The 2021 census confirmed that the population of the UK has continued to age with the median age in England and Wales increasing from 39 in 2011 to 40 by 2021. The Office for National Statistics projections for 2030 and 2045 show an increase in the number of people reaching pensionable age.
What will be the needs of an ageing population and how can these best be met? It strikes me that the aspiration to have people living healthier as well as longer lives should be front and centre of our policy agenda. There is a general sense services are focused on meeting the needs of our population when they reach their most acute phase and that opportunities are not realised to identify and meet needs through preventive action.
While broadly supported as a good idea, prevention is inherently a difficult sell for several reasons. Proving the absence of something is difficult to do, and proving that actions taken have resulted in the absence of something is even harder.
The long lead-in time required for preventive interventions to modify demand means any benefits are so far in the future they often won’t influence the political imperatives of the day. The demands on public services are now so pressing that capacity and resources have to be focused on them at the expense of longer-term outcomes.
One example of where technological developments could help are with the challenges around prevention. Whether the emergence of the abacus, the modern numerical system or papyrus, accountants have always been the beneficiaries of technological advances.
There are already examples in the world of public finance where machine learning and robotics are used to deliver efficiencies in the systems and processes that produce information. This has the benefit of allowing finance professionals to focus on how this information can be used to inform and make better decisions for the communities they serve.
The increase in the use of machine learning is a product of the increased digitisation of our existence. This impacts on almost all our interactions, including those with public services. As a society we are generating vast amounts of data, most of which is now captured by digital means. This, coupled with the increased processing power now available to us, means that we can model both the current and future needs of populations. As these models develop we may be able to predict how actions or interventions will impact on those needs. Along with the intuition and reasoning of public finance professionals, technology and data might now allow us to prove the absence of demand and benefits of investing in prevention.
Public finance professionals need to be at the forefront of a mindset that starts to break down the silos inherent in the way public services are delivered.
Financial elements of decision-making can often be characterised as the balance between costs and benefits. Often these questions are framed from the perspective of the organisation that is incurring the cost or making the investment. If the perceived benefits do not flow to the organisation then the financial case is lost. In a delivery landscape which is heavily siloed, the benefit to the citizen can be easily missed.
As public finance professionals we need to encourage an analysis which asks, ‘who benefits?’ in the broadest possible terms. The analysis must also support the answer that ‘the citizen first, the organisation second’.
Much will change and, like all professions, public finance will need to move with and adapt to change as it happens. Some of the changes that will take place in the next seven years will have a profound impact and one hopes this results in improvements for those in the profession and the citizens they serve.
For public finance professionals, embracing new technology, processes and outcomes and enhancing their skillsets will be vital if they are to remain a valued part of the organisation. They can help find solutions to our most pressing problems, such as our longer life expectancies and the pressures this will create. Some things won’t change, and neither should they. For public finance professionals specifically, this means the key principles that underpin the way that they approach their role. At the Chartered Institute of Public Finance and Accountancy we set out these principles in our Statement of principles of good financial management, and I believe whatever the future holds these will still stand. They are:
- Organisational leadership – demonstrating a clear strategic direction based on a vision in which financial management is embedded into organisational culture.
- Accountability – based on medium-term financial planning that drives the annual budget process supported by effective risk management, high quality supporting data and whole-life costs.
- Financial management –undertaken with transparency at its core using consistent, meaningful and understandable data, reported frequently with evidence of periodic officer action and elected member decision-making.
- Adherence to professional standards – promoted by the leadership team and is evidenced.
Although the future may be incredibly uncertain at the moment, we know that technology will have a significant role to play in it. Whatever that role is, the public finance professional will be key to harnessing its power to improve lives and outcomes.
Iain Murray is director of public financial management at CIPFA
@CIPFA
On 2 March Localis will be publishing an essay collection on the future of local government finance reform entitled Moving through the gears – where will local government finance be in 2030?
Localis has commissioned experts in local government finance – from within as well as without the local government family – to set out their thoughts, views and hopes for local government finance in the next political cycle.
It includes contributions from Iain Murray, Abdool Kara, executive director the National Audit Office, Cllr James Jamieson, chairman of the Local Government Association, Cllr Tim Oliver, leader of Surrey CC, Cllr Sam Chapman-Allen, chairman of the District Councils’ Network alongside Professor Colin Copus and Dr Mark Sandford, senior researcher from the House of Commons.
