Restructuring of finance function

Report: 9
Date: 19 December 2000
By: Commissioner

Summary

This report provides an update on the process of restructuring the finance function. Proposals for restructuring were endorsed at FPBV Committee on 17 October 2000.

A. Supporting information

1. Introduction

1.1 FPBV Committee will be aware of the current work to restructure the Finance Directorate as one of the prime action points arising from the Treasurers review of finance conducted earlier this year. The purpose of this report is to appraise Committee members of the current position.

1.2 The two key objectives of the restructuring are to:

• Support the MPS in its objective to increasingly devolve financial responsibility through providing a greater level of professional financial management resource.
• Establish a suitable framework of financial control to support the most appropriate level of financial delegation from the MPA to the Commissioner whilst enabling the Treasurer to discharge his statutory functions.

2. Progress to date

2.1 Interim arrangements have been made to fill the senior divisional manager positions (identified in the October report) pending a formal recruitment process due to take place early in the New Year. This is through a combination of existing MPS management and experienced temporary managers from the local authority sector. Related functions have been brigaded together under the divisional management structure. Focus initially is on the development of the Business Support division as this is the part of the function which provides professional finance support to devolved managers in both operational and support areas.

2.3 The transfer of the management of existing accounting personnel from the Territorial Policing and Specialist Operations Business Groups has already taken place and plans for the transfer of relevant professional staff within the support business groups are under development. All transfer is expected to be fully completed by mid-January. Service Level Agreements are being developed and work is underway to increase the capacity of this division as quickly as possible to enable the delivery of reliable professional services of a consistently high quality.

2.4 The development of the other divisions is underway although they have less obvious impact on individual business groups. Short term resources have been identified within Corporate Finance division to support the Best Value process and, with the establishment of the MPA’s opening financial position and the audit of the 1999/2000 Cash Accounts almost completed, changes within the Accounting division can now be started.

2.5 Specialist consultancy services have been retained to assist the Finance Directorate management team in the areas of role and responsibility identification, process redesign and recruitment advice. This work is presently underway within the directorate under the direction of the Head of Finance.

2.6 As part of the restructuring programme, the Treasurer and Director of Resources have requested that a review and development of the prime financial regulations and responsibilities be undertaken.

Accordingly work will be undertaken to deliver revised versions of:

• Standing Financial Instructions for the Authority and Service
• Scheme of delegation and budget holder’s responsibilities.

2.7 This piece of work will address two related actions to the Resource Directorate contained within the Commissioners Action Plan to tackle bureaucracy in addition to satisfying recommendations contained in the Treasurer’s original report on the finance function.

3. Issues

3.1 It has been recognised that although modernisation of the function is necessary, in the medium term this cannot be achieved without increasing capacity. The capacity short fall will be addressed by both the recruitment of suitably experienced and qualified staff and the development of existing staff with training and better-defined job roles and supervision.

3.2 A recent recruitment exercise for qualified finance staff has confirmed earlier experiences regarding the difficulties encountered in recruiting professionals of the calibre required. There exists already a market-related allowance available for accountants of between £4000 and £5000. Even incorporating this fully into remuneration, salary levels for this specialism are significantly below the market rate. An important part of the restructuring work will be the determination of appropriate salary levels for the roles identified.

3.3 On a parallel track, pilots for the creation of a Senior Resource Management role within Boroughs are planned. This is seen as fulfilling earlier promises to review the Finance and Resource Manager role in the latter part of 2000/01 but also to complement a more proactive and focused financial management service from the Business Support division. Early indications are that these developments will be well received.

4. Resources

4.1 Increasing capacity will require investment in the medium term. Although the directorate has achieved more than its target in cashable efficiency savings through streamlining its top management tier, a development bid of £900,000 has been put forward in the 2001/02 budget process.

4.2 This sum is estimated to be the minimum required to deliver the quality of finance function which would be expected in an organisation of this size and complicity. Even with this sum approved, the total cost of the professional finance function would be less than 0.3% of the likely MPS total revenue budget for 2001/02.

4.3 The impact of not providing additional resources for this development will be to continue with a finance function with recognised inherent weaknesses which will both limit the extent of financial management devolution that can occur within the MPS. It also likely that significant criticism would be received from external audit and HMIC.

B. Recommendation

The Committee is asked to note the update and invited to comment on progress.

C. Financial implications

Although the final size and structure of the function has not yet been finalised, a development bid of £900,000 has been included in the 2001/02 revenue budget proposal to enable the recruitment of additional professional staff and to development suitable training for both existing and new staff.

E. Background papers

The following is a statutory list of background papers (under the Local Government Act 1972 S.100 D) which disclose facts or matters on which the report is based and which have been relied upon to a material extent in preparing this report. They are available on request to either the contact officer listed below or to the Clerk to the Police Authority at the address indicated on the agenda.

None.

F. Contact details

The author of this report is Bob Alexander - MPA, Head of Finance

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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