“Public finances must provide value for money”
The public sector is a vital part of the economy, where in the UK it accounts for around 40% of GDP, while in Cyprus it should provide value for money, a leading expert on public finances said ahead of a speech this week.
Ross Campbell, Director, Public Sector at the Institute of Chartered Accountants of England and Wales (ICAEW) where he provides a strategic focus to the Institute’s work to improve standards in the management of the Public Finances, both in the UK and internationally, will address an event on Thursday evening hosted by the British High Commission.
His presentation, “Sound Public Finances, Sound Economy” at the Hilton Park in Nicosia at 6pm, will be followed by a cocktail reception.
Throughout his career, Campbell’s main interest has been reform and improvement of financial and commercial management in the public sector to which he brings strategic-level expertise from both public and private sectors. Before taking up his current role at the ICAEW, Ross was the accounting policy lead and financial reporting standard setter for the UK Central Government at HM Treasury. Other recent senior roles in government include being the Group Chief Accountant at the Ministry of Defence and the Director at the National Audit Office responsible for the value for money review of Defence.
Asked about the role of public finances in the general effort for public sector reform and in achieving growth, Campbell said that “the public sector sets the regulatory and tax frameworks in which much of the economy operates. It is also a vital part of the economy – for example in the UK the public sector accounts for around 40% of GDP.
“Every year, the Cypriot government manages around $12 bln of public money, so ensuring it provides value for money is crucial.”
How, then, can a Finance Ministry ensure that it implements sound economic policy?
“The Finance Ministry should optimise the management of a country’s resources and be at the core of strategic decisionmaking. It should enable governments to base policies on sound financial information. Whatever governments want to do, fiscally, will rest on robust figures,” Campbell said.
“A Finance Ministry should also be able to monitor and manage government spending and costs. This means it can strengthen standards, improve balance sheet management, and drive value for money across government. It should look longterm, beyond the parliamentary cycle.”
And what about parliament?
“The parliament looks to the Treasury to make sure departments use their powers only as intended, that revenue is raised and resources are spent only within agreed spending limits,” the ICAEW expert said.
Asked about what would constitute a good financial management, Campbell said, “an effective and accountable finance ministry should have a clear mandate, setting out roles, responsibilities and capabilities to ensure financial plans are wellfounded and sustainable. This should include a clear distinction between macroeconomic policy and management of tax and spending plans. It should also have a strong focus on the day to day operation of the public finances, and any financial risks to the delivery of government policy. Finally, it should emphasise managing long term sustainability of the public purse, rather than short term expenditure.”
“Such a ministry would need people with the right mix of financial and commercial skills, and appropriate tools and systems. It will be responsible for business planning, risk management and improved financial information, and needs the framework and structure to enable this. “
In conclusion, he spoke about the role of professional bodies such as ICAEW in ensuring sound public finances.
“Finance professionals in business play a central role in improving financial planning and management. Much of that expertise is also relevant to the way governments manage public money.
“ICAEW has both a proud tradition and a duty as a chartered body to act in the public interest. This means also helping shape how governments can uphold their duty to the public to spend public money efficiently and effectively. Finally, of course, ICAEW is training the next generation of finance professionals, who may well go on to work in this area,” Campbell said.