:23:42or maybe you need to buy a big computer system
0:23:42 > 0:23:44- for another 50 million. Who knows? - Oh, my God!
0:23:44 > 0:23:46It's unbelievable, it's unbelievable.
0:23:46 > 0:23:48I mean, this wouldn't matter, in a way,
0:23:48 > 0:23:50if it was just in the private sector,
0:23:50 > 0:23:53but these companies are now operating in the public sector
0:23:53 > 0:23:55- with public money.- Yes.
0:23:55 > 0:24:00I was at a conference of management consultants a few years ago,
0:24:00 > 0:24:06and one of the directors of a leading management consultancy said,
0:24:06 > 0:24:08"It's so easy to sell into the public sector
0:24:08 > 0:24:11"because buyers are inexperienced, inconsistent
0:24:11 > 0:24:13"and incompetent."
0:24:14 > 0:24:17- Wow.- This was from the head
0:24:17 > 0:24:20of one of the largest consultancies that sells to the public sector.
0:24:22 > 0:24:25- And everybody clapped and laughed. - Incredible.
0:24:28 > 0:24:31So far, I've discovered that consultants are being hired
0:24:31 > 0:24:34to help councils find internal savings,
0:24:34 > 0:24:36but it doesn't end there.
0:24:38 > 0:24:41They're also advising on the services that affect us all.
0:24:45 > 0:24:49Here in Powys, cuts mean the closure of schools are being considered.
0:24:54 > 0:24:57So the council paid PwC to study the impact
0:24:57 > 0:24:59this would have on pupils' travel time.
0:25:01 > 0:25:06Local school governor John Millson has been studying their report.
0:25:06 > 0:25:08- Yep, come in.- Lovely. Thanks.
0:25:11 > 0:25:14What did PwC conclude about travel time?
0:25:14 > 0:25:18They do give an example when they say that if they close four schools
0:25:18 > 0:25:21out of the 13 in the county,
0:25:21 > 0:25:26then the increase in average travel time for pupils in the county
0:25:26 > 0:25:28would be 33 seconds.
0:25:28 > 0:25:30- 33 seconds?!- Yes.
0:25:30 > 0:25:34So kids who go to school in Powys, how do they get to school?
0:25:34 > 0:25:36The ones who can't walk to their local school,
0:25:36 > 0:25:40the vast majority of them will travel by council-funded bus.
0:25:40 > 0:25:44And this 33-second figure that PwC have come to,
0:25:44 > 0:25:46added to their journey time,
0:25:46 > 0:25:48is that based on bus journeys?
0:25:48 > 0:25:50No, it's actually based on the time taken
0:25:50 > 0:25:54by someone to drive from the student's home address
0:25:54 > 0:25:56by private car to the school.
0:25:56 > 0:25:58- By private car?- By private car.
0:25:58 > 0:26:02Right. But pupils in Powys, the majority travel to school by bus.
0:26:02 > 0:26:06- Yes.- So that's wrong, then?
0:26:06 > 0:26:08Very wrong, yes!
0:26:08 > 0:26:10BOTH CHAT
0:26:10 > 0:26:13I want to put PwC's findings to the test.
0:26:18 > 0:26:20Oliver Bowage has two children
0:26:20 > 0:26:22due to attend the local secondary school.
0:26:26 > 0:26:30By car, it's about a six-minute journey to the school gates.
0:26:33 > 0:26:35But the school's threatened with closure,
0:26:35 > 0:26:38which means his kids may have to travel a further 12 miles
0:26:38 > 0:26:39to the next one.
0:26:42 > 0:26:44So, Oliver, according to PwC,
0:26:44 > 0:26:47if your kids' secondary school was to close down,
0:26:47 > 0:26:52on average, the journey to the new school should take 33 seconds.
0:26:52 > 0:26:55- Right, OK.- Does that sound...? How does that sound?
0:26:55 > 0:26:59You've basically got 33 seconds to get from here to Brecon.
0:26:59 > 0:27:01Right, let's go!
0:27:01 > 0:27:03OK, let's see how far we get. OK, go!
0:27:07 > 0:27:09Remember, Brecon is, what, 15 miles?
0:27:09 > 0:27:10Yeah, something like that.
0:27:10 > 0:27:14OK, all right. Well, you're not doing bad. OK.
0:27:14 > 0:27:16You should be about halfway there by now.
0:27:16 > 0:27:17THEY LAUGH
0:27:17 > 0:27:23You haven't got long. You've only got another six seconds
0:27:23 > 0:27:26- to get to Brecon.- So we'll go straight, but obviously...
0:27:26 > 0:27:28No, no, you've got to stop now. No, sorry, you've got to stop.
0:27:28 > 0:27:30So, you've got to stop now.
0:27:30 > 0:27:32'Oh, dear. 12 miles still to go.
0:27:32 > 0:27:37'Looks like Oliver's kids are going to be taught in the lay-by.'
0:27:37 > 0:27:40So, Ollie, we've tried to put the PwC report into practice
0:27:40 > 0:27:43and given what we've found out, what do you think about that report?
0:27:43 > 0:27:46Well, I know consultants get paid lots of money
0:27:46 > 0:27:48and they probably drive very fast cars,
0:27:48 > 0:27:50but it's just completely unrealistic.
0:27:50 > 0:27:52Even if you were in a Formula One car,
0:27:52 > 0:27:55you couldn't get to Brecon in the time they're suggesting.
