Above the parapetFollow @pwc_ukgov
By John Berriman, Chair, PwC’s Government and Public Sector Finance Board
Public sector finance issues have occupied centre stage in recent years with fiscal austerity the order of the day, as the Coalition pursues its programme to cut public expenditure. The scale of challenge means that Finance is in the spotlight as never before, with a leading role to play in the management of the public finances.
It is against this background that we have undertaken annual research over the last four years into the status of the finance function in the public sector, measuring its performance against our three dimensions of efficiency, compliance & control and insight.
We argued in our first report on this subject in May 2009 that Finance was at a crossroads and that it needed to speak up and be much more than just a scorekeeper. Since then, in our subsequent reports, we have emphasised the importance of Finance really stepping up and taking its proper place at the top table.
Of course, making such a change to a long established function in any organisation is inevitably a slow process. But change has been needed, and there is positive and encouraging evidence from our survey that it is happening in the public sector. Finance functions are slowly starting to be viewed, and acting differently, with a greater perceived role as a business partner.
There are, however, still significant challenges. In the research reported three years ago, 60% of public sector finance directors surveyed said they believed they would be high performing finance functions by 2012. Despite the aspiration for high performance, only a small minority of our survey respondents this year (less than 5%) say that they have a high performing function with respect to efficiency, compliance & control or insight.
But why is there such a large gap between aspiration and achievement? Our study reconfirmed that people-related issues underpin many of the perceived barriers to future success. It highlights how challenging the people issues are in achieving the government’s ambitions for a finance transformation across central government, instilling more commercial thinking and cost conscious decision making.
Respondents said that the critical issue holding back the finance function from being perceived as business partners is a lack of resources and skills, coupled with the challenges of managing significant change. Culture continues to get in the way of an effective, efficient and insightful finance capability, particularly in central government.
Indeed, whilst six out of ten respondents to our research now aspire for their finance functions to be high performing within three years, the gap is so large that there is a need for some sort of reality check as to timescales. There is still a huge amount of work needed to translate ambition and aspiration for the finance function to be seen as an insightful business partner, into plans, action and change.
And if change is to be secured then there are three critical ingredients that really must be addressed. The future finance function needs to be moulded in the shape of a more insightful and agile business partner. The public sector needs to support the development of the finance professional for the future. And the culture of finance needs to be changed to an outward looking one which seeks out and learns from the best.
Click here to download a copy of our new Finance research report ‘Above the parapet’.
A version of this first appeared in the Gasette (summer 2012 edition)
Email: John Berriman
Tel: +44 (0)20 7213 4656