The key elements of financial responsibility in the public sector, and in leading public bodies, are fairly straightforward. Top of the list is to be sure to follow both the spirit and letter of the law and to act in the public interest. However, the challenge is applying these principles in what can be a complex working environment. Here we consider five challenges. 

Accountability

The accounting officer, usually the CEO of a public body or equivalent, has individual ultimate responsibility for financial decisions. However, the board also has some collective responsibility. This means there can be some confusion in lines of accountability, although the perception generally is that the board shares the reputational risk without the necessary control regards decision making.

Clearly a constructive relationship between the executive and the board is necessary to ensure significant issues don’t arise with this arrangement.

Timing

Ideally financial decisions would be timed as appropriate for what is being delivered by an organisation. However, public bodies are tied to the spending commitments and timescales of the Government. Currently these are often made on an annual basis, which can be at odds with what public bodies are trying to achieve over a multiyear timeframe.

Again, relationships here are key, both with the public bodies sponsoring department and the Treasury to ensure decision making from central government recognises the longer term objectives of public bodies.

Silo decision making

A common frustration within the public sector is the layered set of processes that exist and need to be navigated within the civil service. This can lead to having to a system that has a series of individual decision making processes as opposed to one integrated decision making process for a public body or a project.

A challenge here is that a lot of the relationship between a public body and its government department has grown organically. Keeping on top of this relationship, and perhaps taking time to map all the interactions, might help to breakdown some of these silos.

Measuring success

There is general agreement that measuring success is harder in the public sector than in the private due to the nature of what is being delivered. This can lead to having measurable outcomes that are activity focused as opposed to customer or outcome focused. The consequence therefore that the outcomes being measured don’t always demonstrate the most value for money for the public.

Attempts to focus on customer outcomes can often be harder to measure and require multiyear analysis. However, steps are being taken to address this, and central government has set out a series of commitments to try to resolve this issue.

Managing a crises

The financial frameworks public bodies have can be less helpful in a crisis. The frameworks often have many controls which do not always fit well with the requirements of crisis management to make swift and often novel decisions.

However, experience over the last year has demonstrated what is possible. Public bodies have largely responded well to an unprecedented crisis. By ‘doing the right thing’ and recording why you did it can greatly mitigate against subsequent challenge.

Thank you to Sir Hector Sants, Chair of the Money and Pension Service, for facilitating our discussion.