HMT Finance Transformation Programme

www.cipfa.org

HMT Finance Transformation ProgrammeManj KalarCIPFA25 September 2013

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Agenda Landscape Finance Transformation Programme Link to Civil Service Reform CIPFA Thinks … What CIPFA is already doing What we plan to do?

cipfa.org.ukwww.cipfa.org

Landscape


Landscape

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Remember the 2010 deficit reduction plan?

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cipfa.org.ukwww.cipfa.orgAutumn Statement 2012 - deficit reduction plan

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Landscape (2)

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cipfa.org.uk

Managing Taxpayers Money WiselyIdentifies four areas of development where the public sector can improve financial management:

Leadership: driving performance from the top

Cost conscious culture: so every decision is built on informed financial assessment

Professionalism: all public servants have financial awareness

Expert central functions: providing the strategy to work toward common goals

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What’s wrong?

•Few disincentives for poor performance

•No structured incentives to drive savings

•Lack of recourse•Unclear roles

• Fragmented, multiple data sources• Inconsistent data granularity• Lack of data comparability• Budgetary protectionism

• Lack of alignment across spending teams• No true, government wide chart of accounts• Multiple collection data points (eg. CO & HMT)• Role of Centre

•Lack quality information for decision makers

•Lack of finance and non-finance staff financial management capability

• Inadequate technology, lack infrastructure for basics

Transparency

AccountabilitySim

plic

ity

CULTURE

Coherence 9

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Reason for the FTP

The UK is facing unprecedented fiscal pressures and strengthening financial discipline is an essential part of reducing the deficit…. To deliver best value to the taxpayer the public sector has to develop strategic financial management and embed sustainable cost effectiveness and public value in the delivery of all government services. The FTP will deliver the step change in the way that resources are managed by public servants.

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Financial Management is key

“Good financial management is at the heart of an effective, well run organisation… understanding exactly how they are spending the money and what return or policy outcomes they are getting for that money”

Managing Taxpayers Money Wisely – FM at the heart of finance transformation programme

UNCLASSIFIED

Ministers, Boards and SCS demand the

highest standards of financial management.

EFFECTIVE LEADERSHIP

PEO

PLE All staff understand

they are responsible for cost-effective

delivery – and are appropriately trained

and incentivised.

COST CONSCIOUS CULTURE

Finance professionals have the range of

skills and experience needed to support the

business.

PROFESSIONALISM

The centre aligns with finance departments to provide consistent

and coherent messaging.

EXPERT CENTRAL FUNCTIONS

Finance is an integral part of strategy and business planning.

PRO

CES

S

Processes promote a VFM and continuous improvement culture.

Finance processes are economic, efficient

and effective.

Central processes support and

incentivise good financial

management.

Senior management has expertise to use

and analyse information effectively.IN

FOR

MAT

ION

and

TE

CH

NO

LOG

Y

Systems provide relevant and timely

information that staff need to exercise their

responsibilities.

Systems provide access to clear,

consistent and well understood information.

The centre draws on information that is

used by and useful to departments.

The FD is a key member of the senior

leadership team, positioned to

influence all material business decisions.ST

RU

CTU

RES Departments’ internal

structures and governance support /

incentivise a cost-conscious and risk-

aware culture.

The finance department is structured and

resourced to provide the business with the

support it needs.

There is clarity between the

respective roles and responsibilities of the

centre and departments.

Vision for the Finance Transformation Programme

finance at the centre of decision making

FTP – Finance DG-led areas Working with the Centre: Working collectively:

UNCLASSIFIED

Finance and Commercial Awareness for non-Finance StaffMOJ

Capability (Finance Professionals)DWPHMT Spending framework

HO

Value for money and efficiency including ERG relationship

DfT

Shared servicesBIS

Financial reporting and management informationDCLG

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Measuring FM Improvement HMRC

cipfa.org.ukFLG led FTP work streams

Finance and commercial skills for non-finance professionalsAnn Beasley – MOJ

Capability (Finance Professionals) Simon Judge - DfE

Value for money - HMT spending controls and ERG efficiency controls –

Clare Moriatry DfT

Shared servicesHoward Orme - BIS

Management Information and Financial ReportingSue Higgins - DCLG

Measuring progress of FTP Simon Bowles - HMRC

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Government Finance Profession

Of 22,100 FTEs in the finance community - there are c.9,000 Finance Professionals:• Nearly 4,000 trainees and over 4,800 qualified• Over 20 % work in areas outside of mainstream finance.

