Service users overcharged total of £5m by council accounting 'screw up'

Newham Council's children's services have been branded inadequate by Ofsted. Picture: Ken Mears

Newham Dockside, where the OneSource joint committee sat - Credit: Archant

Businesses and residents were overcharged by more than £5million due to a council accounting “screw up”, a committee has heard. 

In July, 533 direct debits to Havering Council were multiplied by 100 after an IT “bug” stemming from a software update added two decimal points to the amount due

Havering Council has apologised “unreservedly” for the mistake and promised to cover the full amount, as well as any bank charges incurred as a result of the error. 

Service users who had the accidental charge taken from their account included music school students, shop tenants, market traders and businesses who pay for waste removal. 

The mistake was missed by multiple staff members at OneSource, which provides back-office services at both Havering and Newham Council, and was only spotted ten days later when the payments were processed. 

One woman, Patricia Clark, told the Recorder at the time that the council requested £3,952 from her account, rather than the usual £39.52. 

Once alerted, Havering Council could cancel some of the remaining payments and help customers warn their banks.

It has apologised “unreservedly” for the mistake. 

Last Friday (November 3), at a joint committee set up by the two councils to oversee OneSource, Newham’s mayor Rokhsana Fiaz called the mistake a “screw up” and questioned whether enough was being done to strengthen the organisation’s governance. 

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A report on the incident written by OneSource’s director of transactional service and chief information officer said it was the “first time” the senior accounting officer responsible had “run the direct debit process”. 

The report reads: “In addition, further IT checks should have been completed. The IT operator and supervisor should have also picked up the incorrect value and this should have been reconciled against the totals in the file submitted.  

“However, these colleagues also failed to identify that the decimal point was missing. 

“All team members who are responsible for control checks have been identified, and made aware of their responsibilities to ensure that the council does not suffer further financial and reputational damage.” 

The report added that staff members involved had “shown remorse” and an action plan had been put in place to prevent the same error occurring again.