Financial management within government needs to improve if planned cost savings are to be achieved, according to a report from the National Audit Office (NAO) which describes the scale of the challenge as 'stark'.
The NAO says that the finance profession now has a greater presence in the upper levels of Whitehall, partly due to the establishment of the Finance Transformation Programme to develop the skills and capabilities of finance professionals which means that qualified professionals are now better represented at senior levels. The publication of two sets of Whole of Government Accounts by the Treasury has also improved government accountability.
However, the NAO says that more needs to be done, given the importance and urgency of the challenges presented by fiscal consolidation and public service reform. The report found that the 'robust information' needed for decision-making is not routinely available. It says departments often do not integrate financial management with their strategic and operational planning, while a lack of planning prevents departments from achieving the best results by linking resources and outcomes.
The NAO also queries how sustainable the current round of spending cuts will be. It says that while reforms such as changes to pensions and higher education funding are likely to lead to long-term savings, other options such as pay freezes and moratoria on the use of consultants and contractors will be of only temporary benefit. It wants to see public services re-designed so that they operate permanently at lower cost.
NAO head Amyas Morse said: 'The pace of change must be accelerated. Savings are being made but progress in restructuring how services are being delivered is lagging. If the challenge of reforming the delivery of public services is to be met, then the Treasury and Finance Leadership group need to provide more effective impetus to strengthen financial management capability across government.'
The report recommends that the Finance Leadership Group should take responsibility for diagnosing the key current financial management challenges facing the finance profession and the wider civil service, and for addressing them quickly.