Of the nearly 4,000 qualified finance professionals in mainstream finance: 60% work in Decision Support; Over 30% work in Reporting and Control ; Less than 10% work in Transaction Processing.

Over 10% of qualified finance professionals are in SCS or equivalent type roles.

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Departmental FM: Strengths include:

• Strong leadership with qualified FD cadre and NEDs on boards & established Finance Leadership Group

• Good talent pipeline (Finance Fast Stream Option and Financial Management Development Scheme for graduate recruitment scheme)

• Good up-skilling programmes for SCS e.g. Senior leaders analytical capability up skilling project (initiatives are widespread but not consistent)

• Rigorous application of spending controls

• Continuous review of finance processes to drive out efficiencies, remove manual interventions

• Greater provision of advice and insight (e.g. VFM advice, more timely and robust information) to board level discussions

• Provision of business partner / expert support

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www.cipfa.org

NAO report - Improvements in Government FM Greater recognition of the strategic importance of the

finance profession Finance Leadership Group has established the Finance

Transformation Programme to position finance at the centre of decision-making

Qualified finance professionals are better represented at senior levels in Whitehall

Improvements in key financial processes, such as the Clear Line of Sight and WGA initiatives

Government taking positive steps with the aim of improving management information.

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Departmental FM: Areas for further investigation include:• Better understanding of cost drivers and financial implications of

operational/policy decisions

• Improving forecasting capability to deliver increased accuracy and better FM

• Development of model cost effective finance function (more cross govt standardising and streamlining of services / shared services)

• Opportunities for further joining up on capability building and sharing expertise (reduce duplication of effort);

• Better cross-government succession planning at senior levels

• More in-year and regular consolidation of Accounts (Dept & ALBs)

• More sharing of good practice e.g. Business partnering experiences/models

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NAO report - Scale of FM challenges

Redesigning and transforming public services so they operate sustainably in context of further spending reductions and demand increases.

Treasury to provide more effective central leadership, to support public bodies in providing services at permanently lower cost.

Chances of success much greater if financial managers are central to decision-making.

Integrate FM fully within processes to design and implement effective target operating models

Financial impacts of all options should be key factor in decision-making by finance and non-finance professionals alike.

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Measuring success of the Finance Transformation Programme

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Use of the CIPFA financial management model to provide a comparative and independent assessment of all Government departments’ financial management

Financial Management Styles Leadership People Processes Stakeholders

Supporting Stewardship Supporting performanceEnabling Transformation

Management Dimensions

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Power of the FM Model Enhanced V3 changes for operating environment

Improved functionality

FM Strategy/Audit/Financial Reporting/Stakeholder confidence

Recent application at Department of Health, Environment Agency and Skills Funding Agency

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Finance Transformation Programme

How does this link with the broader Civil Service Reform Agenda?


Civil Service Reform

18 Action points Size & Shape Policy Development Policy Implementation &

Accountability Capability Employment “offer”

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FTP and Civil Service ReformCivil Service Reform Plan published June 2012 – 18 Actions.

FTP was one of these CSR Actions - www.civilservice.gov.uk/reform

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CSR Actions FTP Workstreams

Developing and managing future leadership (Action 13)

A 5 year capabilities plan identifying skills gaps and how they will be filled (Action 12)

Finance profession talent management

Commercial and finance skills for non-finance professionals

A robust cross-government MI system (Action 9) MI and Financial Reporting

Create five centres for transactional services (Action 3)

Shared Services

New departmental improvement plans assessed annually (Action 16)

Measuring FM Improvement

http://www.civilservice.gov.uk/reform


Civil Service Capability 4 key development areas:

Leading & managing change

Commercial skills and behaviours

Delivering successful projects and programmes

Redesigning services and delivering them digitally

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Civil Service Capability

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Civil Service Reform year 1 Civil Achievements…• Actions for FTP, as before, completed• Updating Osmotherly rules and Managing Public Money• Stronger Cross Whitehall leadership of key corporate

functions• Move to fixed term tenure for Permanent Secretaries• Extended Ministerial Offices• Improving delivery of infrastructure and other major projects,

responding to recommendations by Lords Browne and Deighton

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Civil service Reform year 2

Focus on 7 Game Changer Actions…• Digital (by default)• Functional Leadership• Open Policy making• Modern workplaces• Major Projects• Capabilities Plan • Civil service 2020• And seeing residual actions through to completion

