Government must improve financial management

THE CIVIL SERVICE has failed to embed good financial management, despite some progress in the past two years.

The latest National Audit Office (NAO) report into financial management in government departments finds plenty of room for improvement.

Departments have achieved a “core level” of competence in financial management, but further improvement is needed to meet the rigorous demands for the spending review 2010.

The number of qualified finance staff has improved, with all departments headed by a qualified finance director.

But the report says further progress is needed, driven by the most senior finance heads influencing Whitehall culture to put financial management at the heart of the civil service.

“Despite a clear commitment from the centre, we do not yet see good financial management strongly positioned as an indispensable part of departments’ deficit reduction strategies; and we do not feel that the culture of the Civil Service has yet taken information-led management, and financial management in particular, to its heart,” said Amyas Morse, head of the National Audit Office.

Liberal Democrat MP Stephen Williams, who has challenged professional competence at the top of the civil service in the Commons, said: “It almost beggars belief at this time when the government has imposed incredibly tight budget settlements to have departments whom we cannot be confident can deliver spending reductions if the departments do not have the professional expertise of qualified accountants to monitor progress against the CFR figures.

“It is disappointing that the civil service does not embrace the importance of having staff with the appropriate qualifications. I think the recruitment and promotion procedures in the civil service need urgent examination.”

He said the ethos of the civil service reforms in the Victorian era needed “urgent 21st century reform”.

Mrs Anne McGuire, a Labour member of the Public Accounts Committee (PAC), said: “The thing that has surprised me most about some of the work we have been doing in the PAC is that although over all overspends have been low, there does not seem to be a culture of financial management within the civil service.

“Part of this, I think, has to do with the generalist approach where the service employs some of the the brightest and the best, but that does not mean they have the skills to undertake some of the sophisticated financial management needed in modern government.”