Before our members read this article. It is important to note that there is no detriment to the best of our knowledge to the Pension Scheme because of the unlawful actions identified in the report going to Full Council on Tuesday 28 January 2025. This is confirmed in paragraph 10.2 of the report.

“It should also be emphasised that as the Local Government Pension Scheme (LGPS) is a defined benefit scheme there is no impact as a result of these transactions on members’ benefits.”

 

What has happened?

UNISON has only recently discovered that something unlawful has taken place involving payments to the Council’s Pension Scheme.

The matter was first publicly discussed Pension Fund Committee – Tuesday 14th January 2025 7.00 pm.

You can listen to the discussion by clicking on the link below. You need to scroll 1 hour and 6 minutes to hear the discussion about the unlawful payments.

https://aisapps.mediasite.com/AuditelScheduler/Player/Index/?id=a1c6cfd1-5311-44ae-94fa-6aff99b35ae6&presID=11f4679ca075408d948fb7b34a51a1811d

 

The next piece of critical information came to our attention when the reports were published for the Full Council on Tuesday 28 January 2025.

One damning paragraph stands out:

“5.2.1 After taking advice, and based on the information available the Monitoring Officer and the Section151 Officer are of the view that the Additional Payments and the Repayments were unlawful.”

Source: Report to all Elected members of London Borough of Barnet Under Section 5(2)(a) of the local Government and Housing Act 1989 and Section 114 (2)(a) Local Government Finance Act 1988 By Jessica Farmer Monitoring Officer and Kevin Bartle Chief Finance Officer (Section 151 Officer).

https://barnet.moderngov.co.uk/documents/s87758/Appendix%20A%20joint%20report%20S5S114.pdf

The report uses the term unlawful ten times unlawfully once and unlawfulness once.

It is a shocking report.

UNISON recommends that members read the above report that is being discussed at Council meeting.

The two paragraphs set out what happened:

“4.2 The Council (acting as a scheme employer) made a one-off prepayment of £20,477,000 to the Fund in April 2020 (“the Prepayment”) instead of secondary contributions for the years 2020/21, 2021/22 and 2022/23. This was because the Council was advised that a Prepayment would save the Council money compared  with making secondary contributions over three years. The Council received leading counsel’s advice, which was taken without reference to the Monitoring Officer, that making the Prepayment was lawful in principle.”

“4.4 After the Prepayment, the Council continued to make periodic payments of (in effect) secondary contributions for the three financial years 2020/21, 2021/22 and 2022/23 (“Additional Payments”). These were made contrary to the Rates and adjustments Certificate. In effect, the Additional Payments would duplicate the Prepayment, and so officers also arranged that the Fund would repay most of the Additional Payment back to the Council in three annual repayments (“Repayments”). Because of a lack of documentation and staff turnover, the Monitoring Officer and Section 151 Officer have not been able to understand clearly when or why the Additional Payments and Repayments were arranged. As far as the Monitoring Officer and current Section 151 Officer can tell, the most likely explanation is that, at the time, officers believed that the outcome of these fund flows would be advantageous for the Council in accounting terms, while not being disadvantageous to the Fund. In any event, the Additional Payments were made and two of the three planned Repayments have also been made: £6,508,000 in October 2020 and £7,574,000 in October 2021.”

For those of us who are not financial experts the two paragraphs explain that not only was an unlawful payment of £20,477,000 made into the Pension Fund but that a further three payments were made of the next three years which resulted in effect in a double payment into the Pension Fund. Towards the end of the final paragraph the Council explains that the Council clawed back two payments back but that once the unlawful payments had been discovered everything was put on hold.

Many of our members reading this report will know that they all are expected to follow Council procedures and understand what happens if you don’t follow. Many of our members will be wondering about who has the powers to authorise spend. The responsibilities for senior managers are set out in what is referred to as the Scheme of Delegation which you can read on the Council website here https://barnet.moderngov.co.uk/documents/s24780/Appendix%20D%20-%20Scheme%20of%20Delegated%20Authority%20to%20Officers.pdf

There are a number of questions UNISON has about how this could happen, but our immediate concern is in regard to the numerous redundancy consultations taking place.

£7.8million is a lot of money that is owed to the Council.

At this moment in time the Council is coming to a close on a number of redundancy consultations which, if confirmed, are going to mean staff will be made redundant. Vacancies will be deleted in teams where there is already increasing pressure on the workforce to deliver more with less resources and to work in a job where their pay has failed to keep up with the cost-of-living crisis.

It is UNISON’s understanding, and we would be happy to publicly correct it if we have misunderstood the report above, that Barnet Council is attempting to find a way to retrieve £7,804,000 back from the Council’s Pension Fund.

£7,804,000 is a lot of money and it is UNISON’s view that if this money were back in the Council’s bank account, then it could be used to mitigate some of the redundancies/cuts to public services which are about to be signed off by Barnet Council.

In the meantime, we have several questions.

1. Was there a scheme of delegation for the Pension Fund?
2. If not, why not?
3. Who made the decision to make the prepayment?
4. Who decided to make the decision to subsequently carry on with payments that the prepayment was intended to cover?
5. Who can authorise a payment of up to £20million
6. What was the cost of the initial legal advice in 2020?
7. Who has authority to seek counsel’s opinion
8. Who did seek counsel’s opinion in this case?
9. Was counsel’s opinion seen by the monitoring officer?
10. If yes what was their opinion, if not why not?
11. Was the scheme was initiated by the council acting as the fund or as the employer i.e. did the pension fund ask them to do it?
12. What has been the total cost of legal advice and tax advice taken so far?
13. Has anyone been subject to a disciplinary investigation?

 

Recommendations:

As a result of the breaking news UNISON is demanding the following:

1. The redundancies are withdrawn in anticipation that the monies owed can mitigate the need to make the redundancies in this year.