Revving up for change

12 Sep 12
Public servants are having to navigate the twists and turns of government policy as part of ministers’ efforts to increase Whitehall’s financial skills

By Manj Kalar | 12 September 2012

Public servants are having to navigate the twists and turns of government policy as part of ministers’ efforts to increase Whitehall’s financial skills

Grand Prix - PA

This year’s Formula One season had an unpredictable and exciting start, with seven different winners in seven different races. The same can be said for central government finance, which shares some other similarities with Grand Prix racing. Both experience constant rule changes, requiring agility and swift mastery of technical amendments.

 In Whitehall, examples include the Clear Line of Sight reforms and the Treasury’s new rules in Improving spending control, as well as moves to strengthen and embed good financial management across government.

Early in 2011, the Treasury published Managing taxpayers’ money wisely: a commitment to action. This was the foundation for central government’s Finance Transformation Programme, which requires all public servants to strengthen financial discipline, not just finance professionals.

The Treasury is taking this forward in collaboration with the head of the Government Finance Profession, Richard Douglas, who is also the Department of Health’s director general for policy, strategy and finance.

Continuing the Formula One analogy, the Finance Transformation Programme has four ‘wheels’ to support it: leadership; a cost-conscious culture; professionalism; and expert central functions.

Strong leadership is essential. In Formula One, managers set the direction for all aspects of the team and the car, sharing their vision of how to achieve success. The same applies to the FTP, which demands strong leadership from the (relatively) new board structure. This is chaired by the lead minister in each department and made up of an equal mix of officials, ministers and non-executive directors, who have been given an enhanced role. They are largely drawn from the private sector to challenge and ensure financial discipline in decision-making.

The second wheel is a cost-conscious culture. Lesser F1 teams need to convert each and every hard-won point over the season into increased sponsorship. Decisions on technical development, including the equipment purchased, have to be assessed to ensure they maximise the team’s achievements.

Similarly, civil servants need to move away from spending the budget to assessing the need for expenditure. What can be sourced more efficiently? Should we be doing 100% if 95% can be delivered at 70% of the cost? We need professionals with financial capabilities and wider business skills – and future financial leaders must be supported as they develop these wider skills.

F1 teams have driver academies, encouraging progression through Grand Prix racing and cultivating the next generation of world champions. These drivers are not just well versed in the car and the various circuits; they know that they are only one part of the team, which must perform well together to win races and, ultimately, the championship.

The final wheel is expert core functions. In F1, these are equivalent to the many strategists analysing the data from the car to ensure optimum performance; reacting to conditions such as temperature and rain; selecting appropriate gear ratios for the track layout; and getting the right set-up to ensure the extra tenth of a second that can make the difference between qualifying for pole position or losing out in the top ten shoot-out.

For government finance, the centre – the Treasury, the Cabinet Office and the Efficiency & Reform Group – provides clear guidance, boundaries and examples of good financial management as well as challenging decision-making and spending. Rules have to be adhered to. Just as regulations on tyre compounds are clearly set out, so are the rules on the nature of spending, both resource and capital. Breaching these will lead to sanctions – whether a grid penalty or qualification of the accounts.

These are significant changes for Whitehall and Richard Douglas has brought on board his finance director-general peers to ensure a cross-government approach. The challenge will be to embed the cultural change required, so it is time for the accountant to transform into a business manager. Let the F1 driver in you step out to be the champion. Now is our time.

Manj Kalar is CIPFA’s technical manager for central government and financial management. Richard Douglas will be speaking at the CIPFA central government conference on September 14


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