In The National Interest: Bizarre trends causing concern to professional FDs

Readers of this column may notice that I have been a little quiet over the past few weeks. I am afraid that the need to strip £18m out of a net revenue budget of £186m for my organisation has been the focus of my attention. This is largely driven by the government’s recent spending cuts announcement and, in partnership with the organisation’s management board, I have been beavering away to ensure this is delivered in the most painless way possible, whilst still balancing the budget.

However, as I sit here late at night I have just taken a very bizarre call from one of my finance director colleagues in the public sector. He was concerned about being removed from the board of his organisation. This seems to me rather counter-intuitive in the current financial environment, but I am hearing of a number of organisations going down this road.

It does seem to me that in a time of extreme financial constraint, properly qualified finance directors should be the key to delivering proper government and strategic remodelling of organisations to achieve the very challenging financial targets that we have in the public sector at present.

In the local authority sector there is a requirement to set balanced budgets and the finance director is legally required to ensure this happens. The role is not simply about proper accounting, but an integral part of the key decision-making process of the local authority.

Additionally, the government appears to be going down the road of extending this role to other areas of responsibility. For instance, some FDs now need to certify on matters of IT security and also verify the financing of private finance initiative schemes.

While professional qualifications are not everything, I do believe that budget processes in the public sector, which ultimately drive the spending of valuable tax payers’ money, do need to be managed by appropriately qualified professionals. Normally, in the public sector this means either an accountant or a professional with a business studies degree.

In the struggle that we are facing both to remodel public sector organisations and use tax payer’s money to its best effect, having the FD at the very centre of board level activity working in partnership with the chief executive and other key board members is the model that a public sector organisation should be looking for.

Politics will ultimately determine the road we go down in terms of managing the spending deficit, but if politicians from whatever political party wish to see this issue addressed in a professional fashion across public sector organisations, I believe valuing the finance director’s role at the board level of the organisation is essential.

Is there anything that anyone out there would like to argue with that one?

Stephen Fitzgerald is FD for Hounslow Borough Council