Cost leadership is needed to cut government debt.

AuthorGlass, George
PositionA word from the president

A representative from the World Bank recently described the mismanagement of public sector spending in one developing country as a "form of corruption on a grand scale". Emotive words, but they are a timely reminder of the global need for prudence and accountability when it comes to public sector spending.

Few countries have avoided the Shockwaves of the economic downturn and it is essential that governments ensure that the social impact is kept to a minimum. I had absorbing discussions about cost leadership with CIMA members in government positions in both Canberra and Wellington on my recent trip to Australia and New Zealand.

It was interesting to compare their views with the findings of a report published by CIMA last summer, which argued that a lack of strategic leadership and poor performance management practices had contributed to the current spending crisis in the UK. The report outlined how cost leadership and better management information could contribute to more informed decisionmaking and help to reduce government debt.

Some savings can be made by improving the efficiency of the finance function in government departments. But the bigger prize - billions rather than millions - is to ensure that ministers have accurate information (financial and non-financial) on which to base policy, make decisions and run public services effectively.

A high-quality performance management structure, supported by effective management accounting, is crucial for the effective measurement of outputs and outcomes, and to reduce the costs of delivery.

At present, the decision-making process is imprecise. Correct management information would aid the development of evidence-based policies. It would also complement the work of economists in framing objectives and forecasting the expected results, as well as making the machine of central government "smarter".


In this respect, the UK is by no means unique. Governments around the world are grappling with similar problems. Whatever country...

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