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The National Audit Office’s assessment of the Government Finance Function’s Strategy 2030 finds that foundations for success have been established but that there are longstanding challenges to overcome
Poor-quality cost data and a lack of incentives for non-finance staff to prioritise good financial management have the potential to derail the Government Finance Function’s strategy, the UK’s public spending watchdog has warned.
In its assessment of the Government Finance Function (GFF)’s ‘Strategy 2030’, the National Audit Office (NAO) said that overcoming such barriers would dictate the extent of success in achieving the government’s financial management goals.
The GFF strategy – published in July 2025 to inspire the more than 10,000 government finance specialists across government – set out an ambition to strengthen finance capability, improve the use of data and insight, and make finance professionals more integral to delivering public services.
But the watchdog warned that there are “some long-standing challenges the government must overcome”, with “outdated systems and poor-quality cost data mak[ing] it harder to take full advantage of artificial intelligence and to track potential savings”.
The NAO concluded overall that the GFF has “laid out a clear ambition to strengthen financial management across government and has established many of the foundations needed to succeed”. But it recommends that the GFF should now “look at how its work could go beyond impacting just finance teams and set out clearly how it will work across government to truly have influence with senior leaders, HR teams and budget holders”.
Read more: NAO boss calls for ‘step change’ in financial management across UK public sector
NAO’s call for ‘step change’
The NAO’s 46-page analysis, published on 19 June, comes four months after the head of the NAO called for a “step change” in the standing attached to the “often underplayed” role of financial management in enabling the public sector to hit cost-saving targets and ultimately deliver better services to citizens.
Gareth Davies, the NAO’s comptroller and auditor general, spoke of four “fundamentals” of financial management that can “unlock the improvements in value for money we all seek” during a keynote speech to a largely parliamentary audience in the Palace of Westminster in February. The fundamentals were: “timely and accurate” financial reporting; the “right” financial management information; “skills and capability” needed to inform decision-making; and leadership and culture to “drive” better financial management.
Davies was speaking just a couple of weeks after the NAO – which exists to scrutinise public spending for Parliament, assessing about 400 annual reports and accounts each year – highlighted that some central government departments are suffering from “weaknesses in getting the basics of financial data and reporting right” in a first-of-its-kind report collating and presenting insights into their annual book-keeping.
As part of the government’s 2025 Spending Review, all UK departments are required to deliver at least 5% savings and efficiencies by 2028-29, representing nearly £14bn (US$18.75bn).
HM Treasury (HMT) and the Cabinet Office are currently introducing reforms to give departments more responsibility for their finances – an initiative set out in the Autumn Budget 2025 for 2026-27 onwards, and referred to inside government as ‘Project RESET’.
Implementing AI, data and enterprise resource planning systems
Artificial intelligence is described in the NAO’s latest assessment as a “major opportunity to transform” financial management across government.
“AI and automation could reduce administrative finance tasks, freeing up resources to improve analysis and strengthen financial insight – overall helping better management of department budgets,” the watchdog explained.
The NAO urged that the GFF, through a recently formed innovation committee, should support “structured experimentation” in AI use across the finance profession by: defining “priority problem areas” where AI could improve productivity and quality; capturing and sharing learning on opportunities and risks from pilots; and championing the most effective use cases so that departments can adopt them with confidence.
The GFF should, the NAO continued, “set out how it will identify, assess and disseminate what works” so that experimentation leads to adoption, not just isolated pilots; and “use its influence to coordinate action to remove the barriers to scaling up appropriate AI use across government, such as through its work to support the standardisation of financial data”.
On the related topic of data, the GFF is described as “well ahead of other [government] functions in its efforts to standardise data” to support the adoption of shared services across government through moving departments in groups onto Enterprise Resource Planning (ERP) systems.
“The aim of shared services is to unlock efficiency savings and enable analysis and insight through standardising back-office processes and data,” the NAO noted. “But progress is being held back by other government functions, lack of readiness and different rates of adoption by departments”.
“More fundamentally, the quality of data that supports decisions in government, including on costs, will need to improve dramatically if the full benefits of ERP systems and the embedded AI capabilities are to be realised,” it added.
Read more: NAO identifies ‘weaknesses in getting basics right’ in UK government annual accounts
Government Finance Function’s innovation priorities
The GFF’s innovation committee is spearheading efforts for government finance professionals to be “insightful and data driven” and “innovative and delivery focused”.
But the committee is “still developing its workstreams, and our interviewees said it has not made as much progress as they had hoped,” the NAO noted.
The committee is currently focusing on “transformation assessments of finance functions in departments,” the report explained.
“It is working to identify suitable data sources to understand the time spent on finance‑related tasks within departments,” it continued. “It plans to use these data to develop an understanding of how artificial intelligence and automation could support efficiency, and target further interventions on the areas of greatest opportunity”.
The committee is also exploring the use of Microsoft Copilot for government finance, it stated, adding that this includes developing training for finance staff across government on AI.
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Skills self-assessment
The NAO report includes a bar-chart presenting how Government Finance Function members self-assess their skills (as of September 2025 – 4,920 submissions were received).
The GFF membership self-assessed as being strongest at basic finance skills, working with data in finance, and budgeting, forecasting and costing; and self-assessed as being weakest in tax, systems and digital, and working with data in systems.
Other skill areas ranked (from strongest to weakest, according to respondents’ self-assessment) were: strategy; government finance; business and organisation; risk; project management; International Accounting Standards (global financial reporting guidelines designed to bring transparency and comparability to financial statements worldwide); and investments.
The Ministry of Defence is the single government department employing the most GFF professionals (1,592 in 2024-2025), followed by Defence Equipment & Support (988), and HM Revenue & Customs (946). Arms-Length Bodies make up the largest cohort (1,781).
Overall, the NAO found “positive engagement across Whitehall” with the GFF, with 90% of departments rated good or excellent for their finance teams’ engagement with the GFF in 2024–25.
‘Reap full benefits’ of tech
The GFF, which has a central team of about 40 staff based at HMT, is jointly headed by Conrad Smewing and Tara Smith. The former is director-general of public spending at HMT and the latter recently moved from her role as chief operating officer at the Department for Business & Trade to the same role at the Home Office.
Its four-strong management team also includes deputy head Andrew Cartner, director for public spending at HMT, and Clive Martin, who is head of the Government Risk Profession.
Another of the recommendations in the NAO report is to “engage senior government non-executive directors with a non-government background and relevant skills to provide independent challenge over the life of the strategy”.
Sir Geoffrey Clifton-Brown MP, chair of the House of Commons public accounts committee, said in response to the NAO report: “Artificial intelligence presents a significant opportunity to transform financial management and boost productivity, but only if government prioritises the right specialist skills and tackles the longstanding issues of poor-quality cost data and legacy IT systems.”
“The Function must now deepen its understanding of what AI will mean in practice for skills and headcount, so that it can reap the full benefits of new technology,” he added.
Report: The Future of the Finance Ministry – published by Global Government Forum and sister title Global Government Finance – is based on interviews with 10 senior leaders from finance ministries around the world. Download the repot here.
This article was first published by Global Government Forum’s sister title Global Government Finance: Watchdog warns on biggest challenges facing UK government finance teams