Monday
Jul152013
by 
Bishop Hill
Bishop Hill Hosing down beancounters
Jul 15, 2013 DECC DECC ministers have revealed the extent to which they are squeezing expenditure. In a written ministerial answer, Greg Barker has outlined the sums lavished on the big four accountancy firms.
;)
Blue, PWC; Yellow, Ernst & Young; Red, KPMG; Purple, Deloitte
Reader Comments (32)
They can all the information they need free from the Internet viz: stop what your doing right now!
What's the scale? They're surely charging us more than eight grand a year...
And What's the color code?
I do not understand the need for accountants to be involved with the DECC except for auditing their accounts and in that and any other case I fail to understand why they need to use four different firms in one year?
Brent
You need to add 000 to the figures :)
"What's the scale?"
Consulting accountants always think in thousands, when they're not thinking in millions.
Anything less is for the little guys.
Perhaps we need a supplementary question: "What did they do with it?"
Maybe the money was spent investigating how DECC can best be abolished? If so, £8 million is a bargain.
There was a time when those four had so many law suits brought against them that if they'd all been dealt with all at once every one of them would have gone bust.
Probably still true today and no doubt one reason they employ so many Govt Ministers and their shadows.
Who in return hand them large contracts, no matter how crooked or useless they have proven to be.
The interesting figures would be the total business of these companies with central and local government as a proportion of their overall turnover. They are heavily embedded in all aspects of government to the point that no action appears to be taken unless the options have been farmed out for framing by these guys. At local level it's just as bad. Of course, the implementation of decisions taken from these options is often in the hands of the consultants too. You then have very highly paid civil servants who don't seem to do anything other than commission consultants to think for them.
I may be wrong, but I think it was during theBlair era that these parasites hooked their claws into the funnel of taxpayers money.
Is it true that A.M. is soon to be drummed out of the Beancounters Union?
Call it the hunt for the Huhne-Davey cheap bills illusion
Creative accounting - The use of aggressive and/or questionable accounting techniques in order to produce a desired result.
Accountancy - Energy and Climate Change?
More likely consultancy, don't have time to look but IIRC I have seen references in DECC reports to consultancy studies carried out by some of the following. They all offer services in "sustainability-climate-change"
PWC
http://www.pwc.co.uk/sustainability-climate-change/index.jhtml
Ernst & Young
http://www.ey.com/UK/en/Services/Assurance/Climate-Change-and-Sustainability-Services
KPMG
http://www.kpmg.com/uk/en/services/audit/pages/climatechangeandsustainabilityservices.aspx
Deloitte
http://www.deloitte.com/view/en_GB/uk/market-insights/sustainability-services/climate-change-and-carbon-management/index.htm
Another reason why "climate change" is such a wonderful money spinner and not likely to fade away any time soon.
Use of consultants was well established under Thatcher and Major, though may have grown further under Blair. The problem is not that they make policy. Too often they just tell Ministers what they want to hear. Civil servants, though susceptible to the same pressures, were not always so compliant.
This will be consultancy.
Project lead will be charged out at 2000-3000 GBP a day. He doesn't do much. All the dog work is done by the "cheap" labour (graduates with a few years experience) maybe 1000-1500 a day. There will be various people in between.
You want to be looking at overall consultant cost to be in region of 33% of rate (though times did get harder in the last few years, so that ratio might be more flexible.)
Value for money? Of course not. But you are paying for the letterhead on the report, that is all.
Scaring people about carbon dioxide, and helping scared people dream up ways of 'dealing with it' are lucrative businesses. Some, such as these consultancies are surely in it for the money, and who can blame them? Others are in it for power since it promises a fast-track to a lot of it. But I suspect some are in it for pleasure, and they are the creepiest of the creepies that abound in this sorry mess.
So, can we conceive of a time when calming things down will be lucrative, or a fast-track to power, or even a source of frissons? Hard to see it, and therein lies the rub. We have a problem here with human nature, not with carbon dioxide.
Davey obviously requires much more expensive advice than Huhne.
The definition of a consultant is "a person who borrows your watch in order to tell you the time and then walks off with it."
I was 'forced' into consulting. It paid off while it lasted.
Crony capitalism in action.
No doubt they are delivering 'on message' services.
Perhaps it was they who were responsible for the 'Green deal' nonsense where householders are tempted to invest in solar panels with hugely increased tariff rates for their output to 'save money' which simply translates into massively increased energy bills for the rest of us!!
Or was it the scheme whereby when the wind doesn't blow owners of those dirty diesel generators are given hugely inreased tariff rates to prevent power outages again translating into massively inreased energy bills for the rest of us.
And it seems that most of those 'green jobs' ministers are so fond of extolling will be via 'consultancy', one shudders at the cost and where is the added value?
https://www.gov.uk/becoming-an-authorised-green-deal-organisation
If it was to look for departmental cost savings, or have proper Beancounters look at the costs and benefits current climate policy, then a few million quid is money would be money well spent if the results acted upon. But given the references of Green Sand at 4.55pm it is likely spent opposite. That is providing more excuses for not listening to alternative perspectives.
