Late pension payments could cost Barnet Council £85,000

The process being run by the council to transfer payments from schools to teachers’ pensions meant some missed a required monthly deadline following the deduction of contributions, according to internal audit papers.

Total interest for late payments between April 2019 and February 2020 was almost £36,700 – coming on top of outstanding interest invoices dating back to April 2014 that add up to more than £49,000.

The issue was identified in Barnet Council’s annual internal audit opinion 2019-20, which was discussed at a meeting of the audit committee on Tuesday (July 14).

During the meeting, officers revealed outsourcing giant Capita had been responsible for overseeing the pension payments for most of the six-year period.

Cllr Arjun Mitta (Labour, East Finchley) asked why the late payments had not been flagged up to the committee before, despite dating all the way back to 2014.

Director of finance Anisa Darr said finance and strategic HR had only recently been brought back under the council’s control.

“Some of these processes have been inherited,” she explained. “Whereas previously we have just been interested in the outcome, now we are more invested in the end-to-end process.”

Ms Darr confirmed all the departments involved – finance, HR and pensions – were previously part of the customer and support group contract with Capita, which was signed in 2013.

When Cllr Mittra asked why Capita was not liable for the payments, Ms Darr replied: “We are looking at that in the background. For the year from April 1 until now, it is our responsibility. Previous to that, I can’t confirm – we haven’t concluded those conversations.”

Cllr Arjun Mittra quizzes officers at the audit committee

Cllr Mittra requested an update on what is owed by the council and what may be owed by Capita, which was agreed by committee chairman Cllr Rohit Grover (Conservative, Garden Suburb).

Despite the pension payments issue, the council’s internal audit report for 2019-20 shows the assurance level – an opinion on the system of internal control and corporate governance within the council – has been upgraded to “reasonable” for the first time in two years.

During the previous two financial years, Barnet only achieved “limited assurance” – primarily due to a £2 million fraud against the council by former Capita contractor Trishul Shah and an “inadequate” rating given to its children’s services department by watchdog Ofsted.

Following the fraud case, consultancy firm Grant Thornton set out a series of actions designed to improve the council’s financial controls. Officers say the “vast majority” of that work has now been completed.

Their report adds that the finance function – which was insourced from Capita on April 1 last year – has seen improvements and “has completed a significant restructure and undertaken its own project to review and strengthen financial controls”.

Barnet’s children’s services department was rated “good” by Ofsted in May last year.

Independent committee member Richard Harbord told the meeting: “I was very critical when this was limited assurance, and I felt that Barnet should not be in that position – so it seems only right I should say I am very pleased to see this report, with the higher level of assurance.

“It is very important from a financial reputation viewpoint, so I think it is a very good thing and I congratulate finance staff.

“Of course, it is only a journey, and hopefully, in another 12 months, we will see a move to an even higher level."