Deloitte UK profits boosted by pandemic work in the public sector

Deloitte has confirmed a surge in UK profits helped by public sector contracts during the pandemic, saying that its work on the response to Covid-19 was “essential”.

The consultancy firm, which employs 20,000 people in the UK, was one of the big winners from the government’s heavily criticised strategy of relying on consultants to assist with the rollout of pandemic support programmes.

It has been awarded coronavirus-related public sector contracts worth £280m since the start of the pandemic, according to data provider Tussell, including for work on the government’s Covid-19 testing schemes.

The firm’s UK chief executive Richard Houston said Deloitte’s work had “played a key part in the reopening of the UK economy after months of national restrictions”.

Asked whether the firm’s public sector contracts, including on the Covid-19 Test and Trace programme, represented value for money for taxpayers, he said: “The skills and capabilities that we provide, along with a number of other private sector organisations, were essential in order to deliver the outcome.”

Revenues at the firm’s UK and Swiss businesses, which operate as a single partnership, rose 4.2 per cent to £4.49bn in the 12 months to the end of May, buoyed by demand for its consulting and deal advisory services.

The firm’s 691 equity partners shared an operating profit pool of £590m, up from £518m a year ago. Average profit per partner rebounded from £731,000 last year to £854,000.

That was slightly lower than the 2019 payout of £882,000 but partner income this year was boosted by an additional one-off payment from the sale of Deloitte’s UK restructuring business.

Deloitte did not disclose the size of the extra payment, but people briefed on the details said it would push total pay to about £1m.

Partners were also required to pay in more money last year to support the business, the firm said. These capital contributions are returned to partners when they leave.

Deloitte is the latest professional services firm to publish strong financial results after clients unwound spending cuts made at the start of the pandemic. Its partners remain the best paid among the Big Four accountants, which include PwC, EY and KPMG.

It did not furlough any workers during the pandemic but deferred promotions and temporarily cut pension contributions.

Houston insisted staff had not been left worse-off overall.

“We backdated promotions and we increased the bonus pool,” he said. “In aggregate that amounted to a comparable amount of money that we’d originally saved.”

Staff also received a “thank you” bonus of between £500 and £2,000 each in April.

The firm is continuing a round of redundancies that is expected to cut the number of executive assistants from about 500 to 380. Redundancies would be on a voluntary basis only, said Houston.

Deloitte’s largest division, consulting, increased its revenues by 10 per cent to £1.19bn. Revenues in the financial advisory division also surged 10 per cent — to £578m — thanks to a boom in mergers and acquisitions.

Audit and assurance revenues rose 5 per cent while the tax and legal division increased sales by 3 per cent. Revenues at the risk advisory unit shrank 10 per cent.

Deloitte has not followed KPMG and PwC by releasing data on the socio-economic background of its staff. The data “needs more work” before the figures can be made public, Houston said.

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