Other spending by ALBs

Keywords

ALB, Arm’s Length Bodies, Public Bodies, Quangos, Public Servants, Civil Servants

Headlines

In 2023/24ALBs spent

£365.75 Bn

Grants-in-aid issued:

£224.92 Bn (61.5%)

Spending on Contingent Labour

£1.43 Bn (0.4%)

Spending on Consultants

£450.11 M (0.1%)

Cabinet Office | ALB Landscape Analysis 2023-24

Other spending

Beyond spending from core budget allocations of RDEL, CDEL, and AME detailed previously, this page provides a dedicated examination of other significant spending streams for ALBs: grants disbursal, consultancy services, and the use of contingent labour. These are presented separately to offer clearer insight into these specific expenditure areas. It is important to understand that these are not distinct budget types separate from RDEL, CDEL, or AME; rather, they represent common ways in which funds allocated within these budgets are typically spent by ALBs.

Analysis of RDEL, CDEL and AME spending

Analysis of ALBs’ RDEL, CDEL, and AME spending can be found on our Spending page.

Grants spending

Overall grants spending by ALBs

Grants spending captures the money spent by ALBs when issuing money as a Grants-in-Aid to other entities. A Grant-in-Aid is money given by one organisation to another organisation, which is used to support the activities and objectives of the receiving organisation. For example, Education and Skills Funding Agency issues grants to schools and academies as part of the National Funding Formula. In total, ALBs issued around £224.92 Bn in grants during 2023/24.

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Cabinet Office | ALB Landscape Analysis 2023-24

Data

Cabinet Office | ALB Landscape Analysis 2023-24

The amount of grants disbursed by ALBs is expected to change significantly in the coming years.

Upcoming changes in the ALB Landscape will see significant changes in the amount of grants disbursed by ALBs, as ESFA and NHS England will both be wound down, with their responsibilities moved into the remit of their sponsoring departments.

• Education and Skills Funding Agency will be closed in March 2025, with its functions moved into Department for Education.

• The UK Government recently announced plans to abolish NHS England as an ALB, and plans to move their functions into the Department of Health and Social Care.

Grants disbursment by ALBs

During 2023/24 ALBs issued around £224.92 Bn in grants. The total amount of grants-in-aid disbursed by ALBs was primarily driven by 3 ALBs. These were: NHS England (£134 Bn), Education and Skills Funding Agency (£72.06 Bn), and UK Research and Innovation (£8.47 Bn). Collectively these 3 ALBs spent £214.53 Bn billion as grants issued, which was around 95.4% of all grants-in-aid issued by ALBs.

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Cabinet Office | ALB Landscape Analysis 2023-24

Data

Cabinet Office | ALB Landscape Analysis 2023-24

Contingent labour spending

The Cabinet Office and HM Treasury provide guidance to government departments and their ALBs on spending controls for the use of contingent labour. They define contingent labour as contractors, agency workers, and temps - who will often, but not always, be recruited to undertake work in a Business As Usual (BAU) environment. The contracts for contingent labour will generally pay on a time-based rate rather than delivery of an output or outcome, where there is a justifiable need identified by the organisation for contingent labour within their workforce plan.

Contingent labour spending by ALBs

In 2023/24, ALBs spent a total of £1.43 Bn on contingent labour staff, who supplement their primary workforces. Across all ALBs, on average, contingent labour spending made up around 0.7% of ALBs’ total expenditure.

Around 46.2% of all contingent labour spending by ALBs was attributable to the 5 ALBs who spent the most on contingent labour. Many of these ALBs are bodies which have large workforces, or are bodies which deliver public services that require employees with specific skill sets, which are often supported through the use of contingent labour. The ALBs who spent the most on contingent labour were:

• NHS England (£185.01 M)
• HM Revenue & Customs (£152.3 M)
• Defence Equipment and Support (£122.7 M)
• Network Rail (£105.84 M)
• British Council (£94.19 M).

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Circles represent Contingent Labour Spend for individual ALBs, bars represent total spend for ALBs under sponsor.

Cabinet Office | ALB Landscape Analysis 2023-24

Data

Cabinet Office | ALB Landscape Analysis 2023-24

Consultancy spending

The Cabinet Office also provides guidance to government departments and their ALBs on spending controls for the use of consultants. Consultants are defined as services that provide advice to fill a knowledge gap within an organisation. This can involve providing solution-oriented options and recommendations, typically to solve challenges during organisational change. The role of consultants is typically time-limited and focussed on outputs and solutions, and consultants are not typically classified as staff that operate within the structure of the organisation employing them. The UK Government recently announced new spending controls, aimed to cut consultancy spending, to save £1.2 billion by 2026.

