Reflections from Public Finance Live conference

Don’t make politics the enemy of good governance

Political contest is not an obstacle to good governance. The challenge is creating the relationships, information and rigour that allow disagreement to improve decisions rather than simply generate heat.

When councils run into difficulty, it is easy to blame adversarial politics: opposition parties frustrating decisions, scrutiny becoming partisan, poor behaviour or meetings descending into theatre.

Politics isn’t the problem – governance matters

Sometimes those concerns are real. But politics itself is often not the problem. Full council, for example, is partly theatre: a public space in which political groups explain what they stand for and challenge one another. When done well, it provides constructive debate about the issues that matter to residents and also presents an opportunity for differentiation. Problems arise when; the wider governance system is too weak to make political contest productive, when scrutiny lacks information or influence, challenge is dismissed as opposition for opposition’s sake, or poor conduct is tolerated.

It is then easier to blame politics than ask whether the organisation has created the conditions for democratic challenge to work well.

Good governance underpins sound and transparent decisions. Done well, it is an early-warning system and protection against failure, creating the guardrails within which leaders can pursue ambition, take informed risks and innovate in the interests of local communities they represent.

Lessons from Croydon

Yet governance is often seen as boring, technical or burdensome. Hamida’s experience as Leader of Croydon Council during the onset of its financial crisis showed why that is dangerous. Financial failure may be the most visible symptom, but governance failings often lie at the root.

In Croydon, these included a culture in which challenge was not always welcome; optimism bias; weak record-keeping and transparency; reliance on relationships over process; poor financial rigour; and formal decisions not always reflected in subsequent spending. When there is an absence of constructive and robust challenge, weakness will inevitable grow.

The consequences have lasted far longer than the problems took to build. Governance cannot be treated as separate from delivery, or revisited only when crisis becomes undeniable. Good governance should almost be unnoticed, there when needed ready to alert and assist the organisation in navigating challenge.

Relationship and rigour

The answer is not simply more process.

Councils can have excellent frameworks on paper and still allow problems to grow. Difficult conversations are avoided, information softened as it moves upwards, challenge interpreted as disloyalty and problems left until they become crises.

This exposes a missing connection between relationship and rigour.

Relationship without rigour can become cosy consensus, blurred accountability and avoidance. Rigour without relationship can become compliance theatre: technically correct systems that nobody trusts, and challenge that is offered but not heard.

Shared accountability and making challenge safe

The sweet spot is where challenge is robust enough to matter and relationships strong enough for it to be heard and acted upon.

Governance cannot belong only to finance, audit, the monitoring officer or scrutiny. Political and professional leaders need a shared understanding of their roles, where decisions sit, what good challenge looks like and what they are collectively accountable for.

Leaders signal what matters through their behaviour. Do they ask for uncomfortable evidence, admit uncertainty and welcome challenge without becoming defensive? Culture is shaped less by what an organisation says about governance than by what happens when somebody raises a difficult issue. There should be a clear and unambiguous duty on political leaders to make themselves accountable, and not just to members of their own group, as uncomfortable and unnerving that can often be.

Making challenge safe is therefore essential. Telling people to “speak truth to power” places most of the responsibility and risk on the person with less power. Organisations must show that legitimate challenge will be heard, tested fairly, answered and followed by action where necessary.

But plain speaking is not permission for aggression, unsupported assertion or public humiliation. Challenge must be robust enough to matter, but relational enough to be heard.

Information that members can actually use

Information also needs to be usable. Finance reports are too often written by professionals for professionals rather than for the councillors making decisions. Members do not need financial qualifications, but they need a clear account of the position, risks, choices and consequences. Information is not assurance: telling members something is under control differs from giving them the evidence to test it.

Good governance must also be consequential. People disengage when reports produce no change, risks are repeatedly rolled forward, actions remain outstanding or challenge disappears into the minutes.

Assurance should not simply confirm that a process occurred, but test whether it produced the intended result. When an issue keeps returning, the question should shift from “has the action been completed?” to “why has the system not changed?”

Governance is everyone’s job

Finance professionals often see pressures, trade-offs and warning signs before others. Their role is not only to present numbers, but to help organisations see reality clearly, translate information into consequences, expose false certainty and have difficult conversations early enough to matter. When problems are presented, it is also crucial that these are shared and handled corporately. Secrecy only undermines good governance.

Ultimately, good governance is collective. It is created through the everyday behaviour of political and professional leaders: what they ask, tolerate and listen to, and how they respond when somebody tells them something they would rather not hear.

The test is not whether governance removes politics, disagreement or discomfort, in a democratic system it is essential it remains as it can be an indicator of governance health and maturity. It helps to demonstrate that the system can make political tensions productive and ensure that bad news can still be heard and acted upon.