From Department of Public Expenditure, NDP Delivery and Reform
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Introduction
Thank you Mr. Chairman. I would like to thank you and the members of the Committee for inviting me here today, in my capacity as Accounting Officer for the National Shared Services Office (NSSO), and I look forward to discussing any aspect of the NSSO with you.
I am joined here today by my colleagues, Paula Lyons, Assistant Secretary and Head of Employee Shared Services and Joan Curry, Principal Officer and Head of Corporate Services for the NSSO.
I thank you also for the opportunity to make an opening statement. As we have provided the Committee with briefing material, I will endeavour to provide a relevant overview in my statement so as to make best use of the Committee’s time today.
The matters being examined are Chapter 10 of the Comptroller and Auditor General Report 2016; which is titled – ‘Shared Services – Management of Salary Overpayments’, and the Appropriation Account 2016, Vote 18: which is the Vote for the NSSO.
Before I give an outline of these matters, and as this is my first appearance before the Committee as the Accounting Officer for the NSSO, I would like to set out the background of the NSSO and the progress we have made in delivering our objectives in recent years.
About The National Shared Services Office
The NSSO is a statutory office, established under the National Shared Services Office Act 2017, on 1st of January 2018, when the NSSO became a separate civil service office, under the Department of Public Expenditure and Reform.
The NSSO is contributing to the modernisation of corporate administration and professionalisation of these functions across the civil and public service. The NSSO is responsible for Shared Services provision across the entire civil service. This allows departments and offices to focus on their core purpose of effective front-line service delivery.
While each sector in the public service has responsibility for implementing Shared Services, the NSSO supports the progression of the strategy across the public service by providing advice and guidance on best practice, creating professional communities for learning about shared services standards, policy development and research.
You will already be familiar, Mr. Chairman, with MyPay in Laois that administers payroll for 28 Local Authorities and pensions for 15 authorities and HAP in Limerick, a housing assistance payment scheme. A new multifunctional Shared Services Centre for Higher Education is being established in Dublin. Athlone has an administration centre for schools, and SUSI, in Cork, is the grant payment shared service for students. The HBS is the provider of multiple shared services to the HSE and it has plans to consolidate administration further.
The NSSO has two Shared Services operations in four locations: Clonskeagh, Tullamore, Killarney and Galway. HR Shared Services, providing HR and pensions administration service to 34,500 civil and public servants, and Payroll Shared Services, administering payroll, travel and expense, and pension payments to 124,500 civil and public servants. A project is well underway to develop the Shared Services model for financial management and this will go live in mid-2018.
As articulated by Secretary General Watt in previous sessions with this Committee, the Government must invest in order to deliver cost and efficiency benefits, and Shared Services is an intrinsic part of that transformation of strategy.
Since 2012, the Government has invested €32.3m capital funding in HR and Payroll Shared Services in technology, facilities and consulting costs.
Although still at an early stage of maturity, the savings estimated for HR and Payroll Shared Services to date are €21m, and are expected to deliver €13m annually, as these centres are fully established.
In addition to cost savings and improved effectiveness arising from standardised processes across the civil service, other benefits include:
Payroll Shared Services has replaced 18 payroll offices around the country that had different licensing and versions of payroll systems, with one Shared Service centre, on a single technology platform administering payroll, pensions, and travel and expenses one way across Government.
In 2016, Payroll Shared Services made 2.7 million payments to the value of €3.24 billion. This increased to €4.7 billion in 2017 and will increase further in 2018, now that all in scope public service bodies have transitioned their payroll and expenses to the NSSO.
HR Shared Services responded to 77,466 calls and closed 215,268 cases in 2016. In 2017 this increased to 86,028 calls and 231,289 closed cases.
This level of service delivery was acknowledged in the awarding of the CCMA 2015 Shared Services Award to PeoplePoint, and the Civil Service Innovation Award went to the PSSC in the same year.
