Payroll errors cost council almost £500,000

Hundreds of council employees carried on being paid even after they left, landing cash-strapped Lancashire County Council with a bill of almost half a million pounds.

Friday, 4th May 2018, 7:30 am
Updated Friday, 4th May 2018, 3:31 pm
County hall

The series of payroll errors came to light during an internal audit, where it was revealed that hundreds of employees carried on receiving a wage packet after they left.The blunders, which went on over three financial years and affected 363 people, came at a time when the council was cutting front line services because of budget cuts.Councillors were updated behind closed doors on the oustanding debts and the management of the payroll at a recent meeting of the council’s audit, risk and governance committee.Afterwards committee member Labour County Coun Erica Lewis said: “Ideally we would like all of our administration to be right first time and where errors are made they need to be corrected.”In total from July 2015 to March 2016 the overpayments amounted to £176,141, with average overpayments of £1,087.The 12 months between April 2016 and March 2017 saw £166,600 was overpaid, with average payments of £969. Between April 2017 and March 2018 another £155,827 rolled unnecessarily out of county coffers, with an average overpayment of £489.This brings the total bill to a shocking £498,568. In the financial year 2015/16, a total of eight per cent of former employees were overpaid, and this fell to six per cent in the period April 2017 to June 2017.Last September the council said there had been a “reduction over recent months in the volume and scale of salary overpayments.”By August last year there was still £312,000 of overpayments which needed recovering. Those who fail to repay the cash after being notified of the payroll mistake face possible referral to a debt collection agency if the debt is less than £1,500, or to legal services if the debt is more than £1,500, the council said. The council’s total annual salary bill is more than £300m.Angie Ridgwell, chief executive & director of resources (Interim), said: “Since the report back in September, we have made significant progress to reduce instances of overpayment, which only involve a small percentage of our total staff numbers.“In common with many large companies, mistakes can sometimes occur relating to payroll. However we will continue to manage this issue and follow up on all cases, including looking at ways to reduce the chance of it happening at all.“We always take action to retrieve money which has been paid out incorrectly.“The overall number of cases has reduced and we’re expecting a further reduction in the coming year.”A council spokesman added: “For the year 2017/18 we had 126 cases amounting to £155,827. It’s expected that this will drop further in the future.”He added there was a 38 per cent reduction in cases in the past year and a 24 per cent reduction in the amount overpaid. Concerns had been raised that payments might have ben made to people who had died. but the spokesman said: “It’s unlikely that an overpayment was made to someone who’d died, although it’s possible that someone could have died before the payment was recovered.”In the two years from July 2015 363 people received the overpayments.The council reported last September that “the issue remains an area of ongoing heightened focus.”

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Under pressures

Like many other local councils, Lancashire County County has faced a huge squeeze on budgets since 2010.With millions stripped in funding from central government, the council now has a forecasted funding gap of nearly £49m in 2018/19 rising to £144m in 2021/22.The shortfall has resulted in savage cuts to local services.Some of the services that have seen cuts include libraries, children’s centres, funding for services for children with special needs, PCSO funding and community transport such as Dial-a-Ride. Council tax has also been hiked to help cover budget shortfalls.The council has also been forced to use £110m from its reserve funds over the next two years, which leader Geoff Driver described as “the county council’s most challenging time in its 130-year history.”