Witnesses:
David Lewis, Cabinet Member for Finance and Resources
Anna
D’Alessandro, Director of Finance Corporate and Commercial
(Interim s151)
Tom
Holmwood, Head of HR Operations
Key points
raised during the discussion:
- A
Member asked what background information and analysis the Cabinet
decision to stop providing the payroll service to Multi-Academy
Trusts (MATs) and academies was based on. The Cabinet Member for
Finance and Resources explained that the Council was in the process
of transitioning from SAP to Unit4 and there was awareness of the
challenges. The Enterprise Resource Planning (ERP) systems were
based on a set of standard processes which were rolled out to all
users including MATs. A gradual move
away from the payroll service by the MATs had already started over
the previous 18 months. MATs were independent businesses that had
no obligation to use the Council’s payroll service. An Accent
survey, carried out in 2022 to understand MATs’ views of
SCC’s payroll service, contributed to the decision. Three
different options were prepared to determine how the Council would
proceed; continue to deliver a payroll service with
investment;continue the payroll service only for maintained
schools; deliver corporate service only. It was decided to continue
the payroll service only for maintained schools and MATs were given
more than the statutory notice of termination of the service. The
Cabinet Member believed that transition of MATs from the
Council’s payroll service to independent services went well,
and the necessary support was provided.
- The
Director of Finance Corporate and Commercial (Interim s151)
reiterated that the transition went smoothly. The 2022 survey
portrayed a deterioration in the payroll service provided to MATs
and set off a chain of events. By the time the Cabinet report was
delivered, there was already a significant reduction in the income
from MATs and Academies and the assumption was that this would
continue. Financial implications were mapped against a set of
strategic criteria such as reputational impact and customer
service.
- The
Member asked specifically what budget implications were
considered.The Director of Finance Corporate and Commercial
(Interim s151) explained that an options appraisal went to Cabinet,
with around eight options reduced to three viable options. To
continue providing the payroll service to MATs required a
£600,000 investment of one-off project costs and ongoing
costs to set up and maintain the MATs. To get the service fit for
purpose, there was a request for another two full-time equivalent
administrator posts, costing £80,000 on an ongoing basis. The
budget was also in an overspend position. The income budgeted from
the MATs was £1.2 million, on a declining trajectory. When
the options were taken to Cabinet, the Council had already received
notice of £400,000 loss of income, and an assumption of
another £400,000 loss was made, forecasting an ongoing
deficit at the end of 2024/25.
- A
Member asked why only 30% of Academies and MATs were satisfied with
the service. The Director of Finance Corporate and Commercial
(Interim s151) explained it was due to several reasons such as a
lack of effective management and oversight; lack of good processes;
lack of resource planning; and lack of effective use of technology,
such as a macro being used that was not fit for purpose. The
maintained schools followed the Council’s terms and
conditions and had the same pay dates, whereas the MATs had
different pay dates, different terms and conditions and other
requirements. These operational issues caused many
problems.
- The
Cabinet Member for Finance and Resources noted the principle of
whether local authorities should run a payroll service for MATs,
that were independent organisations with separate requirements.
There were other specialist payroll providers available in the
market that could meet MATs requirements.
- The
Member asked if the operational issues highlighted should had been
fixed long ago and suggested if it had been, income could have been
generated. The Director of Finance Corporate and Commercial
(Interim s151) agreed. By the time the issues were brought to her
attention, the income was on a declining trajectory. The Council
was not in the business of providing a payroll service. Maintaining
MATs would have required a lot of change and investment to deliver
a good service.
- A
Member asked if learning had been taken from other local
authorities who dealt with the same situation and successfully kept
MATs on the payroll service. The Director of Finance Corporate and
Commercial (Interim s151) could not provide a definitive answer,
but there was no known recent learning. The Council was now
ensuring it looked at other organisations and how payroll was dealt
with. It had become apparent that a lot of local authorities were
withdrawing from providing a payroll service to MATs due to its
complexity, and in consideration that it was not a usual service
for local authorities to provide.
- A
Member asked for an elaboration on what market research was carried
out in spring 2022 and if it could be shared with the Committee.
The Director of Finance Corporate and Commercial (Interim s151)
agreed to share the Accent report with the Committee.
- A
Member asked why there was there a time lag between when the market
research was completed, in spring 2022, and when it was taken to
Cabinet, in May 2023. The Director of Finance Corporate and
Commercial (Interim s151) explained that after the market research,
the resources team and Head of HR Operations wanted to improve the
payroll service. Within six months of this, it was clear that the
payroll service provided to MATs could not be improved. Another
issue had occurred with statutory maternity pay which caused some
anxiety with the schools. It also became clear that the confidence
of a lot of the MATs was irrecoverable. There was also several
months to complete a detailed options appraisal to go to
Cabinet.
- A
Member asked if the decision to stop providing the payroll service
to bureaus could had been taken sooner than May 2023. The Director
of Finance Corporate and Commercial (Interim s151), explained that
a quicker decision could had been made if the Accent Survey was
commissioned sooner and six months had not been taken to try and
improve the service. The statutory maternity pay issue also did not
arise until December 2022. It would have been better to take the
decision to Cabinet before the start of 2023.
- A
Member asked if any consultation with the MATs took place prior to
the Cabinet decision. The Director of Finance Corporate and
Commercial (Interim s151) confirmed there had been no consultation
beforehand.
- The
Member asked if all the MATs were contacted. The Cabinet Member for
Finance and Resource explained that 105 education settings were
interviewed as part of the accent survey but did not know what
proportion this was.
- The
Director of Finance Corporate and Commercial (Interim s151),
confirmed that the Council had stopped using the SAP system for
payroll as of December 2023 and the transition to Unit4 was
successful. A Member asked if the Council was currently providing
payroll services to any external organisations and was informed
that only maintained schools and corporate employees were currently
supported by the Council’s payroll service.
- The
Member requested insight into the level of payroll queries the
Council was receiving, compared with 2023, and if there was a clear
methodology for a customer to report an issue with the payroll
service. The Head of HR Operations said the number of payroll
queries had doubled since last year’s but was now on a
downward trajectory. The way the Council received payroll queries
had been redesigned to ensure that all queries, from whichever
direction, went through the helpdesk. This provided better
statistics and allowed visibility of root cause of problems. The
Cabinet Member for Finance and Resources noted the school clinics
being run for schools, were ensuring a better level of engagement
and support for schools. The Director of Finance Corporate and
Commercial (Interim s151) added it was recognised that
communication with schools could had been better. There was now a
forum in place to communicate with schools since Unit4 went live.
There were now subgroups from the Head of HR Operations’ team
that meet separately with headteachers to discuss any issues and
resolutions.
Actions:
- The Director of
Finance Corporate and Commercial (Interim s151) to share the 2022
Accent report on payroll customer satisfaction.
- Accent surveyed 105
education settings; The Director of Finance Corporate and
Commercial (Interim s151) to provide what proportion of SCC’s
academy customers participated in the survey.
- The Head of HR
Operations to provide how many payroll queries the Council is
receiving per month since Unit4 went live and how this compares
with the same period last year.
Resolved:
The
Resources & Performance Select Committee welcomes the improved
communication with payroll customers and recommends
that:
- Customers of the payroll service continue to be promptly
notified of any problems occurring and the resolutions.
- Stakeholders affected by a Cabinet decision should, where
appropriate, be consulted and consultation feedback supplied to
Cabinet Members before the decision is made.
- Cabinet decisions directly affecting stakeholders should be
shared with them all (a) at the earliest opportunity and (b) at the
same time as each other.