0:27:55 > 0:27:59- 33 seconds.- 33 seconds is just crazy, it's absurd.
0:28:00 > 0:28:03PwC may claim that average journey times
0:28:03 > 0:28:06will increase by only 33 seconds,
0:28:06 > 0:28:08but the reality for many parents
0:28:08 > 0:28:11will be a much longer school run than that.
0:28:11 > 0:28:14But what about all the other reports that I've seen?
0:28:14 > 0:28:17They cost hundreds of thousands of pounds
0:28:17 > 0:28:20and could have much wider implications.
0:28:20 > 0:28:23I mean, these reports are costing tens of thousands of pounds.
0:28:23 > 0:28:25Is that good value for money?
0:28:25 > 0:28:28They're actually seen by consulting firms almost as loss leaders,
0:28:28 > 0:28:31because when you go into an organisation and do a diagnosis,
0:28:31 > 0:28:35you're often lining up a larger piece of work
0:28:35 > 0:28:37further down the line,
0:28:37 > 0:28:40and so the expression that I heard many times
0:28:40 > 0:28:44in large corporate consulting firms is, "You land and expand."
0:28:44 > 0:28:47You start to uncover issues in an organisation
0:28:47 > 0:28:49and therefore put them under pressure.
0:28:49 > 0:28:51It's like a plumber coming in.
0:28:51 > 0:28:57It's very, very similar to what you see people experiencing in trades.
0:28:57 > 0:28:59In the car industry, you know, they open up the bonnet of your car
0:28:59 > 0:29:02and suddenly they've found six things wrong with your car
0:29:02 > 0:29:03when you only went in for a flat tyre.
0:29:08 > 0:29:12It turns out land and expand is already happening in Wales.
0:29:13 > 0:29:20I've discovered three councils alone have paid PwC nearly £5 million.
0:29:21 > 0:29:25But this upfront money isn't the only issue.
0:29:25 > 0:29:27Something far more profound is going on -
0:29:27 > 0:29:32a type of contract that the consultants call risk and reward.
0:29:33 > 0:29:35What a risk and reward contract means
0:29:35 > 0:29:38is that the consultants take a percentage
0:29:38 > 0:29:40from any savings they can find.
0:29:40 > 0:29:45In other words, they make money from the budget cuts.
0:29:45 > 0:29:47Profit out of austerity.
0:29:51 > 0:29:55Here in West Wales, Ceredigion Council has signed
0:29:55 > 0:29:57just such a contract with PwC,
0:29:57 > 0:30:01and I want to ask council leader Ellen ap Gwynn about it.
0:30:02 > 0:30:04One of the things you've done
0:30:04 > 0:30:07is to bring in outside management consultants.
0:30:07 > 0:30:08Is that correct?
0:30:08 > 0:30:12Yes, well, that was after an open tender exercise.
0:30:12 > 0:30:15PwC won that tender
0:30:15 > 0:30:17and we've been working in partnership with them
0:30:17 > 0:30:18for about 18 months.
0:30:18 > 0:30:23They've been very helpful in that they've helped us to analyse
0:30:23 > 0:30:28the basis of our budgetary processes.
0:30:28 > 0:30:31So when you say they're analytical in the way they look at things,
0:30:31 > 0:30:33what do they actually do when they come in?
0:30:33 > 0:30:34How does it work?
0:30:34 > 0:30:37They've held a succession of workshops
0:30:37 > 0:30:39with different members of staff.
0:30:39 > 0:30:41You know, they've been listening first,
0:30:41 > 0:30:44and then come back and talked through
0:30:44 > 0:30:46possible ways of improving...
0:30:46 > 0:30:50Well, not improving necessarily, but changing and redesigning services.
0:30:50 > 0:30:51Couldn't you do that yourself?
0:30:51 > 0:30:53I mean, because you have a lot of highly paid staff here.
0:30:53 > 0:30:56We've had a reduction in our highly-paid staff,
0:30:56 > 0:30:57quite a substantial reduction,
0:30:57 > 0:31:01and we've had a change of staff as well.
0:31:01 > 0:31:03So you've got... So, just to get it straight, just so I understand
0:31:03 > 0:31:06what's going on... So, basically, you've had to get rid
0:31:06 > 0:31:09of a sort of whole level of administration,
0:31:09 > 0:31:11and in order to replace that,
0:31:11 > 0:31:14you've brought in PricewaterhouseCoopers
0:31:14 > 0:31:16to do the job that those people did do?
0:31:16 > 0:31:18For a short period of time.
0:31:18 > 0:31:22It just seems, you know, in this time of extraordinary austerity,
0:31:22 > 0:31:27unprecedented austerity, you know, your council spent nearly £1 million
0:31:27 > 0:31:28on these people coming in.
0:31:28 > 0:31:31Has that been value for money, you know, for you?
0:31:31 > 0:31:33What do you think?
0:31:33 > 0:31:35Well, I very much hope so.
0:31:35 > 0:31:39When you compare that to 34 million that we've had to cut,
0:31:39 > 0:31:42and to compare that, going forward, with the way that
0:31:42 > 0:31:46we're having to restructure, I think it is.
0:31:46 > 0:31:51I spoke to a PwC insider who told me about their strategy
0:31:51 > 0:31:53for when they go into a council.
