In dealing with the increased risks that accompany declining budgets, escalating demand and political uncertainly, public sector organisations across the UK have proven to be incredibly adaptable and forward thinking. Even as funding has been in decline, a recent survey from Deloitte has shown people have expressed increasing personal satisfaction with the services they receive – with 18% saying services exceeded their expectations as compared to 5% in 1998. However we cannot stand still. Now more than ever it is essential that organisations have effective financial management and governance arrangements.
One area of particular focus for CIPFA has been local government, where even though most authorities have found ways to develop and even grow in this environment, we also know there are others which may potentially end up in trouble. Recent reports have raised questions around the financial sustainability of parts of local government, and while we recognise that there are many reasons for this, none of us want another crisis to happen.
In a perfect world we could be confident that the Spending Review would deliver certainty and security for officers, members and the public via an improved funding settlement. But the world is not perfect. Having spoken with sector colleagues and institute members we came to the conclusion that more could be done by CIPFA and the sector to support officers in implementing robust governance and best practice financial management arrangements – areas which are under our control.
I can see far reaching benefits from the introduction of a financial management framework, and this goes back to my initial themes when I took on the role of CIPFA president. In my opening speech at conference I talked about the need to build trust, and better support our members in these challenging times. With both sector insight and support I see the CIPFA Financial Management Code as an important step to rebuilding that trust in local government.
The CIPFA FM Code provides a clear and transparent sector led code that supports every element of financial management. It does not avoid some of the more process driven areas – as to quote Max Caller, “in local government there is no substitute for doing boring really well” – but it also covers the importance of long term planning and the strategic view. It offers a proportionate approach to the challenges being faced by the sector, and builds on our experience from the success of some of the other more familiar codes.
By codifying the approach we ensure that we can set a level of expectation and pass that message onto the public showing that the sector has taken note and delivered, and by working together we can create a code which helps strengthen the sector as a whole. Some aspects may seem obvious. However, by codifying these core aspects for the first time, there is greater transparency and assurance across the sector about what action is being taken.
There are over 400 councils in the UK providing essential services to about 66.85 million people. If the CIPFA FM Code is part of a framework that helps to prevent a collapse in the finances of just one of these then it has had an impact. From conversations I have had recently it seems like there may be even wider demand for such codes across the public sector.
The CIPFA FM Code is, of course, just one piece in a bigger jigsaw designed to support our members during these challenging times. This includes our work on streamlining the accounts, developing the financial resilience index, and ethics support, which along with reform of public audit, we hope to ensure we are all spending our time where it matters most.
You can find the draft CIPFA FM Code for consultation on CIPFA’s website. All responses must be provided by email to FMcode@cipfa.org by 30 April 2019.
This article first appeared in Public Finance Magazine.