A further €42.7m is the estimated capital investment required to establish Finance Shared Services. The development of a new finance technology solution for Government is well underway. A single finance technology platform will replace 31 financial management and reporting systems across Government departments and offices, and facilitate transaction processing in the new Finance Shared Services operation in the NSSO.
When fully established, Finance Shared Services will deliver a sustainable reduction in the annual cost of Government financial management of approximately €15.4m annually from 2021, through a reduction in the cost of support for finance technology, and a reduction in the resources required to provide financial management processing.
Overview of Shared Services Benefits
Since 2014, the NSSO has delivered many benefits for the civil service. These include:
The introduction of one set of standard HR and pension processes, applied consistently, based on common HR policies. These standard processes are eliminating local interpretation and thereby increasing fairness for employees;
Civil servants can access HR and pension services through a much wider range of channels, including the first online system, giving them easier and faster access to important information on entitlements and services. For example, the HR Portal receives over 300,000 visits per month;
HR data analytics are more readily available to management on a civil service-wide basis;
The first online system for public service travel and expenses claims was introduced, with payments processed within a week;
Online payslips are provided to all payees, and there is immediate access to payroll information, including downloadable P60 forms. This is a significant change to the hard-copy payslips and paper-based receipts of the past;
Insights gained through shared services informed the development of Government policies, such as absence, leave and the recoupment of overpayments, and;
Improved technology has resulted in automation in several areas, including the updating of personal information for example annual leave, removing the need for repeated manual entry on the HR system – almost 1.5 million annual leave updates have been recorded in 4 years and further automation is on the way.
A single definitive source of information can be utilised for many purposes that can help the Government with the implementation of strategic changes, and the development of data driven, evidence-based policy formulation. Shared Services continues to have a positive impact– by creating dedicated specialist teams whose focus is on service quality through process improvement, technology and digitisation.
Our team is building expertise and competencies in complex large-scale transformation programme management, service and quality management, lean thinking and digital and technology innovation.
As with any organisation on this scale, and at such an early stage of maturity, progress has not been without its issues. It is reasonable to expect that challenges and corrections are needed as part of the setup and stabilisation period. As with other shared service organisations in the public and private sectors, this has also been the case for the NSSO. We have encountered and solved a number of issues and learned some lessons.
Comptroller and Auditor General Report 2016, Chapter 10 – ‘Shared Services – Management of Salary Overpayments’
I would now like to address the Comptroller and Auditor General Report 2016, Chapter 10 – ‘Shared Services – Management of Salary Overpayments’. I would like to start by thanking the office of the C&AG for their valuable assistance in preparing this report, to deal with complex issues, which I will now articulate as follows.
The Committee should note that the C&AG report accepted the inevitability of salary overpayments, given the scale and complexity of the payments involved, and it acknowledged that there are many causes for overpayments.
I would like to stress that the NSSO is very aware of its responsibility for the stewardship of public monies. When any overpayment occurs, the NSSO pursues the recovery of those monies as soon as possible in a standard way for all staff.
In the response to the C&AG report, it was noted that the value of overpayments in 2016 represents just 0.3% of the paybill, confirming that 99.7% of the paybill is being administered effectively. I also welcome that the C&AG noted in his report that the audits of those bodies did not find any material errors in the payroll charges.
Of course we would like to eliminate all overpayments, but we do not operate in a perfect world where every pay impact is notified in time to administer prior to the payroll run. Adjustments to salaries are always needed, be it public or private sector.
An overpayment occurs when a staff member is paid more than his/her entitlement. Overpayments to staff of salary, allowances and expenses can and do occur because of late notification, after the payroll closed and the file has issued to the bank for payment.
I would like to confirm that the NSSO agreed to all the recommendations in the report from the Comptroller and Auditor General in relation to the overpayment of salaries to civil and public servants and have commenced implementation of actions required. As well as accepting all recommendations in the report, we outlined that a number of actions would be taken.
