Recent years have seen a flood of change for finance directors in local government, including those forced by the pandemic. Andrew Hardingham surveys the FD’s role and offers advice on how to stay the course.
Over the years, finance directors have risen to the challenge. Various governments have introduced changes to local government finance that required us to step up and lead the response whether it be the introduction of compulsory competitive tendering, direct labour organisations’s and direct service organisations; the end of earmarked loans and the associated loans approval regime; the introduction of the prudential code and the PWLB reform consultation.
FD’s have heard local government ministers urging councils: to spend our balances; criticise us for not having enough balances; introduce and then abandon the “poll tax”; introduce council tax (both with and without capping); to use the adult social care precept; to begin business rates pools; to constantly change (and further threats of more change) the business rates system; the gradual demise of revenue support grant (RSG) to negative RSG and all the tweaks to the distribution formula. Need I go on?
In simple terms: Be qualified; lead a competent department; be in a position to challenge; be actively involved in, and be able to bring influence to bear upon, all material business decisions ensuring immediate and longer term implications on opportunities and risks are fully considered…
Central government changes have included the funding cuts, financing restrictions, demands to do more with less, to be more efficient and, of course, balance budgets.
And let’s face it, every year we do it. We get no bail outs. We get no debt written off by government. What we do get is gradually eroded away year on year. In the words of Steve Harley: “There ain’t no more, you’ve taken everything.”
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Promises
We are promised reform, review, change, equalisation, redistribution, help … but do we get what we need? Again, in the words of Steve Harley, “Blue eyes, blue eyes. How come you tell so many lies?” (Forgive me. I have taken this slightly out of context!)
We have outsourced, insourced and even shared sourced our services. We have transferred functions to central government (universal credit and counter fraud) yet the residual debt stays with us. We have to write off the uncollectable at the expense of our local tax payers. We are urged to be more commercial and then we are criticised for taking risks with taxpayers’ money.
Despite constantly dealing with government/life’s shifting sands, our real strengths have always been our abilities: we evaluate; we undertake our due diligence; we make evidence-based recommendations; we set a yearly budget; we deliver services; we get our accounts closed (producing, in the process, the most number of unread pages of local government literature each year) and audited.
We have responded to CPA, the use of resources assessment and now CIPFA’s Financial Resilience Index. With very few exceptions, local council’s are given clean bills of health.
Motivation
Success, you may say, but how do we do it? What motivates us each year?
CIPFA recognises the demands on finance directors and presents a cogent argument in its paper on the role of the FD. In simple terms: Be qualified; lead a competent department; be in a position to challenge; be actively involved in, and be able to bring influence to bear upon, all material business decisions ensuring immediate and longer term implications on opportunities and risks are fully considered; support and advise CEO’s and the executive team; lead the promotion and delivery of good financial management by the whole authority so that public money is safeguarded and, at all times, used appropriately, economically, efficiently and effectively.
Their response was to send us forms. We filled them. Then filled in some more. And yet more forms appeared. Forms we never even knew existed arrived in our inbox. Again, we filled them.
It is, therefore, vital that finance directors need to be at the centre of decision making. They are required to advise councils whether their budget are robust and the reserves are adequate. They have to be impartial providing an assessments, yet be in the “thick of things” beforehand to have that in depth knowledge.
We all undertook our risk assessments, appraised savings plans, signed off business cases, stress tested finance models, NPV’d (net present value) and discounted our cashflows, worked out our IOR and pronounced our budgets “good to go” in February and then two weeks later we were there, doing what we always do: Keeping calm and carrying on.
Competing demands
Resisting the urge for knee jerk reactions, we dug in (deep) and went about the task of revisiting all our earlier work. We re-stress tested our assumptions and led from the front our teams who were already having to grapple with new ways of working.
As always, we responded to the challenges. New systems were introduced quickly to administer the government’s proclamations efficiently. We engaged with government to campaign for support. Their response was to send us forms. We filled them. Then filled in some more. And yet more forms appeared. Forms we never even knew existed arrived in our inbox. Again, we filled them.
It felt like we were spending our most precious resource—time—suppling virtual paper for government officials to virtually push around virtual desks. And in return, local government collectively received “virtually” nothing. “It’s just a test, a game for us to play, Win or lose, it’s hard to smile” (Steve Harley, once again).
So, amid all this mayhem, how does a finance director manage the competing demands of colleagues, directors, elected members, government departments?
Here are my top tips for staying tip top:
- Look after yourself. Take exercise and eat well. I find that being physically fit stimulates mental fitness. As psychologists would say, “Take a deep breath”. This helps being able to look at the challenges from an objective stance.
- Think positively. It is a cliché but, it works. When under pressure, the power of positive thought helps and distracts from dwelling on the negativity of the stressful situations we find ourselves in.
- Take an orderly approach. Work through things methodically.
- Don’t take on every challenge. Taking on every challenge is a mistake. We have competent teams behind us (and they do step up in a crisis). Delegate. Of course, there will be situations when we really need to stand our ground. Be consistent.
- Take responsibility. It is easy to blame others. Demonstrate leadership.
- Get the facts. Let the numbers speak, (we like numbers!) ask questions, and most importantly, listen to the answers. Don’t judge. Don’t draw a conclusion until you’ve heard all the facts from everyone involved.
- Finally get off the grid. Turn off the phone and shut down the laptop.
Andrew Hardingham is service director for finance, Plymouth City Council.
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