5 January 2011 | Lindsay Clark

The UK government has been offered a £1 million discount by consultancy services supplier KPMG on the agreement of a memorandum of understanding (MOU) with the Cabinet Office.

The firm has already discounted around £3 million on government work since the coalition administration came to power, and will be able to offer a further £1 million discount before the end of the financial year, said Alan Downey, head of public sector at KPMG. The total £4 million discount is equivalent to a 10 per cent saving on the government’s annual spending with the firm.

The discount reflected “the investment we have made in order to keep working with the government when it is very reluctant to spend money”, Downey said.

The MOU was, he said, “nearly ready to sign, providing that suitable opportunities arise we are willing to add a further £1 million [discount]”.

Downey emphasised that the discount was not conditional of additional work from the government. “We are not looking for a commitment in return. We are saying that if you are going to commission work anyway, we will be happy to offer a discount to make good on that offer.”

Since July last year the Cabinet Office has been negotiating reduced fees with its top suppliers. It believes this programme will save about £800 million and contribute to reducing the deficit.

Public sector use of consultancy services has attracted criticism from the National Audit Office and the Committee of Public Accounts, which said the government lacked understanding of its consultancy spending.