Highland Council overpaid 593 former staff racking up a bill of £863,000
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Highland Council made 602 over-payments to a total of 593 individuals after they left the organisation racking-up a whopping £863,000 because the local authority is not checking “to confirm the existence of its staff”.
The revelations – described by one MSP as “beyond belief” – emerged in an auditors’ report after talking to staff for the council’s 2022/23 accounts which, though generally positive, did contain significant recommendations.
The highest amount paid to one individual was £57,067 in gross pay or £42,272 net.
A council spokesman said: “It is anticipated that the internal audit will make recommendations which will be implemented to improve practices and prevent or mitigate the risk of overpayments in the future.”
The surprise finding is a massive blow at the worst possible time for the cash-strapped council’s reputation for economic prudence and governance after a torrid time largely due to financial constraints.
This month it has to cut £60 million from its budget despite getting £26.7 million more from the Scottish Government, last year it had to cut £54 million, and in September it came up £233 million short for vital infrastructure projects.
So news that it did not even know who it was employing and paying will prove damaging, so could another recommendation that the council stops issuing more than 1500 “costly” physical cheques a year.
That also flies in the face of the council’s own stance towards the Highland public who are always encouraged to pay by direct debit for payments like council tax or renting property.
Following discussions with officers, the auditors discovered that “there are currently no checks being done within the council to confirm the existence of its staff” alongside a “failure by departments to provide timely information to HR/Payroll”.
That meant that some of those who left the council were overpaid while the “National Fraud Initiative (NFI) matches also confirmed that the current control was not working”.
Auditors said “an establishment check for the whole council should be done to verify the existence of staff on the council’s payroll” and in future that should be done once a year “to ensure the validity and existence of staff”.
The auditors stated: “During the audit and through discussions with the strategic lead (corporate audit and performance), we found there were issues with leavers and how these were being notified and subsequently recorded on the council’s systems.
“Management have responded and are actively reviewing this area with a target date of March 2024 for completion. To date, the total number of payroll overpayments identified by the council is 602 with a value of £863,000.
“A payroll briefing, including key messages, has been provided to executive chief officers and reiterated to managers. New procedures and processes are being built into the system as a result.”
To illustrate the impact of such a sum – the overpayment of £863,000 would cover all but £21,612 of the entire pay of the chief executive and senior executives at the council.
Highland MSP Edward Mountain: “This is beyond belief. We all look after our own money but it appears when we give that money to the council they are incapable of doing the same. Frankly, those who are responsible for these overpayments should bear a proportion of the costs.”
The council said: “It is anticipated that the internal audit will make recommendations which will be implemented to improve practices and prevent or mitigate the risk of overpayments in the future.”
Other issues emerged, according to the findings: “In 2022/23, a total of 1511 manual payroll cheques were issued by the council amounting to payroll payments of approximately £1 million. In one month alone, 189 manual cheques were issued (an average of 126 manual cheques are issued each month).”
The auditors “queried this process” and have been advised that some staff do not have a bank account or that the pay run occurs prior to the staff member being added to the system or there is a timing difference.
But the auditors continued: “We found no evidence to suggest that the council were reviewing these manual payments with a view to moving staff to direct debit payments instead.”
The problem is that “the process of issuing manual cheques is costly for the council and an additional unnecessary administrative burden” and going back to the 602 non-staff pay, it stated it “poses a risk” to ensuring payments “are made only to genuine staff”.
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