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THE FINANCIAL DIRECTOR INTERVIEW – Not pounding the beat, but still

Mention the word “receiver” to your average copper and his hands reach for someone’s collar. Mention it to an FD, and watch the sweat break out as he re-examines his solvency ratios. But in Greater London, the receiver at Scotland Yard is Philip Fletcher, the man responsible for setting the Metropolitan Police budget. Fletcher, however, will be the last person to hold the title in the Met. In July 2000 his job disappears as Londoners begin life under an elected mayor, whose responsibilities will include financial control of the police. The new order ends an arrangement that has existed, essentially without change, since the formation of the Met 170 years ago. Originally, the job of the receiver was to collect money from Londoners to pay for the new police force; now it is to balance the demands of society against a £2bn budget that Fletcher describes as “challenging”. His task is not simply a matter of finding a new and better way of slicing up the financial cake. Fletcher’s responsibilities include developing a range of checks and balances that ensure the continued existence of high standards of probity throughout the Met, as well as the delivery of systems designed to ensure that the budget is spent effectively. The job is all the more challenging given the major embarrassment five years ago when the then-deputy director of finance – one Anthony Williams from New Malden, Surrey, then aged 55 – was found to have stolen about £5m from a secret Met bank account used to fund anti-terrorism activities. Worse, his fingers had been in and out of the till for about eight years. Worst of all, he was rumbled not by Scotland Yard but by a Scottish bank that was struck by the scale of property refurbishment expenditure by the man who publicly paraded about the Highlands as the “Laird of Tomintoul”. Ironically, the bank reported its suspicions to the police under the terms of the Drugs Trafficking Offences Act. Williams’ arrest, conviction and subsequent imprisonment for seven-and-a-half years was a deeply humiliating experience for the police. (He pleaded guilty to 17 charges and asked for 535 others to be taken into consideration.) Its effect was to provide the stimulus needed to prod the organisation into a rethink of its auditing strategy. And although the case pre-dates Fletcher’s appointment – he succeeded Williams’ boss, Graham Angel – he has been largely responsible for introducing a range of measures designed to ensure that the force, in his words, “never again leaves an individual too exposed to temptation and ensures that responsibility is properly shared.” Williams was not the sole signatory to the anti-terrorism account, but only his signature was actually necessary to authorise payments. The realisation that the force had probably been guilty of complacency led directly to the appointment of a senior civil servant – coincidentally from the Treasury – to add weight to the Met’s internal audit directorate. While the directorate’s role had always been proactive, it was now to have the assistance of a forensic unit, headed by a former detective chief superintendent. “I am determined that we should have in place all the necessary systems to ensure that, as far as possible, we are never again in the position that we found ourselves in four or five years ago,” says Fletcher. Met Commissioner Sir Paul Condon himself made a similar promise at the time. “The internal audit directorate now works closely and proactively with CIB (the internal investigations branch of the service), SO6 (the Fraud Squad) and Right Line (the whistle blower’s hot line for staff and public, introduced as part of the Met’s integrity testing initiative). Last year the directorate issued a number of advice notes offering guidance on risk assessment, controlling financial stationary and addressing controls operating at stations and elsewhere,” says Fletcher. With an organisation the size of the Met – 26,500 officers and 11,500 civilian staff – Fletcher remains pragmatic about what can be achieved. “I would be crazy were I to say that nothing could ever go wrong again,” he says. “All I can say is that the same circumstances could not happen again since we now have the checks and balances in place.” Meanwhile, other problems crowd the routine of the receiver’s life. Traditionally the Metropolitan Police has had to finance all its commitments from within its annual budget, including all the usual shocks and disasters that hit the capital from time to time, and make huge demands on police resources. Incidents such as the Brixton, Brick Lane and Soho nail bomb attacks of recent weeks – along with lesser public order events that occurred at the rate of almost ten a day last year – all require a great deal of money. On top of this, the murder of Stephen Lawrence and the subsequent report by Sir William Macpherson continue to have major financial implications that are as onerous as those that followed the Scarman report on the 1981 Brixton riots. Among the Macpherson recommendations, those relating to racial awareness and an improvement in detectives’ investigative skills have heavy cost implications that must be met from within existing resources. The size of London’s police service means, however, that for the most part, the service is able to iron out the peaks and troughs in the demands upon its resources. ‘The unexpected’ is now built into the fiscal planning cycle, although things still sometimes go wrong. Three years ago, the Met was forced to cut back its recruitment programme for the year in order to remain within its cash limit. “Thank goodness we no longer have to hand back (any of our underspend) to the Treasury,” says Fletcher. “We are now allowed to build up our reserves against some of the known extras that are going to come our way.” The public’s growing expectations mean that the police must now make the fullest possible use of advanced technology as an aid to their work. As a result, a number of expensive computer controlled systems have either just been delivered or are in the advanced planning stage, including one in which the eventual cost isn’t yet known. Some, like the Public Safety Radio Communications Project (PSRCP) and the National Strategy for Police Information Systems programmes, are nationally-based and the cost will be shared between all UK forces. Others – like the £1bn, C3I (command, communication, control and information) project designed to replace the Met’s ageing command and control system – would ordinarily have been met from within the budget. It is, instead, one of a number of costly programmes that are being dealt with as Private Finance Initiative projects. Firearms training is another area in which the use of PFI is being explored as a means of providing facilities at the most cost-effective rate. Police marksmen will shortly be provided with all their accommodation, catering and training at a privately-run, purpose-built site in Gravesend. Meanwhile, in