One of the most painful lessons of the global economic downturn is that public and private finances can no longer be separated. A downward spiral, sparked by sub-prime mortgages in the US, has resulted in a devastating sovereign debt crisis in many parts of the world. The eurozone seems to be stumbling towards some improvement, but in the US the talk is of a "fiscal cliff". Following years of debt-financed public-sector spending increases, draconian cuts, also known as "fiscal consolidation", are the order of the day. Governments face the arduous task of reducing deficits without devastating frontline services and entirely losing public trust.
Management accountants are, of course, every bit as at home in the public sector as they are in the private sector. Their skills are even more valuable at a time of austerity, when value for money becomes paramount. Indeed, the discipline of performance management becomes doubly important in times like these. Running government is not like running a business. Civil servants must contend with shifting political priorities, along with a broader range of vocal stakeholders than private companies face. And they simply can't choose to quit a market where returns look poor. Certainly, there is no denying the scale of the task in front of them.
CIMA is working with the London-based Institute for Government (IfG) to examine the underlying problems, focusing initially on the UK. The rolling programme of so-called capability reviews within the British Civil Service has exposed substantial evidence of underperformance in Whitehall and significant weaknesses in strategic leadership at the heart of government.
The successful implementation of public sector outs, and the running of the public sector in general, requires a culture of strong management and open accountability. In May 2012, CIMA published a joint report with the IfG and Deloitte, which called for improved and more informed decision-making in Whitehall. A prime example of this necessity is the recent mismanagement of the re-bidding for the West Coast rail franchise. The Department for Transport was...