Despite the fact that the impact of austerity measures is still being felt, spending cuts and the need to make savings in central government and other public sector bodies is set to increase in the coming years. It is therefore vital that there are improvements in public financial management for the taxpayer. Urgent up-skilling in financial management across Whitehall is needed if the civil service is to make long-term savings and improve service delivery, writes Gillian Fawcett.
While there is strong expertise in the finance function of the UK’s public sector, there is a need for Whitehall to invest in skills development in areas such as data analysis, procurement, project as well as financial management if savings in government are going to be made over the long term.
There has been much-trumpeting of the Treasury’s decision to appoint Whitehall’s first chief financial officer earlier this year, but a more root and branch reform of the public sector’s finance function is needed to garner genuine change. Like the private sector, public sector finance professionals need to see the bigger picture to be more effective, which is why skills linked to data analysis and procurement, as just two examples, are more relevant now than historically.
There has been some recognition in Whitehall that there is a need to up-skill but there is a failure to acknowledge the biggest obstacle – building an effective finance profession in central government which is perceived positively and valued by their colleagues in an organisation which is largely made up of generalists. A change in culture is necessary whereby economists and generalists value the potential contribution that financial management can make to government decision-making.
There is also a lack of recognition that many non-finance professionals who are also budget holders and project managers are in need basic financial management skills. What is needed is a road map for embedding strong financial management skills across the civil service at all levels. In a time of austerity when on average 25% is being stripped out of central government budgets, efficiencies of this scale can only be achieved if civil servants across the board have at least some basic financial acumen
A running theme that continues to crop up within the public sector is the trend of civil service finance professionals in government either leaving or changing roles which could be hindering good governance. The revolving door nature of the senior service is well-known, but it poses significant problems when it comes to delivery of good governance and corporate memory. It inhibits the ability to learn from mistakes and stifles the dissemination of best practice. This is also not helped by the skills gaps relating to procurement, project and financial management that still persist across Whitehall.
The civil service operational structure can also be a barrier to implementing successful policies, particularly as people move around government departments quickly and are often not in place long enough to see a policy or project through or be held to account when the project goes wrong. The consequences of this are that there is no incentive for the person to ensure the long-term success of a project or develop a set of appropriate skills as that person will likely move on before the project is completed. As with the revolving doors this poses a barrier to learning from past mistakes as evidenced by a track record of information technology project disasters. We see the same issues come around time and time and time again.
If we achieve a shared political consensus around the need for reform we could see much greater success in the future and a stronger, more financially aware civil service.
Gillian Fawcett is Head of Public Sector at the Association of Chartered Certified Accountants