The Public Sector Finance Leaders Barometer
Control is possible in 2026, but certainty isn’t
The 2026 Public Sector Finance Leaders Barometer provides a nationwide snapshot of how Section 151 officers and finance directors are navigating a year defined by rising demand, regulatory pressure and tightening finances.
Built from the views of 100 senior finance leaders, it reveals a profession under intense strain, but also one with a clear sense of what must change.
The public sector results in 30 seconds
Three top strategic priorities:
- Digital transformation
- Talent attraction and retention
- Regulatory compliance
Three top operational pressures:
- Rising operating costs
- Complexity of regulation
- Workforce and skills shortages
Three most in-demand skills:
- Technical accounting
- Data analytics and business intelligence
- Change management
Watch: Focus for 2026
What are local government finance leaders focused on for the next year?
Simon Christian, Public Sector Consulting Director offers fresh insight into how public sector finance leaders truly feel about today’s strategic priorities, their confidence in the future, and the key areas where investment is set to grow.
1 Survival sets the agenda for 2026
Attracting and retaining talent
Digital transformation
Improving reporting and analytics
Growing demand for services
Financial sustainability and fair funding
Local government reorganisation
Cross‑cutting issues such as data quality, ERP optimisation, and operating costs further compound this pressure.The sector’s risk profile is now multi‑dimensional—with operational, strategic and external risks carrying near‑equal weight.
Notably, 92% of respondents have a digital programme underway, and 51% describing it as comprehensive. But nearly one-in-ten (8%) still report no digital plan, highlighting uneven digital maturity across authorities.
After years of funding uncertainty and compounding pressures—rising demand, workforce shortages, fragmented digital estates—finance leaders are focusing on the levers that directly influence resilience: skills, technology, and compliance. The shift is not ideological; it is survival‑driven.
Local authorities know what needs to change. The challenge is delivering it. The near‑term gaps are:
- Trusted data foundations
- Fit‑for‑purpose tools
- Adequate digital and analytical skills
- Time to design and implement change
2 Control exists, but certainty doesn’t
Where public sector leaders feel most confident:
- Ability to provide accurate, timely insights (78% feel confident)
- Forecasting (73% feel confident)
Despite some gaps, overall sentiment is positive: 78% feel more optimistic than six months ago, with only 13% more pessimistic – often reflecting localised funding or political pressures.
Local government has deep experience in core financial control, but emerging demands around AI, investment appraisal and regulatory responsiveness will all require capabilities, mindsets and faster iteration cycles than many authorities can support. Capacity constraints and legacy systems limit confidence levels and pace.
The most critical capability gaps now sit in AI literacy and adoption, investment discipline and appraisal, regulatory agility and horizon‑scanning.
Where confidence is lower:
3 Future work is being dragged into today
Expected increase in time spent
However, some anticipate reductions in time investment due to capacity strain:
- Partnering (9%)
- Upskilling (7%)
- ESG reporting (6%)
Hiring focus areas
- Technical accounting 32%
- Strategic decision support 28%
- Forecasting and modelling 28%
- Finance partnering 27%
- Analytics 24%
- AI 23%
This is a capability-building era, not an expansion era. Leaders are funnelling investment into technology and skills because these are force multipliers in a depleted system. The priority is enabling better performance with the workforce that already exists, not growing it. Finance functions are retooling rather than enlarging.
4 Better decisions require friction, not speed
While 96% of public sector finance leaders agree that healthy tension improves decision, 41% say tension is too low in senior discussions, and confidence in managing tension is uneven: 68% agree, 24% disagree.
Governance environments in local government are often consensus‑driven, risk‑averse and time‑poor. Finance leaders want constructive challenge, but unclear mandates, insufficient data and meeting‑heavy cultures reduce the space for genuine debate. The organisational capacity to slow down, test assumptions and challenge isn’t always available.
More timely, trusted strategic data
Clear CEO mandate to challenge
Clear visibility of organisational priorities
More relationship‑building time outside meetings
5 Trade‑offs dominate strategy
Current skillsets vs future capability needs
Speed of decision-making vs forecasting accuracy
Growth vs risk appetite
Short‑term targets vs long‑term goals
Local government faces simultaneous strategic and operational risks. Leaders are being pushed for quicker decisions, yet accuracy and assurance still matter. They are asked to pursue growth while managing tightening risk appetites. Teams are stretched between firefighting and strategic transformation. These tensions reflect structurally conflicting demands rather than leadership misalignment.
Local government is operating within structural contradictions. To resolve them:
- Governance needs simplification to enable agility
- Metrics must link to funding and outcomes
- Data models must focus on clarity, not volume
- ESG commitments need ownership and credible delivery
- Workforce morale must be safeguarded through better workload design
It's clear that leaders recognise these contradictions:
agree "We want agility, but our processes prevent it."
agree "we talk about purpose, but profit comes first".
agree "more data is clouding clarity, not clarifying it".
agree "we prioritise ESG in principle, not practice".
agree "investment in transformation is costing us morale".
Top Risks
There’s confidence – with caveats
Public sector finance leaders feel confident in their financial baselines, with 84% confident their Medium-Term Financial Strategies will hold. However, risks remain long-standing and largely outside their control.
These risks highlight the need for better demand modelling, earlier horizon scanning, and disciplined delivery of change programmes.
6 Funding flows to stability first
Years of financial strain mean many authorities are operating with fragile reserves, legacy deficits and stretched infrastructure. Leaders want to address root causes, not surface symptoms—strengthening systems before expanding service offers.
Top funding priorities
This is a productivity-first mindset: fix the system, stabilise the finances, then scale improvements.
7 People ultimately determine pace and success
Finance teams in the public sector face a critical constraint: people. Workforce shortages, recruitment challenges, and increasing complexity mean there’s simply not enough capacity to deliver transformation at the required pace.
Biggest barriers
- Officer capacity and skills (34%)
- Regulatory constraints (24%)
- Political will (21%)
Local government’s transformation constraint is ultimately people. Not ideology. Not technology. Not funding. Sustainable change depends on rebuilding capability and capacity at the core of finance teams.
What should you do now?
2026 presents opportunities for transformation—but navigating these challenges requires sharp insights, practical solutions, and the right team to execute.
If you'd like to discuss how these insights apply to your organisation, get in touch with our team today.