0:31:53 > 0:31:55Well, if you speak to the ones that come here,
0:31:55 > 0:31:59you'll find out quite soon that they haven't had an easy ride in here.
0:31:59 > 0:32:02They've been challenged and challenged and challenged.
0:32:02 > 0:32:03This is their strategy, right?
0:32:03 > 0:32:07It's called land and expand. Have you ever heard of that?
0:32:07 > 0:32:09No, but I can see through them when they come.
0:32:09 > 0:32:11If I don't want something, I'm not having it.
0:32:11 > 0:32:14Land and expand is, we get our foot in the door
0:32:14 > 0:32:17and then, basically, we create a strategic partnership with them
0:32:17 > 0:32:19and we expand the job once we're in.
0:32:19 > 0:32:20No, they haven't, I'm afraid.
0:32:20 > 0:32:23So have they land and expanded you, Ellen?
0:32:23 > 0:32:25They've landed, but they've been contracted,
0:32:25 > 0:32:30and, in that, I mean the opposite to expand, rather than the contract.
0:32:30 > 0:32:32- So how long is the contract for? - It's finished.
0:32:32 > 0:32:34They're out, they're finished.
0:32:34 > 0:32:37Could you tell me the nature of the contract that you had with them?
0:32:37 > 0:32:40No, I'm sorry. That's commercial.
0:32:40 > 0:32:43- I can't speak about it. - It's commercial?- It's commercial.
0:32:43 > 0:32:46- You're a public body. This is public sector money.- I'm sorry,
0:32:46 > 0:32:50it's a commercial contract between the council and a private body.
0:32:50 > 0:32:54OK. So there are cuts to public services, to the public,
0:32:54 > 0:32:59and you cannot tell me, because it's commercial, the relationship?
0:32:59 > 0:33:01- Indeed.- Do you think the public don't have a right to know
0:33:01 > 0:33:03what the relationship with this contract is?
0:33:03 > 0:33:06That is the legal position we're in.
0:33:06 > 0:33:10- You feel that you can't tell me? - That's the legal position we are in.
0:33:10 > 0:33:13OK. Could you tell me what a risk and reward contract is?
0:33:13 > 0:33:16You need to look that up yourself. I'm not going any further on
0:33:16 > 0:33:19- the contract.- Have you heard of a risk and reward contract?
0:33:19 > 0:33:22I have, but I'm not going any further on the contract, I'm sorry.
0:33:22 > 0:33:23What if we don't talk about
0:33:23 > 0:33:25your specific contract but just generally
0:33:25 > 0:33:28- what a risk and reward contract is? - No, I'm not going any further
0:33:28 > 0:33:31on any contracts. You've had what you want from me.
0:33:31 > 0:33:35I think we should perhaps finish this. I've got to go...
0:33:35 > 0:33:37I've just got one more question. Just one more question, Ellen.
0:33:37 > 0:33:43It's been said that PwC will receive 16% profit
0:33:43 > 0:33:44on every cut that is made.
0:33:44 > 0:33:47I'm not going to comment at all on the contract.
0:33:47 > 0:33:49I've already told you that. That's the end of it.
0:33:49 > 0:33:52- But the public hear... - That's the end of the interview.
0:33:52 > 0:33:54Sorry. You're going too far now.
0:33:54 > 0:33:58Well... Ellen, it's literally knowing about the 16%.
0:33:58 > 0:34:02- Is it right or is it not?- I'm sorry, I'm not discussing the contract.
0:34:02 > 0:34:05- I told you that.- They make 16... - I don't care.- They make 16% profit
0:34:05 > 0:34:09on the cuts that you make, so it's a company profiting from...
0:34:09 > 0:34:12I'm not discussing anything about the contract.
0:34:12 > 0:34:14Do you think it's right that a company should...?
0:34:14 > 0:34:16Look, will you please get out of my room?
0:34:16 > 0:34:19The bloody lot of you. I've had enough of it.
0:34:20 > 0:34:23So, I've just been asked to leave the building.
0:34:23 > 0:34:25The leader of the council has walked out
0:34:25 > 0:34:27of the interview very, very angry, and the thing
0:34:27 > 0:34:31that made her angry was me asking about the nature of
0:34:31 > 0:34:35the contract with PwC. She called it commercially sensitive and said she
0:34:35 > 0:34:38couldn't speak about it, but we're talking about huge amounts of money here
0:34:38 > 0:34:40that are passing to a private company,
0:34:40 > 0:34:43and it does seem extraordinary
0:34:43 > 0:34:45that I'm not even allowed to ask the question.
0:34:45 > 0:34:47Why is it so difficult to find out?
0:34:49 > 0:34:53PwC wouldn't meet me, but they sent us this statement...
0:35:06 > 0:35:07"We therefore work with clients
0:35:07 > 0:35:10"to demonstrate the value and effectiveness of contracts."
0:35:27 > 0:35:30I still need some answers, so I'm meeting the man who speaks for
0:35:30 > 0:35:33the consultancy industry, Alan Leaman.
0:35:40 > 0:35:42Could you explain to me what a risk and reward contract is?
0:35:42 > 0:35:44There are more and more people in our industry
0:35:44 > 0:35:46who are saying to clients, "What you really want to do
0:35:46 > 0:35:49"is buy an outcome. You want to buy a result.
0:35:49 > 0:35:51"And how are we going to do that?
0:35:51 > 0:35:53"Well, we're going to share some risks.
