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Get on the blue skies gravy train

richard brooks exposes the cosy marriage between Downing Street and management consultants

As public spending on management consultants goes through the roof, a grateful industry has opened its doors to Ministers and civil servants, while the government increasingly hands its top positions directly to advisers.

Since New Labour took office in 1997 the government has increased spending on management consultants more than tenfold to around £3 billion a year. And in recent months it has taken the handover of central government a step further by giving the same consultants the most senior jobs at the heart of Whitehall. Meanwhile a lucrative post at one of the big consultancy firms has replaced the carriage clock as the traditional retirement gift for a top mandarin.

A decade after New Labour, desperate to become electable, fell under the spell of Andersen Consulting, consultants have

Lord Birt moved into Downing Street and the cabinet office became a McKinsey outpost

assumed control over billions of pounds of public money. Through an expanding network across Whitehall they glide effortlessly into the heart of government, from where they can ensure the gravy train carrying taxpayers' money to their colleagues' sumptuous offices keeps steaming along.

These days another firm is closest to power. McKinsey, the original and still the most prestigious American consultancy, won its place in the Government's affections through its association with John Birt, former director-general of the BBC, who lavished tens of millions of pounds of licence fee-payers' money on the firm as it transformed the Beeb into a marketplace.

When Birt moved into Downing Street in 2001 as the PM's "blue skies" thinker (not letting go of his £100,000-a-year McKinsey retainer), others soon followed and the cabinet office became a McKinsey outpost. Now no government re-organisation - from sorting out defence logistics to merging the Revenue and Customs and "creating a commissioning market" in the NHS - can be performed