Sector shuts out external consultants in era of austerity

Universities have cut back their spending on external consultants and are planning to slash the amount they spend next year by nearly a third, according to analysis by Times Higher Education.

In 2010-11, institutions spent an average of £1.22 million on consultants, which will fall to £838,000 in 2011-12, according to those who provided details of future budgets.

Average spending also declined over the previous two years, from £1.5 million in 2008-09 to £1.38 million in 2009-10, in a period when overall sector income was increasing.

Freedom of information requests were sent by THE to 131 institutions, asking them to break down their spending on "external consultants" over the past three years and for the next two. A total of 75 provided data on past expenditure, and 28 for planned spending in the current academic year, 2011-12.

Although there was some variation in what institutions classed as "external consultants" - the figures included architects, lawyers, head-hunters and management consultants - most respondents are planning to cut or stabilise their spending (see box).

The picture for the past two years was more complex, with more institutions increasing their expenditure over time than shrinking it, suggesting that the sustained drop in average spending is a result of big falls at a minority of universities.

Paul Temple, reader in higher education management at the Institute of Education, said the results might reflect "a call from [finance directors] to cut non-essential spending in a period of financial uncertainty".

Although the data provided by universities were not detailed enough to illustrate trends in the type of consultants employed, there is anecdotal evidence that some institutions are turning to outside experts as they gear up for the new marketised system.

The University of Exeter, for example, spent £166,319 on marketing in 2010-11, compared with nothing in the previous two years.

In the same year, Lancaster University spent £291,600 on management consultancy, efficiency reviews and "process improvement", a four-fold increase on the previous year.

The School of African and Oriental Studies, University of London, paid £52,500 for a "perceptions audit for brand review", while Roehampton University spent £69,200 with pricing consultants Simon-Kucher & Partners.

One vice-chancellor, commenting anonymously, said they "really try not to use consultants if possible", while another said that their institution "rarely" used external consultants for higher-education policy matters.

The sums spent overall varied significantly between institutions. Birmingham City University claimed it had spent nothing on external consultants during the past three years, whereas the University of Wolverhampton spent £8.7 million, the biggest proportion of overall expenditure (5.3 per cent) of any university.

Roger Brown, professor of higher education policy at Liverpool Hope University, said he did not believe the figures suggested a recent fall in spending on consultants, claiming that the trend was "pretty clear" the other way. Over the past decade, he said, universities had increased outlay on capital projects and outsourced many of their functions, so creating "more work for consultants".

Professor Brown said he doubted any fall in consultancy spending was down to the drying-up of capital funding, because major building projects had life cycles of five years or more and the first university funding cuts were announced only in 2009.

Julie Mercer, partner and head of education at Deloitte, said that "engaging external expertise to help change your business can deliver real value when done well". But she said it was "critical" for universities to "clearly articulate the questions they are asking" and to have a "well-defined vision of what benefits they are trying to achieve".

The THE survey also highlighted huge variations in how universities processed FoI requests, with 41 institutions failing to respond despite their obligation to do so.

Among those that claimed that the cost of providing the information would be too high were University College London, Durham University and Manchester Metropolitan University. The University of Derby asked THE to pay a fee of £24,300 to cover the costs of working out how much it had spent on consultants.

david.matthews@tsleducation.com.