0:35:53 > 0:35:58"So, OK, we might take a basic fee, but on top of that
0:35:58 > 0:36:02"we'll be paid by the results we deliver for you."
0:36:02 > 0:36:08We were in Ceredigion in Wales, and they had a risk and reward contract
0:36:08 > 0:36:15there, which basically delivered 16% return to the management consultants
0:36:15 > 0:36:19- there on all the public service cuts that were being made.- Mm-hm.
0:36:19 > 0:36:21The more cuts that were made, the more money they make.
0:36:21 > 0:36:23Is that correct?
0:36:23 > 0:36:29We all understand that savings are being looked for, and we need to
0:36:29 > 0:36:33improve efficiency in the public sector, and that's one of the areas
0:36:33 > 0:36:37where really skilled management consultancies can make a difference.
0:36:37 > 0:36:40Yeah, but you haven't answered my question. I asked whether
0:36:40 > 0:36:43the management consultancy firm were actually making a profit on
0:36:43 > 0:36:44the austerity cuts being made there
0:36:44 > 0:36:48because of this risk and reward contract. Is that correct or not?
0:36:48 > 0:36:49Well, it means what you're doing is
0:36:49 > 0:36:54you're giving the consulting firm every possible incentive
0:36:54 > 0:36:58to deliver savings for the taxpayer, and that's, to my mind,
0:36:58 > 0:37:01a real benefit for the country.
0:37:01 > 0:37:04How widespread are risk and reward contracts within
0:37:04 > 0:37:08- the public sector in Britain? - It's limited, but there's a desire,
0:37:08 > 0:37:11certainly at the top of government, because we've spoken to them
0:37:11 > 0:37:13about this, to see more being done.
0:37:13 > 0:37:15Do you think it's moral that a management consultancy firm
0:37:15 > 0:37:18are making money out of the cuts that are being made
0:37:18 > 0:37:23- to public services in this way? - I think it's moral if the objectives
0:37:23 > 0:37:26of the project are moral, and if they are, I think it's
0:37:26 > 0:37:29absolutely right that they should be rewarded
0:37:29 > 0:37:31for achieving what the public sector wants to achieve.
0:37:32 > 0:37:36Consultants are profiting to the tune of millions advising on
0:37:36 > 0:37:41public service cuts, but their involvement doesn't end there.
0:37:41 > 0:37:44To make the public sector a gift that keeps giving, they've got
0:37:44 > 0:37:48another trick up their sleeves, and it's all down to that
0:37:48 > 0:37:53ultimate consultant buzzword - "transformation".
0:37:53 > 0:37:58If you go into any company or any council or hospital,
0:37:58 > 0:38:00you'll probably find they're running
0:38:00 > 0:38:02a so-called "transformation" programme
0:38:02 > 0:38:06with expensive, completely unqualified management consultants
0:38:06 > 0:38:11helping them. And of course everybody can improve,
0:38:11 > 0:38:13but you do not need to transform.
0:38:13 > 0:38:15Any organisation stupid enough to buy
0:38:15 > 0:38:19a transformation programme would employ an army of consultants
0:38:19 > 0:38:21for a century and cause endless disruption.
0:38:21 > 0:38:24Because transformation equals starting again.
0:38:24 > 0:38:28- It means spending more money. - Well, it means change everything,
0:38:28 > 0:38:30and you never need to change everything.
0:38:30 > 0:38:32You need to improve those things
0:38:32 > 0:38:36that need to be improved and you need to guard and protect the things
0:38:36 > 0:38:38that are working OK.
0:38:40 > 0:38:43When it comes to transformation projects, they don't come
0:38:43 > 0:38:48much bigger than the top-to-bottom reorganisation of the NHS
0:38:48 > 0:38:53in England, conceived here in Whitehall six years ago.
0:38:54 > 0:38:58This ambitious reorganisation of the NHS promised to be
0:38:58 > 0:39:01the most radical shake-up in its history.
0:39:04 > 0:39:08As the Government put its plans for the NHS into action,
0:39:08 > 0:39:11one firm of consultants were involved in meetings
0:39:11 > 0:39:13with officials - McKinsey.
0:39:17 > 0:39:20It advises governments and private companies across the world.
0:39:20 > 0:39:24What people like McKinsey have in common is a desire
0:39:24 > 0:39:26to see things improve,
0:39:26 > 0:39:29whether you work in the private sector, the public sector.
0:39:30 > 0:39:34Tamasin Cave has been investigating McKinsey's role during the time
0:39:34 > 0:39:37of the NHS reorganisation, and she's built up a dossier
0:39:37 > 0:39:39of revealing correspondence.
0:39:42 > 0:39:45What are these conversations about? What's going on?
0:39:45 > 0:39:47These are fragments of conversations.
0:39:47 > 0:39:49In the correspondence, you see McKinsey
0:39:49 > 0:39:52firing off an e-mail to all the top of the Department of Health,
0:39:52 > 0:39:53all the senior officials, saying,
0:39:53 > 0:39:55"Right, we're ready to start work with you,
0:39:55 > 0:39:57"we're ready to dive in. Hope we can help."
0:39:57 > 0:40:00You see McKinsey being involved in discussions
0:40:00 > 0:40:03around the new structures for the NHS.
0:40:03 > 0:40:06You even get them sitting in on board meetings, even to the extent
0:40:06 > 0:40:10where board meetings are being held in McKinsey's office.
