An internal review by Oldham Council has revealed that staff working 'large amounts of overtime' at a council-owned company were 'underpaid' due to poor management. The audit of Oldham Total Care, a care home company acquired by the council in 2023 after it went into administration, uncovered multiple financial and operational failings.
Financial accounts filed late and negative net worth
The audit, published ahead of a council audit committee meeting on July 22, found that the company's financial accounts for one year were filed five months late, resulting in a fine. The company also had a negative net worth of £1.6m. Additionally, there was no formal agreement between the council and the firm outlining service standards.
Payroll issues and underpayment of staff
Auditors raised concerns about holiday pay not accounting for overtime, leading to underpayment, especially for staff with few contractual hours who worked extensive overtime. Statutory sick pay was calculated manually, and payments to HMRC did not include certain adjustments and levies. The payroll officer lacked access to HMRC's online PAYE portal, causing a £20,000 charge for incorrect and late PAYE payments. HMRC mistakenly believed staff had two jobs due to incorrect tax codes.
Debt management and purchase order problems
Ineffective debt management led to reduced cash flow and increased write-offs, with outstanding debt reaching £624,000 in December 2024. Five purchase orders were also found to have issues. Overall, auditors rated the company's systems and controls as 'weak' and issued 12 recommendations.
Council response and ongoing improvements
Council management acknowledged the issues, stating the company was expected to make a loss in its first two years. They said: 'The focus has been on service improvement, with a key driver being training of staff, quality of care and service improvement.' A project team has been established to improve financial sustainability and prevent further HMRC charges. Management insisted that core income tax and NI payments were always made on time and in full.
Political stalemate and leadership vacuum
The review comes as the company lacks a key board member due to a political impasse at the council, which has no leader or cabinet. The usual cabinet member for adults, health, and wellbeing services remains unfilled. Officers are expected to declare the council is acting unlawfully in the coming weeks.
Broader council tax debt issues
A separate audit report highlighted rising council tax debt, from nearly £33m in 2020 to £49m in 2025, with the council pursuing legal action in several cases.
A council spokesperson said: 'When the council made the decision to step in and save Chadderton Total Care, now Oldham Total Care, we knew the business would come with issues. We have been working through them, with this audit identifying a number of areas where financial processes and governance arrangements could be strengthened. Actions already completed or underway include introducing monthly board meetings, strengthening purchase order approval controls, reviewing governance arrangements and board membership, improving risk management processes, and developing plans to address the organisation's long-term financial sustainability. Work is also continuing to improve payroll processes, debt management and financial systems, with progress against the recommendations being closely monitored. We remain committed to ensuring strong governance, effective financial management and high-quality care for residents.'
