Local government FDs have seen the future, and it’s not pretty. So how can they face up to the daunting challenges at a local and community level? Some new research points the way
The bleak financial outlook, compounded by news of a double-dip recession, has become part of local government reality for the foreseeable future. This has been punctuated by an array of legislative changes that significantly alter the landscape for local authority resources.
Public scrutiny of what is done with these resources is understandably at an all-time high. Much has been written from a technical or efficiency-led perspective about what this means for the public finances. But what has been lacking to date is a more personal angle about what it takes to lead the sector through such turmoil. In particular, what skills do finance directors need under these difficult conditions? And what are the main challenges they will face in driving change?
Ensuring that local government FDs are well equipped to operate in this new world is critical in maintaining the financial stability and sustainability of the services we rely on. That’s why Impower recently undertook research into this area to capture the experience and insights of some of the sector’s leading FDs.
The research raised a number of questions about the management team role of the FD, the skills they need and the direction their career development should take. What we found was a positive story of how, for many FDs and authorities, their role has developed in line with the need to stay one step ahead of budgetary challenge.
This requires FDs to be at the forefront of innovation, to take on new approaches to partnership working, regeneration and demand management, and to proactively shape the future council within a wider system of local partners and stakeholders.
The challenge for future FDs lies in developing a value-for-money culture throughout their organisations. Each manager needs to have the skills to link strong financial management with the improvement of outcomes for customers. Plus, as one interviewee put it, ‘The financial picture alone is not enough to drive the change we need.’
Our research confirmed that FDs need to bridge the divide between the corporate centre and local services. To develop such a culture, they must inspire trust and confidence across the organisation; must really know their members, staff and customers - and be prepared to get out there and understand what drives local supply and demand.
This is no easy task, but for the FDs we spoke to the same approach applied whether it was a case of dealing with the aftermath of last summer’s riots through supporting local businesses, or tackling priority-based budgeting in Scotland.
The key to addressing these challenges in the current financial climate is to communicate in the right way, focus on outcomes, and use creativity and relationship-building to the full. Councils cannot be passive providers, we were told - they must plan how to deliver outcomes.
It follows that tomorrow’s FDs will need to be far removed from the traditional reporting and controlling roles of old. This has been reflected in recent senior resources appointments, which focus on commercial skills rather than just expertise in risk, accountancy or governance. The complexity and diversity of local government make the FD’s role unlike any other.
This evolution looks set to continue. The FDs we consulted recognised the need for the role to adapt and develop to lead change, and they have asked tough questions about their own skill sets, and those of their likely successors.
There is much confidence and optimism about the immediate pipeline of bright talent coming through within the sector, but also some caution about whether local government can continue to attract and retain the best candidates in a climate of uncertainty and exposure.
The role of the FD will continue to evolve as local government itself transforms, facing new challenges that are not confined to budgetary contractions. The recent removal of the post of chief executive in a number of councils is one such example - bringing both opportunities and threats. We expect there will be more fresh challenges for the new local FD just around the corner.
Ebony Hughes is a manager at Impower