0:40:16 > 0:40:21One man who recalls the presence of McKinsey is Dr Laurence Buckman,
0:40:21 > 0:40:25who represented GPs during the NHS reorganisation.
0:40:27 > 0:40:31Wherever you went to a meeting, somebody from McKinsey's was there
0:40:31 > 0:40:35who had written a report that appeared to be a fait accompli,
0:40:35 > 0:40:39and those of us who thought that we were actually going to have a say
0:40:39 > 0:40:43in how this was going to happen were continuously sidelined,
0:40:43 > 0:40:46or we were told, "Well, this is how it's going to be."
0:40:46 > 0:40:49It was always the same experience.
0:40:49 > 0:40:53As the NHS was overhauled, McKinsey was employed across
0:40:53 > 0:40:57the organisation, and their services didn't come cheap.
0:40:57 > 0:41:00Tamasin, do you have specific figures about the amount of money
0:41:00 > 0:41:02that McKinsey are taking from the NHS?
0:41:02 > 0:41:05We know it's many millions, and then, after that, you look to
0:41:05 > 0:41:09spending data, you can see there's 800,000 here, another 500,000 there.
0:41:09 > 0:41:12Similarly, you can go to NHS England. They will have spending,
0:41:12 > 0:41:16and they have... I mean, they've spent hundreds of thousands,
0:41:16 > 0:41:19probably now totalling millions, and it's described as NHS England
0:41:19 > 0:41:22running costs, but that's going to McKinsey.
0:41:22 > 0:41:26We asked McKinsey about their work in the NHS, and they said...
0:41:49 > 0:41:52David Oliver is a doctor who's uncovered how much has been spent
0:41:52 > 0:41:55on management consultants across the NHS.
0:41:59 > 0:42:02In 2013, I put a Freedom of Information request in
0:42:02 > 0:42:05to the Department of Health, asking them
0:42:05 > 0:42:08how much management consultancy spend had increased
0:42:08 > 0:42:10during the time of the coalition government.
0:42:10 > 0:42:13What the Freedom of Information request showed is that
0:42:13 > 0:42:16consultancy spend had doubled within the first three years
0:42:16 > 0:42:19of the coalition government, nearly doubled to £607 million,
0:42:19 > 0:42:22and I dare say it's increased beyond that since that time.
0:42:22 > 0:42:27I mean, if that was money spent within the NHS, what could that do?
0:42:27 > 0:42:31Well, £600 million would run a couple of medium-sized hospitals
0:42:31 > 0:42:33for a year, for instance.
0:42:33 > 0:42:35It would increase the funding
0:42:35 > 0:42:38- for out-of-hours care by about 30%. - When you found out what
0:42:38 > 0:42:42- you found out, how did you feel? - Well, I wasn't surprised.
0:42:42 > 0:42:46I could see with my own eyes what was going on around the place
0:42:46 > 0:42:49and I'm afraid how I felt was - it's a racket!
0:42:49 > 0:42:51And it's still how I feel now, really.
0:42:55 > 0:42:58The management consultants may have cashed in from
0:42:58 > 0:43:03the NHS reorganisation, but has it helped deliver a better service?
0:43:04 > 0:43:08So, we've had years of upheaval, billions spent on reforms,
0:43:08 > 0:43:12management consultants have earned a fortune from it. Have we ended up
0:43:12 > 0:43:15- with a better system? - No. We've ended up with a system
0:43:15 > 0:43:22that is more fragmented, more rushed, under much greater pressure,
0:43:22 > 0:43:26is unattractive for people to work in and that patients are getting
0:43:26 > 0:43:29a less good deal than they were before the reforms started.
0:43:29 > 0:43:33Dr Buckman's just one of many experts critical of
0:43:33 > 0:43:36the NHS reorganisation, while the Government
0:43:36 > 0:43:41says they are putting patient care at the heart of the NHS.
0:43:41 > 0:43:45But with management consultants now working right across our town halls
0:43:45 > 0:43:49and hospitals, just how far has their influence spread?
0:43:52 > 0:43:55Welcome to Whitehall, to the heart of government,
0:43:55 > 0:43:57where they decide how to spend your money!
0:43:59 > 0:44:02'Most of the money that pays for our public services ends up here,
0:44:02 > 0:44:05'where it's divvied up among government departments.'
0:44:05 > 0:44:08On your right is 10 Downing Street, where the Prime Minister lives,
0:44:08 > 0:44:12and right next door, the Cabinet Office, who handle around
0:44:12 > 0:44:162.8 billion every year on things like MI5 and MI6.
0:44:18 > 0:44:23On your right, the Foreign Office, who spend 1.9 billion of our money
0:44:23 > 0:44:25on diplomats and embassies.
0:44:28 > 0:44:31'But billions of pounds of taxpayers' money is also paid
0:44:31 > 0:44:36'to private companies. Some of them began as consultants,
0:44:36 > 0:44:40'but now they've gone from advising our public services
0:44:40 > 0:44:42'to actually RUNNING them.'
0:44:42 > 0:44:44If you could turn to your left, ladies and gentlemen,
0:44:44 > 0:44:49that anonymous building is 71 Victoria Street,
0:44:49 > 0:44:51the offices of Capita.
0:44:51 > 0:44:55'Capita runs lots of public IT and admin contracts.
0:44:55 > 0:44:59'In return, it receives more than £1 billion a year of our money.'
