Local councils must transform to survive say accountants

Central government has halved local council funding since the 2008 financial crash and many need radical transformation if they are to survive as budgets are cut

Unless the government’s austerity policy significantly changes in either the Budget or the Spending Review, local authorities face huge challenges if they are to continue to deliver essential services, warns a report published jointly by the Chartered Institute of Management Accountants (CIMA) and the Chartered Institute of Public Finance and Accountancy (CIPFA).

Finance teams must be ‘front and centre’ when it comes to transforming the way councils operate to ensure long-term sustainability.

The report, Transformation: How finance teams are driving local government innovation, is the result of a long running collaboration between CIMA and CIPFA.

Using best practice transformation case studies, the authors set out the capabilities councils need for successful transformation, from finding and supporting new models of service delivery, to new financing and organisational structures.

‘The impact of simultaneous technological, organisational and funding changes within the public sector brings new challenges for the finance function. The need to focus beyond scorekeeping requires a more commercial edge.

‘Finance professionals in local government are increasingly using their knowledge and skills to analyse data and forecast trends, to carry out detailed investment appraisals which balance risk and return, to set up new trading companies and to build relationships with external partners,’ says the report.

It adds that, while finance professionals in local government organisations are embracing a new, more strategic role, employers face competition for talent and need to invest in staff.

The authors outline skills required for financial professionals in three key areas:

  • technical and professional skills (ie, finance, procurement, tax, governance);
  • strategic skills, including commercial awareness; and
  • soft or smart skills, including communication and behavioural skills.

‘Transformation isn’t just about installing shiny, new tech. It is about looking at an issue and thinking creatively about solutions. It is about understanding the challenges and risks; and ensuring the skills, capabilities and capacity to achieve it is in place,’ says CIPFA chief executive, Rob Whiteman.

He adds that even though cash is tight, investment is an essential part of any transformation plan. ‘Fiscal constraints are certainly an important incentive for transformation, the goal is doing more with less, but investment is also a challenge, which means it’s crucial that finance teams are leading these initiatives.’

Andrew Harding, chief executive, management accounting at the AICPA, adds: ‘As finance professionals, we translate numbers into relevant, understandable and actionable business insights to deliver better services and lead the way for better decision making. We do this by developing a broad knowledge of operations, joining the dots in the organisation and taking into account the public interest.

‘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 a higher performing and engaged workforce to drive organisational changes and deliver sustainable growth.

CIMA/CIPFA report - Transformation: How finance teams are driving local government innovation

Report by Rob Munro

Rob Munro |Journalist and contributor, Accountancy

Rob Munro is a journalist specialising in finance, health and technology. He has worked for several major publishers, including Wile...

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