Consultancy spending by ALBs

In 2023/24, ALBs spent a total of £450.11 M on consultants. Across all ALBs, on average, consultancy spending made up around 0.03% of ALBs’ total expenditure.

Around 55% of all consultancy spending by ALBs was attributable to 5 ALBs. Many of these ALBs are bodies which are undergoing transformational change, carrying out high priority research, or are utilizing consultants to help formulate long-term strategies for innovation. For example, in their Annual Reports and Accounts (p10) the Environment Agency have highlighted one use of consultants (Jacobs and Manchester Metropolitan University) to help better understand how restored saltmarshes can be used for carbon capture, as a method of achieving Net Zero.

The ALBs who spent the most on consultants were:

• Environment Agency (£104.08 M)
• Network Rail (£67.23 M)
• National Crime Agency (£35.6 M)
• British Council (£21.8 M)
• Office of Gas and Electricity Markets (£18.83 M)

Plot

Circles represent Consultancy Spend for individual ALBs, bars represent total spend for ALBs under sponsor.

Cabinet Office | ALB Landscape Analysis 2023-24

Data

Cabinet Office | ALB Landscape Analysis 2023-24

Contingent labour and consultancy spending by ALB workforce size

To better understand how ALBs make use of contingent labour and consultants we carried out further statistical analyses, using an Analysis of Covariance (ANCOVA) model. We predicted that contingent labour costs would increase consistently relative to the size of the ALB, as measured by their workforce size. Our assumption was that larger ALBs with bigger workforces will have greater need for contingent labour, given they will likely use contingent labour to fill gaps in their workforce. We also predicted that consultancy spend would also be predicted by the size of an ALB, with larger ALBs being more likely to take on larger projects, which may require more support from consultants.

We found that ALBs’ spending on both contingent labour and consultants can be predicted by the size of an ALBs workforce: Larger ALBs are more likely to spend more money on both consultants and contingent labour. Interestingly, the relationship between spending and workforce size was stronger when analysing contingent labour spend, and weaker when analysing consultancy spend. This suggests that it is more difficult to predict consultancy spend depending on the size of an ALB’s workforce. Further analysis may help to identify further other predictors of these types of spending by ALBs. Details of this ANCOVA model can be found below.

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Only includes ALBs with an FTE greater than 0, and Contingent Labour or Consultancy Spend greater than £0.

Cabinet Office | ALB Landscape Analysis 2023-24

ANCOVA Model

term	estimate	std.error	statistic	p.value
Baseline Spending Level (Consultants)	4.3890725	0.3013101	14.566628	0.0000000
Effect of Workforce Size (Consultants)	0.4801095	0.1005927	4.772804	0.0000035
Difference in Baseline Spending (Contingent Labour)	-0.7153400	0.4261169	-1.678741	0.0947336
Difference in Effect of Workforce Size (Contingent Labour)	0.4183579	0.1422596	2.940806	0.0036517

Cabinet Office | ALB Landscape Analysis 2023-24

Interpretation of statistical analysis for contingent labour and consultancy spending

The logarithmic model reveals a significant interaction between workforce size (FTE) and spending category (p = 0.004). This indicates that the relationship between FTE and spending is statistically different for Contingent Labour compared to Consultants.

• The relationship is stronger for Contingent Labour, where spending increases by 0.9% (the combined effect of baseline workforce size and the additional interaction effect) for every 1% increase in FTE. This indicates ALBs with larger workforces can generally be expected to spend a greater amount on Contingent Labour.
• In contrast spending for Consultants increases by 0.48% for each 1% increase in FTE, suggesting that whilst larger ALBs may also be expected to spend more on Consultants, the relationship is not as strongly linked to their workforce size.
• When ignoring the effects of an ALBs workforce size (assuming a workforce size of 1 FTE), we see no significant difference in contingent labour and consultancy spending.

The model has an R-squared value of: 37.9 and an adjusted R-squared value of: 37 indicating a moderate fit in explaining some (37%) of the variance in ALBs’ spending on Contingent Labour and Consultants.

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