MoJ broke Treasury rules over prison officer pay

1 Aug 17

The Ministry of Justice three times breached Treasury guidelines in errors over prison officers’ pay.

Treasury officials have refused retrospective permission for the MoJ’s action.

The breaches were admitted in the annual report of the National Offender Management Service, since renamed HM Prison and Probation Service.

It said recruitment and retention problems had led to increases of £5 per hour for overtime and incident response payments from September 2016 to March 2017.

This step “inadvertently breached government pay policy due to a misinterpretation of HM Treasury guidelines and insufficient co-ordination between HR and finance within the department to ensure compliance with HM Treasury pay policy,” the report said.

In February 2017 adjustments were made to allowances for new prison officers at prisons with the greatest recruitment and retention difficulties and these were then also paid to existing officers to avoid detriment.

“The application of the additional allowances to existing staff was a further inadvertent breach of government pay policy which occurred again, due to the misunderstanding of Treasury guidelines,” the MoJ admitted.

Its third breach came when an initiative to develop a new advanced prison officer role was announced in February 2017 before Treasury approval was secured.

When the breaches became clear, permanent secretary Richard Heaton commissioned an internal audit review following which the MoJ submitted a business case seeking retrospective approval from the Treasury, but the latter refused to agree this.

An MoJ statement said: “These changes were made in response to acute operational issues, to boost staffing levels across the service and retain staff.

“The changes inadvertently breached government pay policy due to a misinterpretation of the guidelines. No fine has been imposed [by the Treasury] to date.”

Internal audit officers found there had been failings in governance, after which “concerted efforts have been taken to identify the circumstances leading to the breaches including a lessons learned exercise led by MoJ finance director endorsed by the chief finance officer and a detailed review of the pay remit and approvals process for the MoJ”, the report said.

It also highlighted problems with facilities management contracts with Carillion and Amey, where it turned out the MoJ had been ignorant of vital information before letting these.

The report noted: “There is a financial risk within the custodial facilities management contracts that may impact on service provision and declared efficiency savings.”

A contracting exercise “exposed that historically the costs of maintenance and services were not clearly understood by the business and consequently planning assumptions have not held true”, it admitted.

“The contract is therefore underfunded and the declared efficiency savings reduced.”

Financial risk arose from asset verification, asset condition, service verification and variable costs.

Actions had been taken to clarify the financial risks that had allowed “negotiated settlements to be reached that reflect true contractual costs”.

 Appropriate governance had been put in place “that now ensures that variable costs are accurately reported and justified and that claims are assured by the contract management team”.

An MoJ statement said: “Public funds should always be subject to the highest scrutiny.

“Since these contracts were awarded, there have been a number of unforeseen operational changes which have directly impacted the maintenance of the estate. We are now in discussions with contractors and it would be inappropriate to comment further at this stage.”

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