0:44:59 > 0:45:04We're just passing the offices of G4S. They run everything
0:45:04 > 0:45:07from prisons to detention centres.
0:45:08 > 0:45:11Tucked just up here, between these two buildings at the top
0:45:11 > 0:45:14of Victoria Street, are the offices of Serco.
0:45:14 > 0:45:18'In return for running everything from Boris Bikes to RAF bases,
0:45:18 > 0:45:21'Serco is paid 1.8 billion.
0:45:21 > 0:45:23'In total, these three outsourcing giants
0:45:23 > 0:45:26'receive £3.5 billion of public money.
0:45:28 > 0:45:29'Considering how much we give them,
0:45:29 > 0:45:32'it's strange we know so little about them.'
0:45:34 > 0:45:36- Who is this person? - That's Queen Elizabeth.
0:45:36 > 0:45:40- That is the Queen. - That's Her Royal Majesty the Queen.
0:45:40 > 0:45:44How much money do you think you and I give her per year, per person?
0:45:44 > 0:45:47- £2 per person.- £200.- Whoa!
0:45:47 > 0:45:50- £1 per person.- £1 per person? - Yeah.- £2, £1?- Yeah.
0:45:50 > 0:45:54- Nought point something pence? - Oh, wow, OK.
0:45:54 > 0:45:56It's actually 56p.
0:45:56 > 0:45:59- Oh!- I was close... - That's pretty good.
0:45:59 > 0:46:01- It's a bargain.- You think that's good value for money?
0:46:01 > 0:46:04Do you know who these two men are? Have you ever seen them before?
0:46:04 > 0:46:06'These are the bosses of Serco and Capita.'
0:46:06 > 0:46:10- No.- Have you ever seen them before? - I haven't, no.- OK.
0:46:10 > 0:46:13'I want to see if anyone can guess how much of our money goes to
0:46:13 > 0:46:14'the companies they run.'
0:46:14 > 0:46:16I'm guessing it's going to be a bit more.
0:46:16 > 0:46:19I assume, like, 30p.
0:46:19 > 0:46:22- I'm going to go £5 here.- £5. It's closer to £50.- Really?
0:46:22 > 0:46:23Is it actually, yeah?
0:46:23 > 0:46:25- Shall I tell you?- Is it up to £1?
0:46:25 > 0:46:27It can't be up to £1.
0:46:27 > 0:46:30- It's nearly £50.- What?!
0:46:30 > 0:46:33What do they do? Why do they get that money?
0:46:33 > 0:46:38We pay the Queen, as you said, 50p, which doesn't seem that bad because
0:46:38 > 0:46:40we all love her and everything but, like,
0:46:40 > 0:46:43£50, that's like a weekly shop.
0:46:47 > 0:46:51Since 2010, the number of our services run by private firms
0:46:51 > 0:46:53has doubled.
0:46:53 > 0:46:54That means one in every £6
0:46:54 > 0:46:58of taxpayers' money goes to these companies.
0:46:58 > 0:47:01In return, we expect efficient, well-run services,
0:47:01 > 0:47:06but to local people, the results can often seem bizarre.
0:47:06 > 0:47:08SAW BUZZES
0:47:08 > 0:47:10This is the first time I've seen...
0:47:12 > 0:47:15..urban arboreal vandalism in action.
0:47:16 > 0:47:21This is just terrible. Absolutely...
0:47:28 > 0:47:29Yeah.
0:47:31 > 0:47:32Flipping great work(!)
0:47:38 > 0:47:40It's 6am and I'm in Sheffield,
0:47:40 > 0:47:44outside a depot belonging to a company called Amey.
0:47:46 > 0:47:48Four years ago, they were given
0:47:48 > 0:47:52a £2 billion contract to improve the city's roads,
0:47:52 > 0:47:56including looking after the 30,000 trees lining the streets.
0:47:59 > 0:48:03Amey have since felled more than 3,000 trees they say
0:48:03 > 0:48:06are dead, diseased or dangerous.
0:48:06 > 0:48:09But protesters think otherwise.
0:48:10 > 0:48:14Basically, Dave and Helen and the other protesters are staking out
0:48:14 > 0:48:18the chipping company who are going to be felling the trees
0:48:18 > 0:48:22this morning, and they've been doing this for a number of weeks now.
0:48:22 > 0:48:25And, basically, it's a kind of game of cat and mouse.
0:48:25 > 0:48:28They are waiting to see when they leave, which gate they leave from,
0:48:28 > 0:48:30and then they're going to follow them to the road where
0:48:30 > 0:48:33they are going to cut down the trees and try and prevent it happening.
0:48:35 > 0:48:37Let's go and have a quick recce then, Chris,
0:48:37 > 0:48:39and find out what's happening the other end.
0:48:39 > 0:48:43- So, Dave, what's going on? - We are going to go up to Bannerdale Road...- Yeah.
0:48:43 > 0:48:48..because there is only one person guarding the tree
0:48:48 > 0:48:50we think they'll come for next.
0:48:56 > 0:48:59The protesters have been tipped off that felling crews
0:48:59 > 0:49:03are planning a dawn raid on a nearby street.
0:49:08 > 0:49:11Now, this is where we were yesterday.
0:49:11 > 0:49:14The tree that was taken down is behind this barrier here.
0:49:14 > 0:49:19- You will see the stump that's left. - Wow.- Perfectly healthy tree.
