The Public Sector Finance Leaders Barometer
The Public Sector Finance Leaders Barometer is a nationwide pulse check of the pressures, priorities and sentiment shaping local government finance. Compiled from the insights of Section 151 officers and finance directors, it provides a data‑rich view of how leaders are navigating 2026, a year defined by financial constraints, regulatory complexities and rising demand.
Public Sector Consulting Director Simon Christian unpacks the public sector responses from Grant Thornton’s latest Finance Leaders’ Barometer, offering fresh insight into how Section 151 officers and finance directors truly feel about today’s strategic priorities, their confidence in the future, and the key areas where investment is set to grow.
This year, public sector financial leaders are being asked to deliver stability and transformation, often at the same time. The barometer reveals a profession that knows exactly what needs to change, but is stretched in the capabilities required to make it happen.
Results in 30 seconds:
The top three public sector strategic priorities:
- Implementing digital transformation initiatives
- Attracting and retaining talent
- Ensuring regulatory compliance
The top three public sector challenges:
- Increased operating costs
- Regulatory and compliance challenges
- Talent and workforce challenges (e.g., skills shortages)
The top three skills public sector finance leaders anticipate hiring into their finance function:
- Technical accounting
- Advanced data analytics and business intelligence
- Change management skills
There were 100 respondents from the public sector.
Survival sets the agenda for 2026
Attracting and retaining talent
Digital transformation
Improving reporting & analytics
Regulatory compliance
Financial risk management
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
Control exists, but certainty doesn’t
Where leaders feel confident:
- Accurate, timely insights (78%)
- Forecasting (73%)
Despite these gaps, overall sentiment is positive: 78% feel more optimistic than six months ago, though 13% are more pessimistic, often reflecting localised funding or political pressures.
Local Government has deep experience in core financial control—but AI, investment appraisal and regulatory agility require new skills, new mindsets and faster iteration cycles than many authorities can support. Capacity constraints and legacy systems continue to shape confidence levels.
Critical capability gaps now sit in AI literacy and adoption, investment discipline and appraisal and regulatory agility and horizon‑scanning.
Where confidence weakens - percentage
Future work is being dragged into today
Expected increase in time spent
However, some anticipate reductions due to capacity strain:
- Partnering (9%)
- Upskilling (7%)
- ESG reporting (6%)
Councils are under acute capacity pressure. Leaders know they must invest time in forward-looking disciplines—scenario planning, automation, skills—but day‑to‑day operational demands continue to stretch teams thin. Transparency, AI adoption and business partnering are recognised as critical but compete with statutory pressures and limited staff headroom. The result is a tension between what leaders want to spend time on and what they can.
Investment priorities
Finance leaders prioritise investment in:
- Technology (75%)
- Skills development (74%)
- Environmental impact (73%)
Areas with more limited headroom:
- Rewards (61%)
- Recruitment (64%)
- Capital expenditure (65%)
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.
Hiring Focus areas
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
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 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
Decision dynamics today
Perception themes
We want agility, but our processes prevent it.
We talk about purpose, but profit comes first.
More data is clouding clarity.
We prioritise ESG in principle, not practice.
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.
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.
People ultimately determine pace and success
Finance teams 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.
