Local government ‘must transform’ to cope with funding pressures

30 Jul 18

Local government must transform, innovate and work together to cope with the pressures of increased need for services with less central funding, according to two major accounting bodies.

CIPFA and the Charted Institute of Management Accountants, in a report released today, said authorities that had successfully transformed had done so by procuring and developing skills more commonly found in the private sector. 

“Skills shortages, such as the lack of in-house commercial ability ... may increase cost and complexity, cause delays and impact on effective project delivery,” the joint research noted. 

It added: “With the pressures mounting, councils must make every public pound work harder to maintain public services.

“This requires a significant transformation of local government organisations and the services they deliver. It requires innovation, collaborative working, better decision making and greater understanding of risks.” 

The two organisations concluded that it was “despite (or perhaps because of) ongoing financial challenges, new models of digitally enabled service delivery are changing how we communicate, collaborate and co-exist”.

Transformation in local government was described in the report, which looked at examples in 48 countries, as a “significant change in approach to an organisation’s operating model, technology, process and/or service delivery, in order to deliver better outcomes and improve efficiency.”

CIPFA and CIMA also described the role of local government finance officers as “evolving” and widening in scope. 

“The finance function has an increasingly important role to play in measuring, tracking, demonstrating and communicating the long-term value of proposed investments,” the report said. 

“Finance professionals are acting as catalysts to guide organisations and colleagues to timely and controlled transformation initiatives, rather than risk reactive change as a consequence of financial pressures,” the professional bodies said.

The bodies identified what they called the ‘four ts’ – key aims governments should address when meeting the ongoing challenge of doing more for less: transformation, technology, transparency and talent.

The report concluded that “increasingly, impactful and insightful finance professionals” will help deliver sustainable yet affordable delivery of public services, and this can be influenced by a focus on continuing professional education and professional development.

Rob Whiteman, CIPFA chief executive, said: “Transformation isn’t just about installing shiny, new tech.

“It’s about looking at an issue and thinking creatively about solutions. It’s about understanding the challenges and risks; and ensuring the skills, capabilities and capacity to achieve it is in place.”

Andrew Harding, chief executive of the Association of International Certified Professional Accountants and a CGMA qualified accountant, said: “Local councils need to make sure that they have the right finance teams and skills in place.

“It is therefore essential that they devise long-term talent strategies to create higher performing and engaged workforce to drive organisational changes and deliver sustainable growth.”

CGMA is the accountancy qualification offered by CIMA. 

The report also said that fear of the unknown can often inhibit transformation of services in the public sector.

To combat this local government must communicate the rationale for transformational change to all stakeholders clearly to build support, CIPFA and CIMA urged. 

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