south London, three new divisional stations are to be built as part of a single PFI contract. More are in the pipeline. Some years ago the Metropolitan Police began a programme of devolved budgets, and local operational command unit (OCU) managers were given control of a limited range of budget heads. That programme has continued to expand and with it has come a requirement for local, professionally-qualified accountants. Over the past three years the number of accountants in the Met has doubled as Fletcher and his senior colleagues on the Commissioner’s Central Policy Board, look for ways in which the process can be taken forward. At the same time, Fletcher is conscious of the fact that OCUs can rarely be regarded in isolation and will, from time to time, give and receive assistance to and from other parts of London. The financial arrangements have to take account of this and ensure that sufficient money is available, corporately, to provide a unified policing service across the Metropolitan Police district. “It is devolvement in a context,” says Fletcher. “It needs to reflect the fact that a lot of services are best provided corporately, whether that is within departments like Specialist Operations or Property Services for major, long-term schemes.” So far, devolvement has only included what are known as the direct manoeuvrable elements, such as overtime, allowances and local IT procurements. The really big step would be the devolvement of the manpower budget which, when civilian staff pay and the police and civil pension payments are taken into account, adds up to about 80% of the total cost of the service. Fletcher admits to a certain nervousness about the future possibility of devolving some part of the pay bill. “There is a close match between our control of manpower numbers and our overall budgetary position,” he says. “There is a long lead in time for training and recruitment so we need to know what numbers are being planned for throughout the year. There is also the question of the police pension bill, which we have to bear directly on the annual budget. The cost of this non-funded pension scheme is steadily pre-empting, roughly, an extra percentage point of the budget, year on year on year.” Yet balancing the needs of the Met as a whole against local priorities is a question of recognising where the line is to be drawn. The principles of policing in the United Kingdom are based on the paradigm of local consent: regional chief constables have long recognised the importance of delivering the sort of service that the local community wants rather than that which is seen by the professionals as being the “correct” one. It is this principle which was underscored by the introduction, 18 years ago, of local consultative groups, which gave local people the opportunity to discuss matters of local concern with their local police commander. “I can make some contribution (to the overall policy of the service) by helping to devolve responsibility where it can sensibly happen,” says Fletcher, “giving people more responsibility, more accountability and the support necessary to enable them to carry that out. I am not in a position to know how the priorities are working through on the ground. There are always going to be decisions taken on the priorities, and while some of them are appropriately taken in the light of the overall corporate needs of the Met, we are always going to need the resilience to deal with things like the recent bomb campaigns. There are also local priorities and I think it is right that the commander on the spot should be able to take decisions around the budget based on those local problems. Mistakes are sometimes made but that is the local person’s choice and it is right that it should be.” At least some of the changes now being introduced by the Met have been given an added sense of urgency and direction by the changes due next July, when responsibility for the Met’s budget passes to the newly elected mayor of London. “Until now,” says Fletcher, “no one has ever challenged the constitution of the Met: it is still run according to the principles set up by Sir Robert Peel when he founded the force in 1829.” In effect, the position of the Metropolitan Police will, from July 2000, be similar to that of the other 50 police forces in the UK – apart from the RUC – with all non-operational matters being dealt with by an elected police authority, which will replace the current role of the Home Secretary. At the same time the post of receiver will vanish. “It is a fact which I am fully signed up to. It is a change from the Victorian set-up which, almost against the grain, we are making work for the late 20th century. If there is any tension or conflict of interest, I have to reconcile it, and it is not uncommon for a public servant to have to ensure that he is properly delivering a service to two masters. That is something I have to do. From July next year it will be made more formal, and a police treasurer will serve the elected police authority while the Met’s new financial director will serve the commissioner. If there is an argument then at least it will be resolved between two people, and not within one single person as it is at present.” Curriculum vitae Name: Philip Fletcher Age: 53 Career: 1981-85 – Responsible for aspects of local government finance. 1986-90 – FD of the Department of the Environment (DoE). 1990-93 – Director, planning and land use, DoE. Responsible for the land use planning system. 1993-94 – Chief executive of the Property Services Agency. 1994-96 – Grade 2 in charge of urban regeneration, Countryside and Wildlife; and Government Offices for the Regions. 1996- Receiver for the Metropolitan Police District. Fletcher on the future: “I suspect that it may be right to mark the change (to an elected police authority in London) with a change in personnel. I am, formally, still on secondment from my old department, so whether that leads to anything I don’t know. I look forward with interest to finding out.” Fletcher on the implementation of SAP R/3: “It will be pretty near miraculous if we can complete the change without serious hiccups.” Fletcher on performance: “We are delivering levels of performance in terms of crime reduction, one of the key targets given to us by the Home Secretary, that are quite creditable. Burglaries are at their lowest level for over 20 years. In terms of the match between inputs and outputs, we are one of three or four forces in the country which, over the past five or six years, has seen a real-terms reduction in the resources we have been given by central government. We have, effectively, achieved more with less.” Fletcher on balancing needs against resources: “There are always going to be tensions around the fact that the demand for policing is almost infinite, and that it would be possible to spend as much as society is prepared to give you. It is not an unhealthy tension that we have to work within the budget … to deliver best value to the people of London.”

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