Profile: Helen Kilpatrick, Home Office FD

It’s surprising what chance encounters can lead to. When Helen Kilpatrick
walked into the Greater London Council over two decades ago she had her heart
set on a career working for London’s left-wing firebrand Ken Livingstone.

But on the day Kilpatrick went to the GLC (abolished in 1986 by the Tories),
there was a careers fair focused on accountancy. With the importance of a
professional qualification ringing in her ears, she signed up for three years of
training. ‘I became an accountant by mistake! It could so easily have been legal
trainee day there,’ she confides.

Despite accountancy being typically associated with less turbulent career
paths, Kilpatrick has ended up working in the Home Office at a time when
accounting and politics are in the eye of the storm.

Presently she finds herself working alongside another straight-talking
politician, home secretary John Reid. Well, for the time being anyhow ­ the Home
Office has been run by three different ministers in as many years.

In February 2005 she was appointed finance director at the Home Office, or
director general financial and commercial to quote her official title. She took
up her post in April 2005 as part of a government-wide goal to have qualified
accountants as FDs in every department by the end of 2006. It was almost a year
to the day from her appointment that the asylum scandal hit the department, then
under Charles Clarke, and triggered a wholesale review of the department’s
management.

For Kilpatrick, however, the turmoil has offered her opportunities in which
she can make her mark. She already has a clear idea of how Whitehall worked ­
she spent the best part of her career working in senior finance roles in local
government ­ so it was just a case of getting used to the scale of things and
constitutional procedures.

It is here where she finds the greatest differences. ‘The relationship
between ministers and officials is different to that between councillors and
finance officers. The CFO in local authorities is responsible to the whole
council and not just the party that’s leading, and also has duties in relation
to the public that override their duties even to the council.’

In the civil service the buck stops with the minister and there’s no
particular statutory basis for the finance service as in local government. ‘In a
sense,’ she says, ‘the relationship is less clear’.

Kilpatrick sits on the Home Office board and reports directly to permanent
secretary Sir David Normington ­ nicknamed the ‘smiling assassin’ for his work
at another government department ­ who chairs the board.

She is responsible for a budget worth £13bn. If you include the police
budget, which is raised from council taxes, and local government grants, that
figure rises to a significant £18bn, totalling 3% of public spending.

Put like that Kilpatrick says it sounds a lot, but when you consider that the
money must deal with some of the UK’s most pressing and emotive issues, it’s not
that large, she argues. For a quick snapshot of what the money deals with, it
encompasses everything from counter terrorism and immigration to prisons and
asylum seekers.

‘There are huge responsibilities that have to be discharged with that money.
I think the key responsibility of the finance person who’s on the board is
making sure the Home Office is able to direct its resources in the areas that
are most needed,’ she says.

The government’s goal ­ led by Mary Keegan, the Treasury’s managing director
of government financial management ­ to run government departments in a manner
more akin to the private sector might take longer than imagined. Government’s
stakeholders are, after all, the entire British population, rather than a select
few monied investors.

‘Obviously you have to have the normal finance skills. But I don’t think
those are the most important for a broader finance role. I think the most
important now is understanding the business and the challenges faced by the Home
Office and managing the budgets.’

Observers may scoff at Reid’s 100-day plan to turn the department around and,
in light of the latest revelations on illegal workers in the UK, most might say
it’s already failed, but for Kilpatrick and her finance team at least it offers
them clear parameters. ‘We are now in a position where the Home Office does need
to reform, but we’ve got a steer on what his priorities are, and have very clear
plans of what needs to be done,’ she says.

Improving financial management was already underway across government before
Reid came to office. ‘It fits really well into the reform plan and is
underpinning the plan. It’s no good having the resources in place if you haven’t
got the skills to underpin it.’

But Kilpatrick is the first finance chief at the Home Office to be
professionally qualified. With this in mind, it is perhaps no surprise that the
department’s accounts for the financial year 2004/05 remain qualified. And not
just qualified, but also disclaimed ­ the most serious level of audit
qualification.

