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Finance: a cut too far, by Stephen Fitzgerald

I read with interest the news story by Lucy Phillips Finance Departments under pressure as cull commences in the February issue of Public Finance and on publicfinance.co.uk.

In this period of unprecedented cuts, it is inevitable that those of us who look after what can be classified as ‘back-office functions’ will be targeted for reductions in expenditure. In itself this is not unreasonable; few of us will be brave enough to say that all aspects of local authority finance departments are at the cutting edge of efficiency and best practice.

Nevertheless, given the magnitude of public spending cuts, purely driving further efficiencies out of the finance, resources and back-office areas of local authorities will not deliver the savings required.

The level of savings dictated by the Annual Local Authority Grant Settlement mean that the totality of the services offered must be reduced, however, the largest areas of spend often relate to vulnerable communities.

Finance and resources departments have a key role to play in facilitating that process. If they are cut to the bone as a need to react to the spending requirements, it will have a negative effect on both the cutting of the deficit and the proper governance of these large public organisations.

It is essential that there is a lean, but robust centre for organisations with the finance function leading on shared financial strategies. These operations need to be populated with staff who have high skill levels and versatility to deal with the diverse changes of the modern business world.

In the face of this, it is important that those of us who are in leadership positions in finance and resources functions of authorities provide a consistently excellent service and put a strong case for the retention of appropriately sized finance and resources functions.

From my experience, those authorities that have achieved good governance and controlled council tax have finance and resources departments at the very centre of their strategic operation. This needs to be taken into account when organisations are making their expenditure reductions.

Stephen Fitzgerald is director of finance at the London Borough of Hounslow

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