Finance for transformation includes understanding costs and the drivers for them, setting project and programme budgets, monitoring spend, and applying commercial acumen to the assessment of transformation initiatives.
What is finance for transformation?
The ability to accurately understand and model costs, set budgets, monitor and forecast spend at an organisation, service, project, and programme level to mitigate any risks to the financial integrity of the organisation.
In the context of transformation, this includes setting project and programme budgets, monitoring spend, and applying commercial acumen to the assessment of transformation initiatives.
Why is it needed?
Many council transformation initiatives are a direct response to the tighter fiscal constraints faced by local government and operate in support of reducing revenue costs to make services sustainable with less money.
There is a need to understand the costs and financial benefits of transformation initiatives to enable effective decision making, and to plan how to account for transformation and to monitor progress.
In addition, many councils also seek to use powers available to them to either cover the cost-of-service provision or to generate income to offset wider cost pressures.
What capabilities does it need?
To manage finance effectively for transformation, councils need to be able to:
- set budgets
- monitor and forecast spend
- manage project accounting
- apply commercial acumen
- analyse costs and benefits
- understand and implement governance.
Each capability is defined in more detail in the sub-pages below.
Capabilities have been defined to be read both in isolation (i.e. If you need to know only about a certain aspect of finance for transformation), or in combination (to understand financing for transformation in the round).
For this reason, there is a necessary overlap between some of the capabilities.
Related roles
There are multiple roles within local government that support financial management for transformation initiatives. Some of these roles are full time positions, while others are related to governance within existing job roles.
- Finance Managers
- Finance Business Partner
- Head of Finance
- Director of Finance / Director of Corporate Resources
- Project Managers
- Programme Manger
- Portfolio Managers
- Head / Director of Service
- Budget holder
- Budget manager
Essential enablers
Other than having the right capabilities in place, there are several essential enablers that also need to be in place for councils to apply financial capabilities for transformation effectively.
Finance for transformation – maturity index
A related finance for transformation maturity index has been created to enable councils to understand their current maturity and to set, and work towards, a target state. This can be downloaded below.
Resources
The following resources have been suggested by councils as references or tools that they have found useful in relation to finance management for transformation. The LGA is not able to endorse any resources or individual suppliers.
- Local government finance capacity and capability study | Local Government Association
- Finance and business rates | Local Government Association
- Key Competencies for Public Sector Finance Professionals (cipfa.org)
- Best value standards and intervention – a statutory guide for best value authorities: consultation (www.gov.uk)