I help found a consultancy and spent my entire 35 year working career as a consultant. It is easy to take cheap shots. It is more instructive to determine what skill gaps were the consultants filling and should there have been a skill gap to begin with. For example, if the accounting firms were doing standard Cost Benefit Analysis then this is a major deficiency for an organization that is involved in formulating and championing infrastructure projects. Those analysts definitely need to be in-house.
My consultancy involved large scale survey design, implementation and analysis. For my clients it seldom made sense for them to keep this expertise in-house. At the same time, the lack of numeracy in many HR departments - typical my client - is unjustified and very scary.
One final point of defence for us consultants: Steve McIntyre.
Accountants vs consultants ... when you're looking for decision support in a technical, say engineering project you go for people with a track record - experienced professionals.
I think it's not unreasonable to say that since DECC only popped into existence in 2008 - as a 5 year old - experienced "energy combined with climate change" professionals are thin on the ground and serial BS artists are invited to hoover up funds allotted so that the plates can be banged next year for more...
There are incestuous links and a degree of interoperation between middle managers at DECC, middle ranking executives at the renewables companies and these so called consultants - more so I would say than is wholly proper.
Of course that's tarring them all with unsubstantiated scurrilous aspersions on the integrity of decent, upstanding and honorable professionals - which is wholly intended.
Revolving doors between this sort of "consultant" and the purchasing organisation and the suppliers is a "feature" of our present system of public administration - MoD, NHS etc., etc. - I doubt it'll ever be wholly eradicated - but at present - there's patently too much of it going on.
No doubt Steve McIntyre earned his money well but too often 'Consultancy' simply translates into 'jobs for the boys'.
How about these 'consultants'
"David Miliband paid £70,000 for just three days' work advising venture capitalists investing in 'green' technology"
http://www.dailymail.co.uk/news/article-2106313/David-Miliband-paid-70-000-just-days-work-advising-venture-capitalists-investing-green-technology.html
"TONY Blair has landed a lucrative job advising an American billionaire on how to make money out of tackling climate change.
The former Prime Minister is expected to be paid at least a million dollars (£700,000) a year to act as a 'strategic adviser' to Khosla Ventures, a firm of venture capitalists based in California's Silicon Valley"
http://www.dailymail.co.uk/news/article-1281247/Tony-Blairs-new-job-green-advisor-Khosla-Ventures.html
Then there's the local govt. merry-go-round of course where council officials are paid huge golden handshakes to leave only to get lucrative jobs as 'consultants' to other councils
Brian Reynolds, the former director of environment and development, was given a £280,485 pay-off on top of his £107,000 salary and pension payments.
Since leaving his post he has formed a consultancy and runs a scheme that is supposed to make councils more efficient."
http://www.dailymail.co.uk/news/article-2255913/100-000-plus-pay-offs-135-council-officials-MP-blasts-eye-watering-golden-handshakes.html
Jul 15, 2013 at 5:44 PM | Jiminy Cricket
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You very much under-estimate the charges.
Senior Partners are probably around £600 to £1500 per hour. Difficullt, and/or urgent and/or high value cases could attract a 100% mark up on those rates.
No one working on government work will be charged out at less than £200 per hour. I suspect that typically rates for the majority of the fee earners working on these projects would be within the £300 to £450 per hour bracket, with a senior supervising partner (who may not do much work but may indulge in a little creativity with respect to time spent) charging in excess of £700 per hour.
Accountancy firms are parasites. They usually bleed dry nearly all the assets in insolvent companies before paying out a dividend to creditors. I have lost count of the number of liquidations that I have been involved in where on day one, if the known assets were distributed to creditors they would receive about 18 to 22 pence in the pound, only to have accountants administer the liquidation and about 6 years later signing off on the liquidation paying a dividend to creditors of between 3 to 5 pence in the pound. The accountants have collected in many millions in assets but have charged several times more than the money they have collected in. Only when there is nothing left within the company so that they cannot pay themselves any more fees will they sign off on the liquidation and at that stage only a very paltry dividend is available for the creditors (obviously some creditors do better than others depending upon whether they are secured or otherwise enjoy some preferential status).
The government pays far too much in consultancy fees. For the main part, it is a waste of money. Why can't the civil service perform the service? What about utilising the treasure staff, I am sure they are underworked and would have much spare capacity to prepare reports of the financial implications of policies being proposed/implemented by government departments.
PS. I might be out of date on the rates being charged by these firms since my experience goes back a few years, burt given the recession, I doubt that rates have increased much in the last few years.
Are they providing "accountancy" services or management consulting services ... I'd think that accountancy per se is a small part of the business of these conglomerates nowadays. Management consultancy services are big money earners.
