NHS: Management Consultants

Earl Howe Excerpts

Monday 13th February 2012 Lords Chamber

[Baroness Royall of Blaisdon]

My Lords, I beg leave to ask a Question of which I have given private notice.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, the Health and Social Care Bill and all related programmes require input from a wide range of civil servants, lawyers and other experts. Management consultants have been assisting Monitor, the developing Commissioning Board and others on specific issues. Consultancy spend has reduced very substantially since before the election. We have been transparent around spend of over £25,000 and on hospitality received by Ministers and civil servants. We have also answered all Parliamentary Questions and FOI requests on these issues, showing our commitment to openness.

[Baroness Royall of Blaisdon]

My Lords, I am grateful to the noble Earl for that Answer. Following recent press reports, I want to ask him about a specific management consultant, McKinsey. What payments has it received since May 2010 from the Department of Health and all other taxpayer-funded health bodies? If he is not able to tell the House that now, will he undertake to place this information in the Library of the House? Given that McKinsey seems to be setting the rules of the game in relation to the Government’s health Bill and then benefiting from the outcome, can the Minister declare unequivocally that there is no conflict of interest between McKinsey’s role in advising the Government on their health reforms and its commercial relationships with other clients?

[Earl Howe]

My Lords, I received notice of this Question just over an hour ago so I do not have precise figures about McKinsey. What I can say is that whereas the previous Administration in 2008-09 spent £100 million in the Department of Health on consultancy, my department has spent under £10 million on consultancy this year—very considerably less.

I read the article in the press this weekend which probably prompted the noble Baroness’s Question. I think we need to be careful before casting doubt on the integrity of public servants—and, indeed, of McKinsey. The article referred to Monitor. Those at Monitor are bound by very strict rules and procedures to ensure transparency and openness in all their dealings and to avoid any possible conflicts of interest. They follow those rules and procedures to the letter.

[Lord Laming]

My Lords, does the noble Earl take from this important Question the significance of having in place a robust implementation strategy should the Bill become law, because translating the aspirations of the Bill into day-by-day practice will be a considerable challenge? Can he assure the House that that will be attended to in the proper way?

[Earl Howe]

Yes, I can. The reform of the NHS is a major project. Frankly, it would be irresponsible if the Government were not to commission expert professional advice in undertaking a project of this kind. Consultancy, if used judiciously, can be highly cost-effective. I assure the noble Lord that the implementation of the Health and Social Care Bill is occupying our minds night and day and, so far, I am pleased to report that it is going well.

[Baroness Jolly]

Can my noble friend tell the House how many reports were written for the Department of Health by McKinsey between 1997 and 2010?

[Earl Howe]

I do not have the figure that my noble friend asks for. I do have a figure for the spend by the previous Administration between 2006 and 2010 on consultancy from McKinsey. That amounted to nearly £30 million. In 2005-06, just one year, the previous Government spent more than £170 million on consultancy services with Accenture plc.

[Lord Campbell-Savours]

Have civil servants been sharing information during the course of meetings with McKinsey people which McKinsey has been giving to its corporate clients? In other words, has McKinsey been discussing what has been going on in the formation of the Bill and the potential business benefits which arise from the Bill with its corporate clients? Have civil servants at any stage received any sponsorship for their travel or entertainment from McKinsey during the development of the Bill? Is it true that some meetings with civil servants and McKinsey have taken place at McKinsey headquarters in Jermyn Street in London? Does not that whole area of activity by McKinsey suggest that there is a conflict of interest which the public should know about at this stage in the development of the Bill?

[Earl Howe]

The noble Lord is, I think, insinuating some impropriety on the part of McKinsey and, perhaps, on the part of civil servants. I know of no such impropriety. Indeed, as I said earlier, there are clear and strict rules about transparency and openness. Declaring hospitality received is something that all civil servants and Ministers have to do. The results are published regularly. I will of course ask the question of McKinsey, which I have not yet had time to do. If I discover that there is any substance to the questions that the noble Lord has asked, I shall of course write to him and place a copy in the Library, but I very much doubt that I shall find any substance to them.

[Lord Naseby]

My Lords, as the Question refers to consultants and not to any specific consultant, is it not a fact that consultants provide a good interim role of management, suggestion or policy for consideration for Her Majesty's Government rather than their taking on ever more central staff? Is that not particularly appropriate, bearing in mind that the Prime Minister held a consultation on the whole of the Bill, as a result of which, as I understand it from listening to the debates in this House, changes have been made to the Bill which will have to be implemented pretty quickly? One can understand why consultants are brought in at the centre of the National Health Service. Surely on the whole it can only be healthy to have consultants there to speed up the implementation of this very important Bill.

[Earl Howe]

My noble friend is quite right. As I said earlier, the use of consultants—provided that that use is judicious and they are engaged in open competition processes—can be very cost-effective. It is a very flexible way of obtaining high-class advice without incurring long-term costs.

[Lord Hughes of Woodside]

Has McKinsey been given access to the risk assessment studies, which have been subject to some controversy in this House?

[Earl Howe]

I am not aware that it has or that it would need to have been.

[Lord Hamilton of Epsom]

My Lords, surely one of the problems of the National Health Service is the wall of money that was thrown at a totally unreformed NHS by the last Government? Do we not need management consultants now to show us the way forward on the savings that need to be wrung out of the NHS so that it can survive into the future?

[Earl Howe]

Yes, we do, my Lords. Part of the benefit of the modernisation programme will be to streamline the architecture of the NHS so that year by year we will be saving £1.5 billion in administration costs and £3.2 billion net during this Parliament. We need good advice in order to achieve that.

[Lord Winston]

My Lords, the noble Earl said that this Government have spent less on consultants than the previous Government. Does he agree that, perhaps had they spent a bit more, we might have had a Bill that damaged the health service a great deal less?

[Earl Howe]

My Lords, I cannot help observing confused and contradictory messages coming from the Benches opposite. I would be happy to take that advice back to my department.

[Lord Kinnock]

My Lords—

[Lord Brooke of Sutton Mandeville]

My Lords, is my noble friend aware of the age-old aphorism among management consultants, of whom I was once one, although not at McKinsey, that 10 per cent of the work is diagnosis and 90 per cent is persuading the client to accept the advice?

[Earl Howe]

We have been on the look-out for that and I hope that we have not fallen victim to it.