Before summer recess the influential Commons public accounts committee
criticised the accounts and accounting system, following a severe reprimand by
the National Audit Office. ‘The accounts for 04/05 were qualified and it’s now
impossible to move from a qualified set of accounts to a clean set,’ Kilpatrick
explains.

Worse still, it’ll take at least two years to get a clean bill of health for
the department’s accounts. ‘If you have a disclaimed set of accounts,
technically you haven’t got any accounts because the auditor hasn’t been

able to give an opinion. The following year a set of accounts is like the
opening accounts,’ says Kilpatrick.

‘It may be fair to say that the Home Office hadn’t appreciated in the past
the benefit of a really professional financial accounting function. But it’s a
high priority now. There’s an overwhelming amount of pressure to get a clean
bill of health, but because of the historical problems we have to be realistic
about what level of quality we can receive,’ she adds.

One advantage for the finance team is that the department has already agreed
its spending review until 2007 with the chancellor. Although the budget will
remain flat in real terms, it does mean that Kilpatrick knows exactly how much
money she’s working with.

Kilpatrick, however, must also manage to save. The Gershon review requires
the department to make £2bn worth of efficiency savings to meet the spending
review target of 2004. They have made £1.5bn of savings so far. But the figure
of 2% savings, will from 2006 rise to 3%.

‘We are committed to reducing HQ staff by a third over the period of the
spending review. There’s an opportunity to manage that because people don’t have
to be made redundant as many can be redeployed to the front line,’ says
Kilpatrick.

The current troubles at the Home Office don’t seem to faze Kilpatrick
however. On the contrary, they appear to galvanise her determination to clean up
the financial mess she walked into.

‘There isn’t a single day that goes by at the moment that you don’t wake up
and hear about something that’s happening in the office on Radio 4 before you’ve
even got out of bed. I think that’s a good thing because it shows that the
things you’re working on matter to people in the country.’

Her test will come in around two years’ time, however, when the accounts can
for the first time technically receive a clean bill of health. Then it will be
clear how much the drive to recruit professional accountants has really
achieved. Until then, the FD has to make sure finances are well channelled, as
the minister might not enjoy the Radio 4 coverage as much as Kilpatrick.

Changing face of public sector FDs

Poor or, worse, mismanagement of public funds in the past has changed the
attitude to the finance function employing professionally qualified accountants,
instead of career civil servants, at the helm of finance teams in government
departments.

The change has seen a conscious reform begun under Sir Andrew Likierman who
spearheaded the grassroots reform by shifting government accounting from its
traditional cash accounting to resources accounting, which is closer to private
sector accounting.

The goal to have all government department finances managed by a
professionally qualified accountant began with the appointment of Mary Keegan
who had spent her entire 30-year career in the private sector. She joined HM
Treasury in July 2004.This is hoped to be achieved either by poaching
accountants from the private sector or by ensuring formal training internally.

Another trigger in the increased movement of private sector FDs into local
and central government is the change in the way public works are delivered.
Since New Labour took power in 1997,more and more public services have been
delivered through public-private partnerships and private finance initiatives,
meaning that the two teams have had to work more closely together to deliver to
the public.

‘If you’re an accountant working on a big project with the private sector,
it’s natural for people to move. I think there’s better communication between
accountants in the private and public sectors,’ says Kilpatrick. ‘When I started
my career they were totally different animals. That’s evidenced by the fact
that, although it didn’t work, the merger between Cipfa and the ICAEW, only
failed by 0.5% on the vote. Whereas if you’d had that vote when I started my
career there would have been a big rift.’

‘The private sector accountants are getting a better appreciation of how
interesting and challenging it is to work for government, and what the scope for
accountants is.

The drive to professionalise the finance function in central government has
helped that further, as it will encourage more private sector accountants to
work for government,’ concludes Kilpatrick.