Finance functions across the public sector face a growing recruitment and retention crisis. Professionals who have spent years acquiring experience while climbing the ranks are now retiring. Employers scrambling to fill the gap are struggling even to recruit inexperienced staff, with fewer students and graduates than ever choosing to pursue careers in public sector finance.
Data compiled by CIPFA and the Local Government Association paints a worrying picture. In a report published at the end of last year, the organisations warned that 16% of council finance posts across England stood vacant – including 26% of accountancy roles, 21% of internal audit roles and 20% of business partnering roles. On average, the report added, council finance teams faced staff turnover of 12.5% a year.
And it’s not only local government that is struggling to recruit the finance staff it needs – everywhere you look in the public sector, there are similar challenges. In the NHS, for example, the Healthcare Financial Management Association reports vacancy rates in finance roles at around 6%; in the South East, the figure is as high as 10%. In central government, the Public Accounts Committee warned as long ago as 2020 that civil service skills shortages in specialist areas including finance were partly to blame for delays, inefficiencies and increased costs in a range of government projects.
“We should be really concerned about these gaps,” says Joanne Pitt, senior policy manager at CIPFA. “Public sector organisations are now facing considerable challenges with recruitment and retention, particularly for the most senior roles, and these have to be addressed.”
Take action
In this context, the Local Government Finance Workforce Action Plan for England, published by CIPFA and the LGA in the wake of their research, makes more than 20 specific recommendations, grouped into four areas. It points to the need to build leadership capacity and capability; to attract and recruit the right staff; to focus on people development; and to create attractive working environments.
In practice, however, magic bullets are in short supply, as Pitt acknowledges. “We’re trying to recruit for a huge variety of roles, requiring very different skills and experience,” she points out. “There are some very specialist roles that require really technical knowledge; there are also some very senior roles that are extremely pressurised, with a real political element to them.” The government’s agenda on local government reorganisation is another potential headache, Pitt adds, potentially undermining job security in some areas.
Nevertheless, there are positive steps that could make a difference. Most obviously, there’s the issue of remuneration. “Pay is a real issue,” says Paul O’Connor, head of bargaining at the Public and Commercial Services Union. “Pay in the public sector has not kept pace with the private sector, and, while finance roles do tend to be better paid, they’re not competitive with what’s available elsewhere.”
It’s not just hard cash that’s a factor, adds Sampson Low, head of policy at Unison. “Traditionally, public sector workers made something of a trade-off, perhaps accepting slightly lower headline salaries in return for a better work-life balance,” he says. “But the past 15 years have been incredibly tough for public sector workers, who are working harder than ever; and, in the meantime, the private sector has caught up on benefits such as flexible working.” Even the comparative advantages of public sector retirement benefits are being eroded by reforms to many public sector pension schemes, unions argue.
No-one is under any illusions that there is money going spare. But the Workforce Action Plan nevertheless urges employers to review their remuneration packages, particularly for younger staff and apprentices, to explore more broad-based rewards and to rethink job design.
On the latter, new technologies, including automation and artificial intelligence tools, can support increased productivity. There’s also an opportunity to appeal to new demographic cohorts – to design jobs with women returning to the workforce in mind, for example, or to offer roles in new areas of the country.
A related challenge is to boost the employee value proposition with an increased focus on learning and development – providing more opportunities and making sure that both potential recruits and current staff know more about them.
At the entry level, for instance, the Local Government Association has helped design a finance stream within the Impact programme for graduates, offering specialist training in public finance – including study for CIPFA’s Professional Accountancy Qualification.
Talent pipeline
Get them while they’re young
Expanding the pipeline of young talent coming into public sector finance teams will ensure that there is a larger pool of candidates for more senior roles. Yet public sector employers may not be doing enough in this regard.
“The public sector is not seen as a particularly attractive option by many of our students, and its career paths are not well understood,” says Carrie Wright, director of education in the accounting department at Durham University. “One problem is that students don’t see a great deal of engagement from public sector employers, particularly compared with private sector firms.”
Public sector employers are less likely to make their presence felt at careers events, offer placements, or provide support for the teaching of specialist technical knowledge, Wright says. “There are so many different public sector finance roles available, but students aren’t being told about them.”
The good news is that employers that do make the effort may find themselves pushing at an open door. Research published last year by the business management consultancy Grayce found many young people have positive perceptions of the public sector, particularly in the context of purpose. Grayce found that 64% of under-25s were keen to join an organisation that offered them opportunities to do meaningful work; six in 10 said that potential employers’ values were more important than salary.
CIPFA is making some progress in this area, with an active programme of university engagement and a growing apprenticeship programme. Other initiatives include the Finance Fast Stream, through which the Government Finance Function recruits students each year. The Society of London Treasurers’ graduate scheme is showing good results in the capital, and could be extended to the rest of the country.
