Government Finance Profession Annual Conference 19 th and 20 th November 2009

1. Government Finance Profession Annual Conference 19th and 20th November 2009 Margaret Ewing Partner and Vice Chairman Deloitte Managing Out of a RecessionPerspectives from the Private Sector

2. Managing Out of a RecessionPerspectives from the Private Sector – Overview • Perspective of the Private Sector CFO Today • Priorities for Finance Today • Your Key Challenge - Lessons from the Private Sector • What Next?

3. Perspective of the Private Sector CFO Today Managing Out of a RecessionPerspectives from the Private Sector

4. Managing Out of a RecessionInformed • Deloitte CFO Programme – access to and insights ofCFOs of UK’s major corporates • Deloitte quarterly UK CFO survey: • launched September 2007 • the benchmark of UK corporates’ financial appetiteand attitudes • regularly cited in the quarterly Bank of England's Inflation Report and key financial media etc • early survey results provided to brief BoE's Monetary Policy Committee • 120 CFOs, accounting for 27% of quoted market, took part in 2009 Q3 survey

5. Managing Out of a RecessionOptimism Financial prospects Net % of CFOs who are more optimistic about financialprospects for their company now than three months ago

6. Managing Out of a RecessionFinancial Risk Decreasing Financial risk Net % of CFOs who think financial risk on their balancesheet has increased over the last 12 months

7. Managing Out of a RecessionLasting Change Long term effects of credit crunch % of CFOs who expect the following to happen

8. Managing Out of a RecessionEmerging Recovery Response Corporate strategies % of CFOs following or likely to follow thestrategies below in light of the expected upturn

9. Managing Out of a RecessionPerspectives from the Private Sector Priorities for Finance Today

10. Managing Out of a RecessionFinance’s Role in the Private Sector Transition • Priority to date – “steadying the ship” • Focus on cash, funding, working capital and costs • Priorities tomorrow – being addressed TODAY • Information for decision-making • Business partnering • Delivery of sustainable cost reduction • But fundamental and urgent requirement • Increased focus on Finance talent agenda • Developing wider skills and relevant capabilities within Finance

11. Managing Out of a RecessionFinance’s Role in the Private Sector Transition Gordon Brown's fire sale of public assets to raise £16bn Treasury told public sector can save £9bn The public sector can make another £9bn a year of efficiency savings by 2014, reviews commissioned by the Treasury have concluded. Cost-cutting authority is a taste of things to comeMany Conservative councillors and activists are privately enthusiastic about the possibility of major changes to public services so as to make it possible to cut costs............

12. Managing Out of a RecessionPerspectives from the Private Sector Your Key Challenge – Lessons from the Private Sector

13. Managing Out of a RecessionSustainable Cost Reduction – The Role of Finance Own the agenda • Manage scope of review • Create timelines and schedules Manage process • Manage analyse and assess process • Drive regular review process Boss the numbers • Lead opportunities assessment • Own reporting and tracking mechanisms Empower the business • Provide training in cost management tools/ techniques • Centrally source and provide benchmarking data Drive communications • Ensure that cost management gets constant visibility in organisation Shape policy • Set and enforce critical policies: delegated authorities, spend approval limits and policies

14. Managing Out of a RecessionFinance Characteristics – The Four Faces of Finance High 25% Strategist / Catalysts Strategist / Catalyst Finance d’vpmt path Finance Function 40% 35% Low Mediocres Laggards Low High Steward / Operator Source: Deloitte Research

15. Managing Out of a RecessionPerspectives from the Private Sector What Next?

16. Managing Out of a RecessionWhat Next? • Finance has leading role to play as we manage out of a recession – in private and public sectors • Challenges facing finance professionals have many similarities in both sectors – but some key differences • What can you do to play your part? • Improve your capabilities and skills in understanding relationships between: • - costs and outcome • - forecasting and planning • - business partnering and relationship management • Provide leadership within your Department, particularly around prioritisation of programmes and services in context of reducing expenditure

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