Southend-on-Sea, Essex. Leo, an 11 year-old schoolboy, witnesses the aftermath of a serious road accident. In the confusion, he steals a policeman's cap from an unattended patrol car. Leo approaches the local police station, where he peers into the building from outside. Equipped with new surveillance technology, he is observed by a senior police officer.
The following day at school, Leo shows the cap to his friend Mike. Later, the cap is stolen by another student and thrown on the school roof. The two boys climb onto the roof and retrieve it. Through a skylight, they observe a group of older students in the common room.
Leo offers Mike the cap in return for participating in his own drama. They arrange to perform a mock knife fight at the local football ground as a joke. Leo steals some fake blood from the school. Leo arrives at Mike's house and they discuss the pretend fight. Leo hides the props under Mike's bed.
At the football ground, the two boys begin scuffling. Leo is stabbed in the stomach and Mike flees the scene. The police drive Leo to the hospital, where he is treated for his injuries. They question Leo over the incident. Leo lies to further incriminate Mike, providing them with his name and address.
Mike wanders into a seafront café. He is befriended by Ritchie, a rebellious local youth. Ritchie and his group of friends escort Mike to a disco. Before long, the club is raided by police, looking for Mike. With help from Ritchie and his gang, Mike escapes from the club. They visit a local shopping mall. Ritchie throws a litterbin through a shop window.
A reporter arrives at the hospital looking for Leo; the police immediately remove him from the building. Ritchie steals a car and Mike reluctantly gets in. Ritchie drives at high speed, taunting the surveillance cameras in the town centre. Eventually they are confronted by a stationary police car. Oblivious to the fact that the car has been stolen, the police allow Ritchie to continue.
At the hospital, Leo tells a nurse that everything he has said is a joke. Ritchie takes Mike to a Chinese restaurant. Ritchie pretends he has a phone call to make and disappears. Realising he has been left alone with the bill, Mike escapes from the restaurant through the kitchen. Ritchie drives up behind him in a newly acquired car, telling him it was a test.
At the hospital, Leo eavesdrops on the police operations, discovering that they have not yet found Mike. Discovering that Leo has left his bed, the police begin searching the hospital, and eventually find him on the hospital roof. Leo informs the police that Mike is hiding at his sisters' house.
On the seafront, Mike escapes from Ritchie's car. Ritchie attempts to run a double-decker bus off the road. The bus, filled with drunken revelers, is stopped. Ritchie climbs onto its roof. As the crowd looks on, Ritchie jumps from the roof of the bus and falls to the ground. Mike disperses from the scene and visits Susan, Leo's sister.
Susan calls Leo at the hospital. Mike talks to Leo over the phone. Leo tells him to remain at Susan's house and face the police. The police arrive but Mike has already left. At the hospital, Leo and Mike are reunited. Leo smashes a television set and deliberately triggers the fire alarm. The two boys flee the scene, chased by the police down a stairwell.
Leo and Mike escape into an elevator. They begin arguing and a fight ensues. The elevator doors open, revealing scenes of chaos in the corridor. Injured patients, nursing staff, police and firemen are evacuating the building. Mike and Leo are unnoticed in the commotion. They light up a cigarette each.
