The dust has now settled after the general election - what affect will this new Conservative government have on the UK consulting market?

The dust has now settled after the general election. The cabinet has been selected, resignations have been accepted, the existing leaders of each party have been met and parliament has reconvened. I would like to take this opportunity to explore what affect will this new Conservative government have on the UK consulting market?

Prior to the election the market was expected to grow by 6% in 2015 and be worth £6.38bn to the UK economy. This is a slight decrease on 2014’s growth, which was 6.6% growth, so perhaps the election and a predicted hung parliament was taken into consideration when these predictions were made by Source for Consulting earlier this year.

On announcement of the new government I suspect there were a number of practice leads who rubbed their hands together with glee and have been spending the last two weeks reviewing their ‘go to market’ strategy and their recruitment plans.

The construction and property management sector saw their share price rapidly increase in the days after the election as the mansion tax proposed by Labour will not occur anytime soon under a Conservative government. Predictions were quickly made that property prices would increase by 5% by Christmas. Foreign investors are expected to return to the UK after the fear of rent control and a national landlord register in the private rental sector, put forward by Labour were scrapped. The right to buy scheme is likely to have the biggest impact on the house building sector as Councils will be required to sell their most valuable 200,000 homes and use this cash to build 400,000 new homes on brownfield land. As many of these house builders are still recovering from the recession, and the lack of investment over the past 5 years it is expected that many will seek outside advice to transform their organisations and win the most lucrative contracts.

The utilities sector also saw their share prices rise as the fear of price caps are no longer on the immediate horizon under a Conservative government. The removal of this uncertainty is likely to give organisations the confidence to press ahead to gain market share by investing in technology and improving the way they attract and retain customers. Governance and structural reviews are still likely to be on the agenda as the Conservatives pledged to implement the recommendations of the Competition and Markets Authority (CMA) investigation into the energy sector which could mean the breakup of the big 6’s retail and generation businesses.

The transport sector is also likely to see continued growth with £5.2bn ring fenced for investment in roads and rail with a further £13bn available for transport investment in the north. This is in addition to the £50bn already planned for HS2 and will bring confidence to Transport practices who can invest in growth knowing that the pipeline is strong for the foreseeable future.

Health practices are likely to be pleased to see Jeremy Hunt remaining in post as Health secretary, as this will mean pressing ahead with the 5 year reform plans which were outlined in the autumn alongside Simon Stevens. Organisations are likely to turn to consultancies for support around service redesign as they look at the way back and front office services are delivered. Traditional primary care will be replaced with multispecialty community providers and many acute hospital services will be centralised. Shared services will remain high on the agenda for both back and front office services and a majority government with a focus on devolution will hopefully speed up some of the complex decision making processes.

Investment in technology is likely to remain high as organisations look towards using technology to reduce the amount of patients flocking to A&E and allow resources to be focused on those who really need assistance. The challenge will come from the £30bn funding gap, which was plugged with £8bn additional funding, but this leaves an additional £22bn to find. This can only come from reduced spending or the movement of funds from other public services. All of the above signify opportunities for consultancies, but it is likely to continue to be a highly competitive market with continued downward pressure on margins. We are already seeing this within our professional services interim practice and many of our associates are expressing concern over their day rates.

Despite the continued austerity measures placed on Local authorities, I expect most local and devolved government practices were happy with the election outcome as it will ensure the journey started in coalition will continue. Metro Mayors, devolution, health and social care integration and cost reduction are expected to remain the top agendas, as well as housing which was previously discussed. Consultancies are likely to be used to support alternative delivery models, new ways of working and shared services. In addition, we expect there will be continued investment in technology to support mobile and flexible working, and also to use and sharing of data between organisations to understand service demand and service cost.

The above research points towards another year of growth for the UK consulting market with a focus for both the Public and the Private sector on; customer engagement, attraction and retention, investment in technology and alternative delivery models and new ways of delivering services.

Our professional services interim practice is already seeing a healthy pipeline of opportunities for 2015, and many of our associates are pleased with the increased variety of sectors and types of engagement available to them. We are also noticing that more consultancies than before are turning towards the use of interims/ associates to deliver programmes and we expect this upward curve to continue as pipelines continue to grow.

We will await the outcome of the Queens speech on the 27th May which is likely to discuss the impact of the EU referendum, devolution and further powers for Scotland, Wales and Northern Ireland and the further public sector budget cuts. Many of which will be seen as opportunities rather than threats to the UK consulting market.