Still, recruitment is only a starting point. Research from ACCA warns that retention is also a major challenge in many public sector finance teams, where young professionals are more likely to become frustrated with training and development opportunities.
Get training
Initiatives to improve access to training and development are also supporting staff further into their careers. The NHS, for example, has launched the National Finance Academy, aimed at offering a one-stop-shop for training resources for its finance staff in England. Part of its offer is training for managers and team leaders in people and talent management. The Government Finance Function’s Government Finance Academy aims to play a similar role in the civil service.
“We need to recognise that people coming into these jobs want to build their careers over the long term,” adds Pitt. “There’s huge potential to explore ideas such as secondments, job shadowing and mentoring to help people see what might be possible and support them towards their goals.”
Mentoring has a particularly important role at senior levels, where it can be a hugely effective tool in succession planning, CIPFA has argued. Supporting deputy chief finance officers and other senior staff into top jobs within their organisation is crucial when competition for talent is so fierce.
The broader goal should be to do a better job of creating an environment in which people can flourish, argues Lord Bichard, a former chief executive of Brent Council and Gloucestershire County Council, who has written extensively on recruitment and retention in the public sector.
“Public sector leaders need to foster a climate where people are given more initiative and autonomy, rather than controlled,” argues Lord Bichard, who also served as permanent secretary of the Department for Education & Employment. “The public sector can be a place where you have a huge impact on society and people’s lives, but people need the freedom to explore that.”
Indeed, there is a huge opportunity to sell public sector finance as a meaningful occupation, Lord Bichard adds. “You’ve got to create a sense that this is a special place to work, where you’re making a real difference,” he says. “We never talk about that, even though it’s a way in which you can connect with the values that so many people have.”
Universal language
That language needs to be spoken universally, Lord Bichard adds, from recruiters talking to school and university students to leaders addressing their staff – and policymakers talking about the public sector’s evolving role. Indeed, while different public sector organisations are, to an extent, in competition for talent, there is a need for consistency in marketing the whole sector.
This is a point also made by unions. “When successive governments have denigrated public sector organisations such as the civil service, it’s hardly surprising that people are less keen to work for them,” says the PCS’s O’Connor. “But, actually, public sector workers are enthusiastic about rethinking how government works and have plenty of ideas. If you talk about rewiring the state in terms of how you solve the needs of the public, that’s an exciting opportunity to be part of.”
The key, adds CIPFA’s Pitt, is to talk in terms of outcomes. “Finance leaders, in particular, haven’t always been good at storytelling,” she says. “A career in local government finance, say, is really about enabling councils to build new homes, develop local infrastructure and provide high-quality public services.” People in finance roles in the health service, in education, in policing and elsewhere all make a tangible difference to millions of people’s daily lives, she points out.
One recommendation in the Workforce Action Plan is for the launch of a two-year national marketing and promotion campaign for careers in local government finance. Such a campaign would include case studies “showing the variety and high profile of the work, and the contribution to the community”.
Repositioning public sector roles in this way creates an opportunity to appeal to a broader range of candidates who are searching for more purposeful careers. Just 10% of Britons feel engaged in their jobs, according to research published by Gallup last year, compared with 23% of people globally. One major outcome, the market research group reports, is that a significant proportion of Britons are now looking for a stronger connection to mission and purpose at work – “to feel they’re doing something that matters”.
The role of AI
Friend or foe?
Do public sector employees need to worry about recruitment and retention in a world where artificial intelligence has so much to offer? Earlier this year, former chancellor Jeremy Hunt suggested he would “steer people away” from the profession, “because computers are going to be able to do a huge amount of the work that’s currently done by accountants”.
That prompted something of a backlash. CIPFA chief executive Owen Mapley said: “While today’s rapidly developing technologies will offer unimaginable enhancements, particularly to manipulate and interpret the oceans of data the world now produces, there will still be a role for accountants to provide the human dimensions needed. And what’s the alternative – simply trust the tech bros and hope all is well?”
Bruce Cartwright, chief executive of the Institute of Chartered Accountants of Scotland, rejected the idea that accounting is no longer a viable career for graduates. Employers, including in government, will continue to need the skills of finance professionals, he insists, even if tomorrow’s accountants “will likely spend less time on producing numbers and focusing even more time on explaining them and determining where the numbers take us”.
If that analysis proves right, the advent of AI may even help with recruitment and retention of finance professionals. One recent report from Mordor Intelligence predicted that the use of AI in the accounting industry would grow 30% year-on-year, from 2023 to 2027, but largely in areas where there is scope to replace manual and repetitive work. That could even mean that AI is ‘about to make accountancy sexy’, if a recent Times headline is to be believed.
