Gone are the days when finance professionals were the quiet power behind the
throne in public services. Today they have been increasingly thrust into the
limelight as the government’s spending largesse ends and the new mantra of ‘more
for less’ becomes embedded in every public policy.
Finance professionals under this government have prospered albeit under
pressure. The importance of qualified and technically proficient financial
managers has finally been recognised, as has their place in delivering public
services. But as the government tightens its public spending belt it has carved
out a new role for finance professionals, one that requires a new breed of
accountant who can understand both policy and the business while managing the
Successive governments have been widening the role of finance in public
services since the 1980s, according to Chris Wobschall, Cipfa’s assistant
director, policy and technical. But he says the 2004 announcements of £21.5bn in
efficiency savings, outlined by Sir Peter Gershon combined with the
professionalisation of accountants have given ‘an extra spur’ to this trend.
New political role
Indeed eyebrows were raised when the government conceded that just 20% of
public spending was under the control of a qualified finance director. That has
since been rectified and a professional skills for government programme has
outlined the core proficiencies expected of today’s finance professionals.
In a nutshell the government expects that accountants will be able to
understand not only the financial objectives within a service but also how they
fit with longer-term strategies and policy.
So not only are accountants expected to be finance managers but business
managers, and to a certain degree, policy analysts. They will need to have
exerted some influence over the business plan and be able to lead its
implementation while challenging any peers that have bid for funds. And of cour
se they will be expected to have a full understanding of external and internal
Under this programme there is also a certain expectation that staff will move
around within a service’s policy, operation and support functions rather than
staying within mainstream finance departments in order to get a grasp of the
‘Understanding the business you are in is absolutely key,’ says Stephen
Jones, director of finance and performance at the Local Government Association,
and a former FD at HM Revenue & Customs. ‘Accountants need to understand
what makes it tick and what drives good performance. The government has made a
clear link between finance and performance but it can be quite hard to get this
connection made,’ he adds.
Jones says the challenge is getting accountants to ‘lift their eyes from the
spreadsheet and look into the business’. He says this change is certainly a
skills issue and there has been a lot of investment in training in HMRC, which
is now being replicated in local government. But he adds that any training
should be focused on looking at real business problems and finding solutions.
‘Professionals also need good communication skills as well as good financial and
technical skills that they are able to apply in the context of whatever business
they are in.’
Supply and demand
Wobschall agrees that meeting the efficiency demands of government is
essentially a skills issue. But interestingly, along with its technical tool
kits for developing better financial management, Cipfa is also providing
leadership training, reflecting the changing demands on professionals.
On the ground things are changing, but at different paces. Andy Robling,
director of recruitment agency Hays Accountancy and Finance Public Services
division, has been assessing the recruitment demands of the public sector. He
agrees that accountants have become ‘higher placed’ nationally. ‘There is a
desire to bring in people that can work on business solutions not just numbers,’
he observes. ‘Central government departments are looking for people with better
business understanding and of what drives efficiency and makes budgets work.’ He
echoes Jones when he says that high up on the list are people that can interact
with their businesses.
Robling ranks central government first in terms of reform followed by health
and local government. But he warns that there are huge shortages in skilled
professionals especially in the middle and lower ranks. He says this is leading
to poaching within departments and increasing recruitment of private sector
This trend does not bode well for the future. The 2007 Comprehensive Spending
Review, which will set public spending until 2010/11, is expected to place even
greater efficiency pressures on accountants. The Institute for Fiscal Studies
expects spending to increase by just 2%, compared to 4% in previous reviews. The
IFS is predicting at least £2.4bn in efficiency cuts when the chancellor
announces allocations, possibly in October.
So has enough been done to prepare the profession? Wobschall is reserving
judgement and says that Cipfa will look again at its products and guidance post
the CSR. But he adds that there is still work to be done in the wider public
services. ‘To have efficient financial managers you do need to understand
budgets and there are still plenty who are not qualified accountants but still
need to understand finance,’ he warns.
Robling believes that there are cultural changes in government to overcome
that show some of its policy is not joining up with finance. ‘There is still a
lot of work to be done on embedding finance in strategic decision-making,’ he
‘The government announces new initiatives but no one has looked to see if
they can afford it. This happens because no one is engaging with finance
It is true that there are still no permanent secretaries that are
professionally qualified, a fact the Treasury conceded earlier this year. It has
made some efforts to push finance professionals up the ranks politically,
forming the Government Hundred Group of Finance Directors, not as a lobby group
initially but to share ‘best practice’.
But it still has to join up its own dots and while finance professionals are
rapidly gaining new skills, the government needs to start managing by numbers
just as much by policy if its efficiencies and new breed of accountants are to
have the desired effect.