0:49:19 > 0:49:21One gone here yesterday.
0:49:21 > 0:49:24I was standing by that tree and they carried on cutting it down.
0:49:30 > 0:49:33Many locals woke up to see their trees gone.
0:49:34 > 0:49:36It just breaks my heart.
0:49:36 > 0:49:40How can it be right to fell a beautiful, healthy tree?
0:49:40 > 0:49:44It's just...appalling! It really is dreadful.
0:49:44 > 0:49:48This time, the protesters are one step ahead of the felling crews.
0:49:48 > 0:49:50Now, this is the tree in question.
0:49:50 > 0:49:54'The tree they are guarding is due to be removed because Amey say
0:49:54 > 0:49:59'it's causing structural damage, but Dave disagrees.'
0:49:59 > 0:50:02- The kerb edge, straight.- Yeah.
0:50:02 > 0:50:05There's no damage to the boundary wall.
0:50:05 > 0:50:10- There's really minimal damage to the pavement.- Yeah.
0:50:11 > 0:50:14'Sheffield Council say residents are consulted before
0:50:14 > 0:50:17'a tree is removed, but protesters say it's cheaper to chop
0:50:17 > 0:50:20'the trees down than have to work around them.
0:50:20 > 0:50:25'In other words, fewer trees equals more money.'
0:50:27 > 0:50:29It makes absolutely no sense
0:50:29 > 0:50:32to be chopping down highway trees at the rate they're doing.
0:50:32 > 0:50:35It's absolutely unsustainable. It has to stop.
0:50:37 > 0:50:40Amey wouldn't meet me, but said in a statement...
0:50:45 > 0:50:48"..while ensuring the safety of highway users and properties."
0:51:00 > 0:51:04Across the country and the political spectrum,
0:51:04 > 0:51:07the value of outsourcing is being questioned.
0:51:07 > 0:51:10Nowhere is that more true than Birmingham,
0:51:10 > 0:51:14where the council signed an unusually large deal with Capita.
0:51:17 > 0:51:21Birmingham is Europe's largest council and the outsourcing deal
0:51:21 > 0:51:24it agreed with Capita is one of the biggest in the UK,
0:51:24 > 0:51:28involving over £1 billion of public money.
0:51:31 > 0:51:33The council agreed to let Capita handle
0:51:33 > 0:51:35its IT and back-office operations
0:51:35 > 0:51:39through a joint venture called Service Birmingham.
0:51:39 > 0:51:43But the deal was shrouded in secrecy.
0:51:43 > 0:51:46'Professor David Bailey, another pesky armchair auditor,
0:51:46 > 0:51:48'has been trying to uncover the truth.'
0:51:48 > 0:51:52This joint venture, which Capita was providing all these services,
0:51:52 > 0:51:55how much was it supposed to be costing?
0:51:55 > 0:51:59The initial view, talking to people that were around at the time,
0:51:59 > 0:52:01was that they were expecting it to be
0:52:01 > 0:52:04of the order of £50 million to £60 million a year.
0:52:04 > 0:52:08It's difficult in the sense that over time more elements
0:52:08 > 0:52:11were added to the contract, so the costs inevitably went up.
0:52:11 > 0:52:16But at its peak, it was costing something like £140 million a year.
0:52:16 > 0:52:20So it's still over £100 million a year for the last figures we have,
0:52:20 > 0:52:25of which Capita has been making a profit
0:52:25 > 0:52:28of over 20 million in total.
0:52:28 > 0:52:31So it's a very lucrative business for them still.
0:52:31 > 0:52:36I looked into this a bit myself and it seems as though £338,000
0:52:36 > 0:52:39a DAY in Birmingham was being spent
0:52:39 > 0:52:43on simply "backroom" administration and IT.
0:52:43 > 0:52:44Per day!
0:52:44 > 0:52:49The spend on IT through Service Birmingham by the city council
0:52:49 > 0:52:53ran at over 10% of the entire controllable budget
0:52:53 > 0:52:55of the organisation. That's a huge amount.
0:52:55 > 0:52:57If you look at most organisations around the world,
0:52:57 > 0:53:00and what they spend on IT, it might be 5%.
0:53:00 > 0:53:02This is over 10%.
0:53:02 > 0:53:05Given that this is public money that's being spent,
0:53:05 > 0:53:07why has it been so difficult for you to get answers?
0:53:07 > 0:53:11That has been one of the major issues for me. This is very opaque.
0:53:11 > 0:53:14And whenever we tried to challenge the council on it, they hid
0:53:14 > 0:53:17behind this term "commercial confidentiality".
0:53:17 > 0:53:19Whenever pertinent questions are actually asked,
0:53:19 > 0:53:21commercial confidentiality is the phrase
0:53:21 > 0:53:24that is always brought up to protect it, and that, in a way,
0:53:24 > 0:53:27demonstrates how utterly murky
0:53:27 > 0:53:31the relationship between these companies and councils is.
0:53:31 > 0:53:35It is totally impossible to work out what is really going on.
0:53:35 > 0:53:39If we can't see how 10% of the council's budget is being spent
0:53:39 > 0:53:42because it is covered by a contract we can't see,
0:53:42 > 0:53:45how are we able to judge whether or not
0:53:45 > 0:53:46public money is being spent well?
