Examination of Witnesses (Questions 80
MONDAY 17 APRIL 2000
PHILLIPS KCB AND
80. You would find that out at an early stage,
(Mr Smedley) Death of a receiver?
(Mr Smedley) We would hope to, yes. The case worker
would obviously be in contact.
82. Is there any evidence any of the money you
have got in your fund is as a result of people dying and not being
(Sir Hayden Phillips) I wondered whether Mr Rendel
was questioning you about mental incapacity or talking about the
funds in court, which is what we were talking about earlier.
(Sir Hayden Phillips) It would differ depending on
from whom the money has come in the first place, yes.
(Mr Smedley) Yes. A case that is live in the Public
Trust Office, the money would not find its way into the Unclaimed
Balances because we would know whose that money is. The discussion
you and I were having was not about the Unclaimed Balances fund,
or it was not intended to be.
84. On Ms Lomas's bonus payments, paragraph
9 of the report appears to show that she was paid 100 per cent
for the last 15 months in effect on the grounds that there was
no way of judging how well she would or would not have met the
KPIs. What was the logic behind that?
(Sir Hayden Phillips) The logic behind it was to try
to secure a payment for that period which, as it were, was defensible
and also enabled us to reach an agreement about her departure.
What I didapart from legal advice which I have mentionedI
looked at the pattern of bonus payments that had occurred, and
they were running at about 80 to 85 per cent, sometimes higher
than that. I recognised that I could not actually come to a decision
that was based on objective evidence because the objective validation
of these bonuses can only take place after the financial year
is over, so I had to make a judgment about what in the circumstances
it was sensible to pay to secure an agreement and to get the benefits
which were a clean and fresh start of early departure.
85. What was the worry about not getting some
agreement? If you had offered a lower sum what could Ms Lomas
(Sir Hayden Phillips) She could have argued that I
was in no position to say whether or not she might not have achieved
a full amount for the period in question and what basis did I
have for undercutting it and so on.
86. If she had said that and you had said "Tough,
I think it is fair"?
(Sir Hayden Phillips) Then either she might have agreed
and the costs would have been marginally lower or we would not
have got an agreement with the disadvantages that would have involved.
87. Which would have been?
(Sir Hayden Phillips) I think we had both come to
the view, in fact, that given the scale and pace of change which
was going to take place, the fact that she was not going to have
her contract renewed from the end of June, it was better for people
to be in charge who were going to be focused on being there.
88. You wanted her out and if you had said "We
are going to get rid of you now but you are only going to get,
say, 50 per cent of the bonus for the last year and three months
of your contract", what would have been the disadvantages?
(Sir Hayden Phillips) My preference was to make the
change but I was perfectly content, if we had not come to an agreement,
for her to have been there until her contract came to an end at
the end of June. I was not under an absolute obligation, as it
were, from my own point of view, to say "We must come to
this agreement". I wanted to do it to get the advantages
I thought were there but I would have accepted a position, if
she had not agreed, by which she stayed.
89. You are saying that if she had not agreed
with the lower bonus payment that she would have been in a position
to force you to keep her on?
(Sir Hayden Phillips) No, not to force me. She was
there anyway, that was her entitlement, she had a contract.
90. Did she have an entitlement to the 100 per
(Sir Hayden Phillips) She did not have an entitlement
to 100 per cent, she had an entitlement to bonuses. What I could
not do was to treat the ones for 1999-2000 in the same way as
I could treat the ones from the past history.
91. I can quite understand you had no means
of deciding exactly what it should be given the period had not
even ended but I just wonder why you felt that you had to provide
100 per cent? Is this not a question of negotiating with the person
concerned? What could she have done if your final negotiating
position had been "Sorry, 50 per cent"? I do not see
that there was perhaps anything she could have done, she would
have had to accept 50 per cent.
(Sir Hayden Phillips) She would have refused the deal
and stayed in post.
92. Does the Civil Service have no means of
just removing her from post?
(Sir Hayden Phillips) That depends on whether one
takes the view that the contribution she had made was so unsatisfactory
that she should be removed. That was not the view I took but I
did take the view of trying to leave on the basis of mutual agreement
93. You could have removed her but decided not
to because she agreed to go?
(Sir Hayden Phillips) If I had thought there were
grounds for removal then that would have been the route I would
have taken. I did not think there were grounds for removal so
I took the route of saying "Look, you can certainly stay
to see your contract through or would you prefer to go by mutual
94. You did not think that what was in this
report was sufficient grounds for removal?
(Sir Hayden Phillips) No, for the reasons I had given
earlier in relation to all the other aspects of performance which
she had carried through with and within the agreement reached
with the Department.
95. I want to take the witnesses to another
area of the report which Mr Rendel hinted at. Mr Smedley, in response
to one of the questions asked by my colleague you said it is your
responsibilityand I quote"... to make it as
easy as possible for people to find their money". That takes
me to pages 22 and 23 of the report you signed up to and that
is the matter of the Unclaimed Balances Index which does anything
but make it easy for people to claim their money. I note, Sir
Hayden, in your letter of 17 March you were kind enough to inform
us that you will shortly be transferring on to a modern database.
(Sir Hayden Phillips) Yes.
96. I want to ask questions in relation to the
Unclaimed Balances Index, and I do not mind who answers as long
as the answers are relatively brief. Can I ask, the report identifies
as at May 1999 you were approximately 18 months to two years out
of date in terms of the Index, and that is in paragraph 3.23.
Can I ask how out of date was that Index when your Chief Executive
started in her job? Any idea?
(Sir Hayden Phillips) You answer, Nick.
(Mr Smedley) I cannot answer the specific question
of how out of date it was in 1994 when Julia Lomas took her job
up. I do not know that detail, I can get it if it is relevant.
97. How out of date was it when she left her
(Mr Smedley) We were in the process
98. With her bonus, how out of date was it?
(Mr Smedley) We were in the process at that late stage
of transferring on to this modern database which is now active
and live, so it is no longer out of date at all.
99. When she left how out of date was it?
(Mr Smedley) I imagine it was in the late stage of
being updated, so it was not particularly out of date. She left
about three months ago now.