Labour has loudly pledged to slash taxpayer spending on external consultants. However, the founder of a City-based digital consultancy firm told  that the government still relies on private firms to plug operational gaps because the civil service previously “got rid of the wrong skills”.

Ben Terrett, chief executive and founder of Public Digital, said the government is right to rein in Big Four-style contracts, but urged ministers to “diversify the marketplace” by spending money with smaller consultants all across the country, and “not just the usual suspects in London”.

The Treasury vowed to halve the amount government departments spend on external advisers and management consultants, targeting savings of over £1.2bn. Despite that, data from Tussell showed total spending on management consultancy contracts climbed to £1.44bn during the government’s first 12 months, up from £1.28bn the previous year.

Terrett, a former civil servant, was part of the team behind the government digital service, which oversaw the creation of Gov.uk, a landmark project that consolidated hundreds of government websites into a single platform.

He left the government to become one of the four founders of the digital consultancy firm, set up in 2015.

The founders’ strategy was to do for other governments and large institutions what they did for the public sector, using “lived experience” as the selling point. Terrett said: “We really build [reputation] on lived experience, as we have come from lived experience ourselves and we hire people from that lived experience. We like to be with clients and say ‘we’ve been on your side of the table.”

Public Digital is primarily known for public sector work, including having the IRS, UN organisations, the World Bank and global governments as clients, but the firm is actively pivoting into the private sector, which now accounts for around 25 per cent to 30 per cent of its business, as the firm targets large bureaucratic institutions.

He pointed out that some of the tech the UK government uses outperforms the private sector as he pushed back on the assumption that corporates are more advanced in technology. Terrett said: “If you go and renew your passport and then you try to buy a new mobile phone package online, you might think that the government is better at technology.”

The founder said the firm often works with clients with large technology teams spending lots of money but not getting what they should, because the systems haven’t been set up properly. He highlighted a case study with telecomms giant BT where the firm achieved a 23 per cent saving in technology spend.

But Public Digital is not targeting just any large bureaucratic institution. The consultancy firm is focused on private-sector clients that sit close to governments or have a public‑service role, rather than purely commercial businesses.

Terrett said his firm is “particularly looking at the water sector at the moment”, a largely privately owned but politically exposed, regulator‑heavy industry. He added, “a lot of what we’re doing is getting under the bonnet of how organisations work and what their model is and how they can be improved.”

Prime Minsiter Andy Burnham recently paused plans to take the troubled Thames Water into public administration due to fears of multi-billion-pound costs to taxpayers.

For the water sector, Terrett said it was its view that, no matter who owns the companies, the problems and issues would be the same. “We would be able to take existing money, no new money required, and just use it better and use it more efficiently…I’m very confident in saying that,” he added.

While the consulting market is crowded and expanding with new boutique agencies, heavyweights like McKinsey and the Big Four still dominate the landscape. According to Terrett, Public Digital keeps its competitive edge by leaning heavily on word-of-mouth referrals and its track record.

He added: “We get a lot of phone calls saying we got a big consultancy in and it didn’t work, then a slightly less big consultancy in and that didn’t work. Now we have to try something else, so can we talk to you?”

The boss said the firm is currently experiencing a growth trajectory of roughly 30 per cent annually, which Terrett said it aims to reach a turnover of £50m and a headcount of 200 people by 2030.