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Finance and commercial skills for non finance staff

• Finance Skills for All re-launch • SCS Financial Leadership face-to-face course• Budget management face-to-face course • Toolkits/Intranet quick guides/best practice to supplement CSL

learning. • Engagement with the Commercial/ procurement profession• Peer review measurement process - testing of peer review

process and link with CIPFA/NAO model review• Mentoring scheme for business staff by finance professionals • Review of performance appraisal and recruitment processes to

ensure finance skills and performance are measured effectively

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Professionalism focus 2013-14 • Douglas-White Review of Finance overseen by Lord Sainsbury• Set the ambition for the finance professionalism/ capability • Succession planning - Management of SCS cadre as a community• Talent management programme for G6 and G7• Qualified recruitment campaign• Creation of network community seminar talks• Secondments and swaps with departments and the private sector• Development of Finance foundation e-learning product• Launch of the finance learning map and career mapping tool• Structured development – GFP training event 6-7 November in

Brighton

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How HMT can within existing budgets and preserving single point accountability to Parliament for financial stewardship that the accounting officer provides

Improve quality and consistency of management information flows between Treasury and departments to ensure these are of the right quality to enable effective risk-management and decision making across Government

Strengthen the role of the Head of the Government Finance Profession in promoting and assuring improved financial capability – skills, systems and processes – across government (considering also the interaction of this role with the Treasury)

HMT FM Review - 1

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HMT FM Review - 2How HMT can within existing budgets and preserving single point accountability to Parliament for financial stewardship that the accounting officer provides

Ensure right levels of delegated authorities and approvals are in place to ensure both tight spending control and appropriate flexibility for those departments with proven financial management capability

Create a more streamlined, coherent set of central appraisal and approval process for projects and programmes outside those delegations

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CIPFA Thinks … 1Capital and revenue expenditure decisions must be taken in a coherent and joined-up way that is proportionate to the level of financial and other risks involved in both the short and longer terms by: Being set in the context of short, medium and long term financial and

delivery risks Considering capital and revenue impacts together Replacing fixed delegation limits with ranges Linking delegation levels with risk assessments Drawing on FM model outputs and relevant internal and external

audit reports HMT matching skills and experience to the risk and complexity of

departments Requiring medium term expenditure frameworks from all major

departments

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The quality and consistency of management information flows between departments and the Treasury needs to be improved through: Appropriations on the basis of output targets Increased use of shared services Widespread adoption of the Common Chart of Accounts Mid-year closedowns and coordinated intra-government

balance agreement processes Incentivising accurate expenditure and cash flow forecasting Publishing FM Model assessments and agreed action plans

CIPFA Thinks … 2

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The role of the Head of the Government Finance Profession needs to be strengthened through: Being a full-time role based in HM Treasury Having a dotted line professional leadership relationship with all DGs

Finance, including input to their appraisals based on the quality of information and other interactions with HMT

Being directly involved in the development of the budgetary and performance frameworks

Finance being recognised as fundamental to the management of Government rather than just another profession

Ensuring the FM Model is run regularly in all main departments, and having access to the results

Evaluating the FM Model results to develop best practice guidance and training

Monitoring progress of FM Model implementation plans Coordinating CPD training to ensure balance and that FM weak spots are

addressed

CIPFA Thinks … 3


What’s CIPFA already doing? Supporting finance professionals across government

― Training/CPD― Conferences― Talent Programmes

Central Government Panel CIPFA FM Reviews Financial Management Panel Support Treasury/FLG

― review/consultation― Talent programme


What we plan to do Support HMT Review Use our pan public sector expertise to support Government

bodies – lead innovation and using unique position to bring sectors together

Be a champion for public service Promote good PFM across all sectors Start a debate about the role of the CFO and need for

protection of officials

Questions?

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Thank you

Manj KalarCentral Government & Financial Management

Technical ManagerCIPFA

September 2013

HMT Finance Transformation Programme

Documents

Transcript of HMT Finance Transformation Programme