Examination of Witnesses (Questions 40-59)
DEPARTMENT FOR
BUSINESS, ENTERPRISE
AND REGULATORY
REFORM
22 OCTOBER 2007
Q40 Mr Bacon: I would like to return
to the appendices, Sir Brian. On page 45, Appendix 7 lists the
total payments to the top 10 claimants' representatives, most
of whom were solicitors. You said earlier that the Government
were going to try to claim back some monies from solicitors. Is
any of that £1.048 billion, of which those payments to the
top 10 claimants' representatives comprise £635 million,
included in the money that you will seek back, or is that all
parked, paid, done and dusted?
Ian McKenzie: These are monies
that were paid to claimants' representatives.
Q41 Mr Bacon: These were fees.
Ian McKenzie: These were
effectively fees paid to these organisations, and about £80
million of the £102 million that Sir Brian has referred to
in relation to the fast-track recoupment process that we are aiming
to achieve has to be recovered from the solicitors.
Q42 Mr Bacon: I am asking whether
that £80 million is out of that pot of £102 million.
Ian McKenzie: It would bring
that number down by £80 million.
Q43 Mr Bacon: Hang on. My question
is about the £1.045 billion. The chart shows the £635
million paid to the top 10 claimants' representatives. As I understand
it, the pot contains £1.045 billion, £635 million of
which is broken down in this Report. Does the £80 million
that you referred to come out of that pot of £1.045 billion?
Ian McKenzie: Yes.
Q44 Mr Bacon: Therefore, if things
went well, you would only have paid the solicitors and the other
claimants' representatives £900 million rather than £1
billion.
Sir Brian Bender: We have
already recovered more than £30 million of that £80
million.
Ian McKenzie: The latest
figures show that that figure is now up to about £38 million,
which is about 48 % of that £80 million to be recovered.
Q45 Mr Bacon: That still leaves me
gasping. I have not done a representative sample of taxpayers,
but I guess that most would be pleased that injured coal miners
were receiving money. I am sure that Mr Touhig's constituents
are very pleased; I am sure that others, too, will be pleased.
People would probably feel that it was a good use of taxpayers'
money. However, you have been making individual solicitors multimillionaires,
have you not?
Sir Brian Bender: I explained
earlier—
Q46 Mr Bacon: I am sorry, but it
was a question. Have you been making individual solicitors multimillionaires?
Yes or no?
Sir Brian Bender: Large sums—
Q47 Mr Bacon: Have you been making
individual solicitors—
Sir Brian Bender: I have
not asked them.
Q48 Mr Bacon: The answer is either
yes or no. You either know the answer or you do not. Have you
been making individual solicitors multimillionaires? Yes or no?
Sir Brian Bender: I cannot
answer the question—
Q49 Mr Bacon: Why not?
Sir Brian Bender: I can say
that Thompson's has received £123.6 million. The answer is
probably—it may well be—yes, but I do not know.
Q50 Mr Bacon: Have you heard of Beresfords?
It is a firm to which you paid £115 million. Do you know
how many staff are employed by Beresfords?
Sir Brian Bender: I do not
know.
Q51 Mr Bacon: It is a small firm
in Doncaster, is it not? Do you know what was the salary the head
of that firm, Mr Jim Beresford, in 2006?
Sir Brian Bender: No.
Q52 Mr Bacon: You do not know?
Sir Brian Bender: I do not
know.
Q53 Mr Bacon: You have been hosing
this money out of the door, including £115 million to Beresfords,
but you are not even remotely curious that this man was paying
himself—
Sir Brian Bender: I am deeply
concerned about the sums of money that the legal firms have had.
I have explained how it came about, and the actions that have
been taken to try to claw some back. It is deeply regrettable.
Q54 Mr Bacon: You have been making
those individuals multimillionaires, have you not?
Sir Brian Bender: That looks
to be the case.
Q55 Mr Bacon: If it is the case,
the word you need is "yes". According to The Guardian—it
could be incorrect, of course; 50% of what one reads in the newspapers
is incorrect, but one never knows which half—
Mr Mitchell: Not The Guardian.
Mr Bacon: So says Mr Mitchell. I
am sure that The Guardian is much better than that. According
to that newspaper, Mr Beresford had a personal salary of £16.7
million in 2006. Under any view, the purpose of the scheme was
not to make individual solicitors in Doncaster multimillionaires,
was it?
Sir Brian Bender: I agree
with you, Mr Bacon. No.
Q56 Mr Bacon: It was not, but none
the less, that is what you managed to do.
Sir Brian Bender: The purpose
of the scheme was plainly to try to ensure that vulnerable and
disadvantaged people received proper advice.
Q57 Mr Bacon: I find it incredible
that the programme management and the procedures—the project
management put in place at the beginning—did not identify
some of the risks of such a huge compensation scheme. The Committee
regularly deals with risk and risk management; and you, as a veteran
of the Department for Environment, Food and Rural Affairs and
the Rural Payments Agency fiasco, are probably more experienced
with the mismanagement of risk than many in Whitehall. We have
seen many attempts to manage or consider risk, but surely to goodness,
with the health compensation scheme, one of the risks that would
have to be dealt with very early on was whether there was any
chance that the proposed scheme would turn some solicitors in
Doncaster into multimillionaires. Should that question not have
been asked pretty early on?
Sir Brian Bender: I tried
earlier to explain to Mr Leigh why it was that the Department
had not set up a statutory scheme, which would have been the simplest
way to cut most solicitors out of it. Once we had something that
had been seized of the court, when the alternative was for individuals
to continue cases through the court, the risk was being run that
it would result in very high payments—and it plainly was
too high.
Q58 Mr Bacon: I appreciate that extinguishing
people's common-law rights cannot be done easily, although in
the right circumstances I presume that it can be done statutorily.
It was in everybody's interest, apart from solicitors in Doncaster—and
certainly in the interests of the taxpayer and the miners, and
in your interests as an Accounting Officer—that those who
should have the money should get it and that others should not
be made multimillionaires in the process.
I turn to page 42, the summary of advice
that I believe KPMG provided to the NAO. Am I correct, Mr Gray?
Peter Gray: Yes.
Q59 Mr Bacon: It was on the best
practice that operators should consider. It does not include an
item called: "Avoid making solicitors multimillionaires",
but that probably is covered by one of the rubrics, is it not?
Is it subsumed in one of them?
Peter Gray: Not within them.
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