Not long ago, here in Australia, I undertook a review of a PPP complied by 2 of the above named mob on behalf of a State Government quango. It was so appallingly done that I packaged it back up and returned it to the responsible Minister's office with a note that it was incapable of being properly reviewed in its current form and it should therefore be rejected. Without a doubt those consultants would have charged a pretty penny to hide behind the authoritative reputations of their organisations.
Well, at least it adds a few more "green jobs" to the tally.
Having worked on both sides of this particular fence, I think that good consultancies can add a great deal of value. For example, I engaged consultants as a public servant to do survey work, in a field where it would be a complete waste of money to keep people permanently on staff in case we needed a survey done. This was in a field (use of subsidised access equipment by people with disabilities) which is very specialised. The objective was to work out whether the subsidy scheme was delivering value for taxpayer money and providing substantial and useful assistance to the target group.
The results enabled us to refine and improve the scheme, and the punters were happy about the outcome.
But we did an enormous amount of work up front, from formulating the brief to selecting the consultants. Then, there was a pilot of the survey, lots of meetings with the consultants during the survey, and more while the results were analysed and written up.
I have also seen some appalling consultancies in the public sector, usually because the brief was poorly thought through and the process was not managed properly. Very often, these are in areas where the Department or the Minister is looking for a short cut to, or a way out of, doing their own job.
richard verney, greensand, Marion - spot on.
Some specialised [engineering etc] consultancies do valuable work - and any of the corporate monsters - well, they are how can one say it.............an unnecessary extravagance at best and at worst could put a business under.
In the corporate world in London.
I know two arts grads, one is a ' psycho' [psychology], and one studied socio-economics-geography, nice kids, affable and good people mainly, both are paid a mint and both are consultants for big concerns of world wide renown, indeed.
Howvever, when you dig below the surface - neither of them know b***er all about anything, including basic arithmetic not actual mathematics. They tell me that, degree level/M.Arts - is about "par" for their different companies, I was minded to ask, what do they teach at the level of Master of Arts level these days, or Msc for that matter?
Both consultants have regaled me with examples and stories about the amount of money being spent on 'green consultancy' contracts within their respective firms.
Simply gobsmacking.
@ Athelstan
I've worked for three consultancies including two of the big four. What I observed was slavish chasing of the latest fad. In 1998, when I arrived at the first one, the company was obsessed with Y2K because it thought there were easy pickings. It was a "huge, huge opportunity", we were all informed by visionary partners, and everyone was exhorted to tap up their industry contacts and try to sell them Y2K work.
Then in 1999 the fad changed to what was then (and may still be) called "ERP" - "enterprise resource platforms". It just meant implementing IT systems such as SAP and Oracle. It was a "huge, huge opportunity", apparently.
In 2000 the fad became the internet. It was yet another "huge, huge opportunity" and it was career-limiting to observe that it was an obvious bubble.
What happened in every case was that the consultancies all groupthought their way to the same market offering which was then commoditised - everyone was offering the same thing, and anyone could do it. The "solution" then fell rapidly in value, so they'd all cast around and find the next fad.
Today's is presumably energy plus climate change. Consultancies do employ some smart people with an industry background, who can tell you pretty accurately what a textile plant in Hungary is worth, or whether you are better off buying gas beds versus gas liquefaction technology, or where your canola operation in south America is going wrong because process X should be costing no more than Y but is instead costing Z.
These type of tasks require skills for which the client has no long term use and thus it makes sense to rent them in. The Chinese guys who built all those phoney plants in China that produced and then "abated" HFCs would have been alerted to the opportunity by some western consultant I would guess.
What was always odious about those companies was that they were unvaryingly led by ignorant shysters with no experience outside consulting, who actually discounted the experience and counsel of those who did have such experience. The guys in charge of the bit I was in were vehemently opposed to the idea of squandering their credibility with clients, as management wanted them to do, by putting fools obsessed with ERP, "e-commerce" and so on in front of them. It would make us look stupid by proxy, so we continued to offer and deliver unsexy stuff that was actually useful and that required you to know something.
The proper work we sold was dismissed as "the wrong kind of money" by management. Effectively, the knowledge workers kept the spivs afloat with a base load of fee income - for which they weren't even grateful.
We can be sure the consultant spend at DECC is exactly the same thing, and will be as valuable in 10 years' time as the insights from an e-commerce strategy from 2001 are today.
Why do they need accountants?
Have they ever been audited?
A rather depressing and worrisome indictment Justice4Rinka and believe me when I say - not all consultancy is work is necessarily a bad thing.
However, the DECC waste our money - what a surprise! All good easy-peasy business for the 'big four'.
When, the big four accountancy firms are 'helping' the DECC - are they going to tell them something they don't want to hear? All the DECC requires is that, the imprimatur of some such as PwC, to augment and emboss DECC policy objectives and with it their propaganda
muckspreadernews blurb.