Public sector bodies is rising to the challenge of government austerity measures, but many of their strategies may not be sustainable or deliver long-term value for money, according to research from ACCA.

A report by academics from Nottingham Business School on behalf of ACCA, called The importance of strategic financial leadership in the UK public sector in a time of financial austerity, says authorities are responding to reductions in funding 'without disastrous consequences for service standards'.

However, it found that public sector bodies - including local councils, health authorities and hospitals, police, fire and ambulance services - need to be more proactive in making clear to decision makers the financial costs and benefits of particular courses of action.

Professor Malcolm Prowle, who led the study team at Nottingham Business School, said: 'What the public sector needs is strategically adept financial managers who can work with colleagues to achieve the best overall outcomes. Working at multi-agency level has a vital role to play in achieving sustainable and long-term value for money and finance leaders need to have the strategic ability and vision to drive change in the right direction, seeing beyond political obstacles and short-term difficulties.'

The report suggests there is a need for senior council officials to create a corporate culture in which the pursuit of public value by employees is rewarded in the same was as pursuing shareholder value is rewarded in privation corporations.

Prowle said: 'Managers need to think about what is most valuable in the service that they run and how effective management can make the outcomes of the service the best that it can be for their communities. In doing this, however, they sometimes need to recognise that public value may be best maximised by joint planning and working with other public authorities, rather than working unilaterally.'