Examination of Witnesses (Questions 20-39)
DEPARTMENT FOR
BUSINESS, ENTERPRISE
AND REGULATORY
REFORM
12 NOVEMBER 2007
Q20 Mr Mitchell: The Department was
also extraordinarily grudging about putting vessels on the list.
I supplied a list, which I got from the Icelandic Ministry of
Fisheries, of vessels that had been spotted fishing in Icelandic
waters by the Icelandic coastguard. Even then, it took several
months to get those vessels, which were not on the original list,
on to the list. One middle-water vessel, the Thessalonian, is
still not there, although it has demonstrably been fishing in
Icelandic waters. Why was that so sticky?
Sir Brian Bender: I guess that
it was just coping with the sheer complexity. I think that the
Ombudsman looked to see whether the vessel that you have mentioned
should have been added but did not find maladministration. I do
not think that the Department has a defence on these issues. It
did not cover itself with glory, because it did not stand back
and plan properly for introducing a scheme like this.
Q21 Mr Mitchell: There was a further
problem regarding lack of knowledge of the industry's practices
in relation to the 12 week break in service. That has caused an
enormous number of problems, which are dealt with in the Ombudsman's
report. At first, we were told that the 12 week break in service
did not include service in prison, so we had the extraordinary
case of a Hull fisherman—this would never happen in Grimsby—whose
wife had been raped by another fisherman. The second fisherman
got compensation because he was in prison serving a sentence for
the rape, but the first fisherman did not get compensation. That
prison thing was a farce.
Sir Brian Bender: I have asked
about that case, which was very odd. I understand that the issue
arose because of the decision to allow gaps in service of more
than 12 weeks, provided that the person had not worked outside
the Icelandic industry. This is not a satisfactory answer, but
the Department did not then appreciate that that would mean that
time spent in prison would not create a break in service, whereas
time spent working for another employer would. We were therefore
faced with that farcical position. I understand that about 30
of the cases involved time spent in prison, although the overwhelming
majority were for relatively minor offences. There were a couple
of cases with long prison sentences—no doubt, the one you
mention is one of those. However, the Department should have been
informed about that and should have got it right.
Q22 Mr Mitchell: The 12 week break
was also difficult because, in Grimsby, if fishermen could not
get an Icelandic trip—this was also the case in Fleetwood—they
were put, by the employment office on the dock, on a North Sea
or middle-water vessel. They had no alternative but to take those
jobs, but it was not allowed and it became a 12 week break. That
is why the Ombudsman ruled in my favour, but I was arguing that
from the start and the Department was extraordinarily resistant
to that argument.
Tim Soane: The reason for the
12 week break was primarily because we were advised by the industry
that a 12 week period would typically cover most of the eventualities
that involve fishermen, whether it be getting a master certificate,
doing a training course or not fishing for whatever other reason.
So the 12 week period was settled on to include all those sorts
of eventualities. The point about people having breaks of longer
than 12 weeks was that there had to be some point at which you
could say that the service before that period was rendered ineligible.
The rules of the scheme were that if you worked in excess of that
12 week period, that would—
Q23 Mr Mitchell: But they were still
fishing; they were fishermen. They were forced to act by employment
law.
Tim Soane: But the point of the
scheme was to deal with the loss of the industry from the Icelandic
settlement, and if they were fishing in other boats, they were
less dependent on Icelandic water fishing. That seems like a reasonable
conclusion to come out of that rule.
Sir Brian Bender: The Department
was, as you well know, Mr Mitchell, trying to compensate for the
effects of the cod war, not for other impacts of the decline of
fisheries. That was extremely difficult in practice.
Q24 Mr Mitchell: Well, I think that
they have now come clean on, or coughed up on, the 12 week fishing
period in the North Sea. Just quickly, were the Hull claims paid
faster, because the Hull branch of the BFA had put a red stamp
on them? That is something that is strongly felt in Grimsby. I
do not know. Was that the case?
Tim Soane: Absolutely not. The
National Audit Office Report that investigated 100 claims found
that to be the case. The fact is that the claims from Hull were
often simpler. There was better evidence available and fewer inquiries
of the fishermen were needed.
Q25 Mr Mitchell: That is true, but,
as you can see on table 4, from May 2001 you were rejecting a
much higher proportion of cases. That meant that the early cases
coming in from Hull got a lot more acceptances than the later
cases coming in from Grimsby, because you were being tougher.