Since the last quarter of 2017 a monthly report on overpayments issues to each Finance Officer. This shows the current balance outstanding on plans in recoupment, the value collected on all plans year to date, the list of all active overpayment cases. This provides the Finance Officer with all information required. The decision for off pay cases remains with each Accounting Officer.
Responsibilities for legacy cases is being progressed and a statement on responsibility will be inserted into the Service Management Agreement for 2018.
In the C&AG report it was noted that there was a delay in recovering overpayments. I can confirm to the Committee that the value of just over €2m was collected in 2016 and the estimate for 2017 is higher. A revision to the Recoupment Circular in May 2017 allows for recovery of the full value of overpayment within a month in circumstances where a staff member has been overpaid for a period of five days or less. This has resulted in a reduction in the time taken to process overpayments.
The reform of sick leave in the public service, while creating significant savings and standardisation of administration and elimination of legacy issues, has meant that staff are reaching sick leave thresholds earlier which increases the risk of a pay adjustment not being notified in a timely manner. Shared Services is reliant on employees and managers notifying sick leave on the first day of occurrence. Late or delayed notification results in overpayments. Regular communications were issued by the NSSO to civil service staff to notify them of their obligations and an intensified information campaign is also planned for 2018 with Local HR.
Following a comprehensive analysis of the root cause of overpayments in 2017, a review of pay impact processes in the NSSO including greater automation is underway. This will help to reduce and eliminate any delays in the NSSO. Furthermore, internal organisation changes are planned for the end of Q2 2018, to centralise the calculation of overpayment values, in order to shorten the time taken to agree the recoupment plan and start to recover the money.
Consequently I believe the NSSO will reduce the number and value of overpayments further in 2018.
Appropriation Account 2016, Vote 18: National Shared Services Office
In relation to the appropriation account published in 2017, I welcome the clear audit opinion given by the Comptroller and Auditor General in respect of Vote 18 for Shared Services, which is subject to review this afternoon.
Since the NSSO was established on an administrative basis in 2014, I have worked to ensure that the NSSO operates effectively and efficiently and that the use of public resources is scrutinised and optimised to ensure best value for money for the Exchequer.
Notwithstanding that, there is an issue in regard to under-expenditure in the Vote. The reasons relate mainly to the on-going project work we are delivering. These projects are very significant.
The NSSO is leading a very significant transformation programme across Government. There is a balance to maintain the project pace within an acceptable level of risk, while ensuring delivery and value for money.
Our best attempt to forecast may require adjustment if a risk arises. In 2016, the underspend was declared and surrendered to the Exchequer in a timely manner.
We are aware that, for 2016, there was a significant underspend, as set out in the Comptroller and Auditor General’s report. As an Office, we are very conscious of ensuring we set realistic forecasts and adjust as soon as possible on an ongoing basis, consistent with public financial procedures.
Shared Services is contributing to the modernisation of the civil and public service. It is creating capacity to build a clear strategy for HR, payroll and finance and improve the capability and professional skills of our staff.
By operating a single standard way of working, the NSSO is able to contribute strategically and respond quickly to new and emerging requirements, such as when a new Government department is created.
Shared Services is about standard processes supported by self-service technology. It’s a balancing act investing to reduce costs and demonstrating efficiencies and improvements, while at the same time, changing responsibilities and accountabilities. While making these changes, issues such as overpayments are amplified by the centralisation of data and the transparency that shared services brings on such matters.
Before I conclude, I would like to take this opportunity to acknowledge and thank, firstly, my staff, who have really gotten behind this major change programme and worked very hard and long hours to deliver it. Without their dedication and focus, the NSSO could not have achieved these milestones reached so far.
I would also like to thank past members of the Shared Services Steering Board and Programmes Boards for their support and generous time to assist the delivery of this ambitious programme of change.
I am confident that further improvements underway will result in a positive impact on managing overpayments more effectively.
Thank you Chairman, I will answer any question you or the members of the Committee may have.
ENDS
NSSO Advance Briefing Material for PAC 01.02.18