The end of management consultancy in the UK: A new chapter for local government transformation

For decades, local authorities across the UK have relied on management consultancies to guide reform, develop strategies, and implement change. As someone who once worked in management consultancy, I understand the appeal: a promise of expertise, structure, and solutions to complex problems. However, after years working in local government, I’ve concluded that the model is no longer fit for purpose.

Today, local government doesn’t need glossy reports or theoretical strategies. It needs capacity, capability, and actionable solutions. Increasingly, this means embracing a new era of technology and data-driven transformation, supported by innovative, niche providers who can deliver what management consultancies cannot.

The future lies in fostering a more open, dynamic, and innovative marketplace, one that gives niche providers the space to thrive and leverages artificial intelligence (AI) to do what consultancies once did, only better.

The decline of management consultancies

Management consultancies have historically thrived by offering strategic advice and providing the "how" to public sector reform. However, the rise of AI has fundamentally changed the game. AI and data-driven solutions now provide the tools, insights, and processes that management consultancies once monopolised, often at a fraction of the cost and time.

How AI is replacing management consultancies

1. Real-time insights: Where consultants once analysed data to produce reports over months, AI provides actionable insights in real time, enabling faster decision-making.

2. Predictive capabilities: AI can forecast demand for services, identify risks, and recommend interventions with precision, eliminating the need for theoretical frameworks.

3. Automation of processes: Routine tasks that previously required consultancy-led transformation efforts can now be automated through AI tools.

4. Scalable solutions: AI platforms can grow and adapt to meet councils’ needs, offering long-term value without requiring costly re-engagements.

AI doesn’t just replace the consultancy model, it improves upon it, delivering the "how" in a way that is faster, cheaper, and more effective.

The role of niche providers

While AI is transforming how local authorities approach reform, its full potential can only be realised through partnerships with specialist technology and data providers. These small, niche companies operate at the cutting edge of innovation, offering expertise and agility that management consultancies simply cannot match.

The value of niche providers

1. Tailored solutions: Niche providers focus on bespoke solutions that address specific local needs, rather than one-size-fits-all frameworks.

2. Cost-effectiveness: Without the overheads of traditional consultancies, these providers deliver high-impact solutions at a fraction of the cost.

3. Expertise in emerging technologies: From AI to predictive analytics, niche providers are uniquely equipped to harness the tools driving public sector transformation.

4. Agility and innovation: Smaller providers are more adaptable and willing to experiment, making them ideal partners for councils seeking creative solutions.

The challenge: opening doors for small providers

Despite their value, niche providers often struggle to gain traction in government procurement frameworks. This is largely due to a deeply ingrained supply chain culture where "big likes to deal with big."

Barriers to entry for niche providers

1. Risk aversion: Councils often perceive large, established consultancies as safer options, side-lining smaller innovators.

2. Framework criteria: Procurement frameworks often prioritise references and scale, excluding smaller providers who may lack extensive portfolios but excel in innovation.

3. Personal relationships: Longstanding ties between decision-makers and management consultancies can further entrench the status quo.

If the UK is serious about fostering innovation, it must create a more inclusive marketplace that actively seeks out and supports smaller providers.

Building capacity to manage niche providers

For niche providers to succeed, local authorities must have the internal capabilities to manage these partnerships effectively. It’s not enough to simply identify and procure the services of innovative providers, councils must also build the capacity to design, lead, and implement transformation themselves.

Building the right capabilities

1. Strong client functions: Councils need teams with the technical and strategic expertise to oversee partnerships with niche providers, ensuring alignment with broader goals.

2. Transformation leadership: Leaders must have the vision and skills to guide large-scale change, integrating new technologies and processes into the organisation.

3. Implementation expertise: Councils must invest in staff who can take ownership of projects, ensuring they are embedded into the organisation’s operations.

4. Cultural change: Councils need to foster an environment where innovation is embraced and staff are empowered to take risks and experiment.

If councils struggle to attract the right capacity and capability, they should consider bringing in specialist contractors and integrating them into the fabric of the organisation. This approach is more cost-effective than relying on consultancies and ensures that the expertise remains focused on delivery rather than upselling.

Building a marketplace for innovation

To level the playing field for niche providers, local government must embrace new approaches to procurement:

1. Create inclusive frameworks: Frameworks should prioritise innovation, potential, and expertise over size and references.

2. Foster opportunities to test solutions: Initiatives like the UK’s Test, Learn, (and Grow) model provide a safe environment for niche providers to trial their solutions and prove their value.

3. Shift risk perceptions: Decision-makers must move beyond the assumption that big equals safe. Small providers often deliver better results at lower costs.

A new era of supply chain culture

The rise of AI and niche providers signals a significant shift in how local government approaches reform. It’s no longer about who has the largest consultancy or the most impressive reference list. It’s about finding the best solutions, wherever they come from.

The public sector reform landscape is no longer dominated by traditional consultancies. Instead, the most exciting innovations are coming from small, agile providers who are rethinking how transformation happens.

Like Nvidia a few years ago, today’s small innovators may just be the solution to the problems we face tomorrow.

A personal perspective

As someone who has seen both sides of the equation, as a management consultant and as a local government leader, I know how tempting it is to default to the "safe" option. But in practice, it’s often the smaller players who deliver the most value.

AI has changed the game. It offers councils the "how" in ways that are faster, cheaper, and more effective than traditional consultancy ever could. By embracing this shift and fostering a marketplace for niche providers, councils can unlock a new era of transformation.

However, councils must also invest in their own capacity to lead this change. Without the right capabilities, even the best solutions risk falling flat.

A marketplace for the future

The end of management consultancy in local government marks the beginning of a new chapter, one defined by AI, data, and local leadership, collaboration and partnerships. By embracing small, innovative providers and fostering a culture of experimentation, councils can unlock transformative potential.

But this shift requires more than just opening doors for small providers. It demands a cultural change within government procurement, one that values innovation over familiarity, agility over size, and results over references. Most importantly, it requires councils to build the capacity to lead and implement transformation, ensuring these solutions are integrated into the very fabric of local government.

The future of public sector reform belongs to those who are willing to think differently, take risks, and embrace the new kids on the block. Let’s give them the opportunity to prove what they can do.