0:53:46 > 0:53:50So there's a fundamental conflict between commercial confidentiality
0:53:50 > 0:53:54and the right for public to actually scrutinise public expenditure.
0:53:55 > 0:53:58We asked Capita about its role in Service Birmingham.
0:53:58 > 0:54:00They told us...
0:54:06 > 0:54:09"..while delivering high quality services."
0:54:27 > 0:54:30With question marks growing over the benefits of outsourcing,
0:54:30 > 0:54:34it's no wonder some authorities are searching for different solutions.
0:54:36 > 0:54:39I'm heading to Liverpool, where they think they've found one.
0:54:39 > 0:54:41- TANNOY:- 'Please make sure that you have
0:54:41 > 0:54:44'all of your personal belongings with you at all times.'
0:54:44 > 0:54:48Until recently, Amey, who I encountered in Sheffield,
0:54:48 > 0:54:50ran the city's street cleaning.
0:54:50 > 0:54:53But the council were unhappy with their performance
0:54:53 > 0:54:55and ended the contract.
0:54:55 > 0:54:59One of the people behind the decision was Councillor Steve Munby.
0:55:00 > 0:55:03Steve, what was the public's experience with outsourcing?
0:55:03 > 0:55:06Did they like it? Did they find they got a good service?
0:55:06 > 0:55:07They didn't bring bunches of flowers
0:55:07 > 0:55:10to thank me or the company. No, it was dreadful.
0:55:10 > 0:55:12Particularly with some of our core street services,
0:55:12 > 0:55:14there was a complete outcry.
0:55:14 > 0:55:16After their experiences with outsourcing,
0:55:16 > 0:55:20the council now runs the services themselves and they believe
0:55:20 > 0:55:23the taxpayer is getting better value for their money.
0:55:23 > 0:55:26And this isn't a loony left Liverpool Council idea,
0:55:26 > 0:55:29this is a non-ideological thing, you've got Conservative councils
0:55:29 > 0:55:34as well across the country, going back to insourcing because
0:55:34 > 0:55:38it is simply more efficient, better for the customer and better for you.
0:55:38 > 0:55:43Absolutely, in fact, the ideologues are the people who are arguing that
0:55:43 > 0:55:45privatisation is going to be cheaper.
0:55:45 > 0:55:47If you look at it, the figures don't add up.
0:55:47 > 0:55:50Even if you did nothing else, by taking stuff back in,
0:55:50 > 0:55:51you eliminate a management fee.
0:55:51 > 0:55:54So that can be a million or two a year on a contract.
0:55:57 > 0:55:59By running the street cleaning themselves,
0:55:59 > 0:56:02the council say they've already saved £1 million.
0:56:02 > 0:56:05- About 48 grand.- About 48 grand.
0:56:05 > 0:56:07THEY CHUCKLE
0:56:09 > 0:56:14By consulting the workers, they say productivity has risen by 50%.
0:56:16 > 0:56:18So what do THEY think about the change?
0:56:18 > 0:56:21- How long have you worked for the street cleaning?- Nearly 28 years.
0:56:21 > 0:56:25How does it compare now to what it was like before?
0:56:25 > 0:56:27If you're working with a private firm,
0:56:27 > 0:56:30their aims aren't the same as what the council wants.
0:56:30 > 0:56:32They could want something totally different.
0:56:32 > 0:56:34What were their aims?
0:56:34 > 0:56:37I could imagine their aims is to make as much money as they could.
0:56:37 > 0:56:40Is there a sense that you're listened to
0:56:40 > 0:56:42as opposed to just being told what to do?
0:56:42 > 0:56:45- Yeah. Nowadays, yeah. Especially with it being the council.- Yeah.
0:56:45 > 0:56:49- Because they're looking for efficiencies, as we are ourselves, you know what I mean?- Yeah.
0:56:49 > 0:56:53- In reality, we're all shareholders. - Yes, exactly.
0:56:53 > 0:56:57We asked Amey about its street cleaning contract in Liverpool.
0:56:57 > 0:56:58They told us...
0:57:04 > 0:57:07"..after both sides had raised concerns about the sustainability
0:57:07 > 0:57:08"of the contract."
0:57:16 > 0:57:21Liverpool isn't the only council taking back control of its services.
0:57:21 > 0:57:24From Cumbria to Essex, many others,
0:57:24 > 0:57:28Tory, Labour and Lib Dem are following suit.
0:57:29 > 0:57:31Being here in Liverpool today, I've realised that the model
0:57:31 > 0:57:35of efficiency that we've been following for years, of outsourcing,
0:57:35 > 0:57:39has been seen to fail and they are following a new model,
0:57:39 > 0:57:43which is based around trusting the people who do the job on the ground.
0:57:43 > 0:57:46The people who do the job are the ones that should be trusted
0:57:46 > 0:57:50to deliver efficiency, rather than just parachuting someone in.
0:57:55 > 0:57:57As Britain tightened its belt,
0:57:57 > 0:58:01billions of pounds of our money has been handed over to
0:58:01 > 0:58:04management consultants and outsourcing companies.
0:58:06 > 0:58:08They say they can deliver efficiency,
0:58:08 > 0:58:10but when we ask questions,
0:58:10 > 0:58:13we are told it is not our business to know.
0:58:13 > 0:58:17If we're going to truly change our public services,
0:58:17 > 0:58:19we need to find out the truth.
0:58:19 > 0:58:23Not just who's spending our money, but how they're doing it.