English local authorities must take urgent steps to tackle staff shortages in their finance teams, says a new report.

Published in October by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Local Government Association (LGA), the report was based mainly on a poll in Q4 last year that invited CFOs in every English council to answer 40 questions.

According to 105 responses, 16% of council finance posts across England at the time were vacant – including 26% of accountancy roles, 21% of internal audit roles and 20% of business partnering roles.

On average, the report notes, council finance teams were facing a staff turnover of around 12.5% per annum, and rising. In districts, the rate was even higher. Employees cited income as the primary reason for leaving.

In addition, the poll found, 4.5% of the total finance workforce in English councils was a blend of agency and interim staff – with CFOs forecasting increased expenditure on those resources. For the majority of respondents, the main reason for using agency staff and interims was because the recruitment exercise had failed to deliver.

Concerningly, most local authorities who took part did not have a finance workforce plan.

Building capabilities

In light of those issues, the report sets out a four-point action plan, urging councils to:

1) Boost leadership capacity and capability

Councils must take steps to widen the availability of CFO candidates – whether that means building career potential within the sector or drawing upon the talent pool outside it.

For example, the report notes, there are many established, experienced senior finance professionals who are retiring, transferring into other sectors or moving into more flexible, interim roles on an associate basis. To make resourcing from outside local government work, the process must be de-risked through a blend of clear guidance, briefing and preparation – plus effective assurance procedures.

Several councils reported gaps in their succession planning at deputy CFO level – a problem that was particularly challenging for smaller authorities. As such, more mentoring is required for CFOs and should be extended to deputies as part of their groundwork for promotion. 

2) Attract and recruit the right staff

With pay emerging as the primary barrier to recruitment, the report says, English councils must do more to promote local government finance careers. In parallel, they must rethink reward packages to ensure they appeal to a more diverse range of candidates.

As an “important example of the benefits of collective recruitment”, the report cites the London-only pilot of Impact: the local government graduate programme finance scheme. Following the initiative’s success, work is currently underway to explore the level of interest nationally. According to the report, the scheme “needs to be promoted and fully utilised”.

Another programme that must be “fully evaluated and rolled out across the country” is the Society of London Treasurers Graduate Scheme, which the report says is currently working well for London boroughs.

3) Develop staff

To build internal capabilities and assist with recruitment and retention, every council must have a specific and comprehensive workforce development strategy for local government finance. That must include increased access to qualifications and CPD, plus better management training.

As the qualification route tends to be heavily focused on new starters, the report says councils must do more to help established team members get qualified. In particular, they must devote attention towards developing staff with the required qualifications and skills for accountant, internal audit and business partner roles.

It is also vital for councils to explore the scope for new training methods – and ensure that they have the correct level of training provision for any plans to build resource capacity.

To support an effective work culture, managers and team leaders must have the opportunity to undertake more training in people management and talent management, the report says. The One NHS finance model serves as an example of what that could look like.

4) Create the right environment to deliver

While turnover of 12.5% is not exceptional, the report notes, it is nonetheless spawning significant costs and demoralising teams. As such, staff are having to take on increased duties for business as usual, which is not sustainable.

From that perspective, it is important for councils to build a clearly defined working culture with a strong employee value proposition. That means paying close attention to staff needs, motivation and career advancement.

In terms of workforce planning, the report points out, councils could yield benefits from greater collaboration at regional or local level – even including other public sector bodies. There are also potential advantages in taking a shared approach to recruitment campaigns, training and development and specialist resources.

Crucial role

In a statement, CIPFA Chief Executive Owen Mapley stressed that local government finance teams are under immense pressure – and that without strategic investment in people and skills, the issues set out in the action plan will only get worse.

“CIPFA and the LGA’s report offers practical solutions to help councils recruit, retain and develop the talent they need to continue delivering for their communities,” he said.

Meanwhile, Councillor Pete Marland, Chair of the LGA’s Economy and Resources Board, said: “Finance teams play a crucial role in helping councils deliver the valuable services our communities rely on. This report highlights the urgent need to invest in and develop the finance workforce and we look forward to working with government and the sector on safeguarding the future of this profession, which is vital for local government.”

He added: “The report emphasises that improvements in workforce capacity and capability will depend on available resources and funding. Without immediate intervention, the research statistics reveal that local government finance teams will struggle to meet service needs, affecting public services nationwide.”

ICAEW Public Sector Director Alison Ring OBE FCA CPFA said: “It is clear that strong and capable finance teams support the efficient delivery of services to local communities. 

“In ICAEW’s vision for local audit, we call for investment in the staff, systems and processes of council finance teams, together with a programme for recruiting and training more qualified accountants.”