Are public sector CFOs made of the right stuff?

Are public sector CFOs made of the right stuff?

Local government’s chief finance officers are being challenged, tested and stressed in a way that they’ve never experienced before. For the past nine months they have been preparing for the harshest budgetary cuts ever seen in living memory as councils begin to reduce their expenditure by 26 percent over the next four years.

These levels of cuts will result in mass redundancies and enormous reductions in services and with finance officers in the eye of the storm the pressure to meet these demands and balance budgets has never been greater.

Councils have been dealt a tough hand in the government’s public service cuts. The 26 percent grant reduction between 2011 and 2015 came with an added extra, to frontload the cuts in the first year. This has forced councils to push around 10 percent of the reductions, which would have been phased in, into 2011/12.  

The government is clearly hoping to mitigate the long-term political impact but according to directors of finance it has meant the acceleration of cuts and more staff redundancies. Authorities have also been placed under intense pressure not to increase council tax; their largest means of generating additional revenue. Most have complied, resulting in the lowest increase since it was introduced in 1993.  

For finance executives it has been a particularly harrowing time.  Falling expenditure, the resulting cuts, organisational changes and in many councils huge community protests are all on top of the usual demands: meeting the service needs of local residents and the political priorities of councillors and government ministers.

“I’ve been through retrenchment in the 1980s,” says Alan Thomas, deputy chief executive and head of finance at North Kesteven District Council. “But I can’t remember it being as bad as this in terms of making such reductions in a short period of time.”

Andrew Bedford, strategic director of finance at Rotherham Metropolitan Borough Council says that finance chiefs have not only had to deal with severe future grant reductions but also in-year cuts after the new government took over.

“Since June we’ve been dealing with budget cuts of up to £10 million, that’s a quarter of the way through our financial year,” he says. “It’s unprecedented to have funding reductions in-year as well as planning for significant reductions in future years.”

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