Tim Soane: There was no change
in the toughness of the application of the rules of the scheme
throughout its life. Every claim was treated the same, and some
claims were re-examined later in the light of the changes to the
rules, which we have talked about before. There is no difference
in time. It is simply the case that Hull was more dependent on
Icelandic water trawling. The claims from fishermen in Hull were
clearer and the evidence was clearer, and that enabled the claims
to be processed more quickly.
Q26 Mr Mitchell: Why was the Department
justified in deducting from the compensation scheme in 2000 not
only the ex gratia payment made in the mid-1990s—that
payment was a legal obligation on the Department because it had
been proved in the tribunals that fishermen were not casual but
were employed and therefore entitled to the redundancy that had
been withheld from them—but the interest on it. No interest
was paid on the compensation, even though it was due from 25 years
before.
Sir Brian Bender: Mr Mitchell,
I know that that is a subject of correspondence between you and
our Ministers and that you both disagree. Our view is that it
is neither unfair nor unlawful to do that. It was a matter of
policy rather than law. As you know, the Ombudsman looked at the
matter in 2004 and concluded that the Department was entitled
to offset the interest and principal sum of the 1993 scheme payments.
I am conscious that that is something that you do not agree with,
but that is the Department's position. The last thing that I saw
was a letter from Pat McFadden back to you.
Q27 Mr Mitchell: One final quickie:
I want to check whether two names have been paid. A problem has
been raised from Grimsby. I do not want to give out the names
here, so I will give you a note. Perhaps you can tell me whether
they have been paid.
Sir Brian Bender: Of course.
Q28 Mr Dunne: Can I be clear about
the timing of this whole episode? It says on page 24 that the
last case was paid in July 2006. Is that the end of it as far
as the Department is concerned, subject to the Ombudsman's inquiry?
Sir Brian Bender: Subject to the
decision Ministers make in response to the Ombudsman's recommendation
that we should look at whether or not to run some aspect again.
Tim Soane: And we have always
maintained that if a claimant were to bring forward new evidence—for
example if they discovered some lost records that might have affected
their claim—we would obviously look at the case again. In
principle, however, it finished at that point.
Q29 Mr Dunne: I am glad that you
raised the issue of records. One of the things that comes through
from this Report is the difficulty for individuals in establishing
whether they have a case or not. You had to go to the Inland Revenue,
as it then was, to get corroborating details of individuals' national
insurance contributions and other payments. How long does the
Inland Revenue have to retain records by law?
Paula Diggle: I think it is six
or seven years, but I can check that for you.
Q30 Mr Dunne: Obviously, there used
to be a seven-year requirement, and now it is six years.
Paula Diggle: I will check that
for you.[2]
Tim Soane: It is worth saying
that we would have asked for the National Insurance records in
order to reduce the amount of the claim. That would not have been
in support of the claim, but only in order to deal with circumstances
in which there was a break of more than 12 weeks and—
Q31 Mr Dunne: And where you could
prove that other work had been undertaken?
Tim Soane: Correct.
Q32 Mr Dunne: That was to reduce
the cost to the Department. I understand. However, my point is
that it is extremely hard to substantiate a claim going back over
a decade. Have you undertaken an estimate of the cost to those
undertaking such claims or appeals?
Tim Soane: We have not.
Sir Brian Bender: Unless there
was evidence that the claim was wrong, we erred on the side of
paying it. That is implicit in a later paragraph in the NAO Report.
If you understand my point—we did not crawl over the details
and ask for more and more evidence.
Q33 Mr Dunne: Although, in some cases,
it took many years to reach a conclusion.
Sir Brian Bender: Oh yes.
Q34 Mr Dunne: What was happening
in those intervening years, if you were not crawling over more
evidence?
Sir Brian Bender: We were trying
to get more evidence. My point is that where there was doubt,
we gave the former fishermen the benefit of the doubt. For example,
in one or two cases—this comes out later in the report—we
actually paid them before they got their national insurance records.
Q35 Mr Dunne: The number of successful
appeals seems to be very small. If I read table 7 on page 15 correctly,
only five decisions were changed on appeal out of 18 already paid,
and none of those rejected were changed. That does not give the
impression that you were erring on the side of the generous. It
gives the opposite impression.
Tim Soane: In a sense, it could
prove that we were erring on the side of the generous. Had we
been erring in the opposite direction, you would have expected
more appeals to have been upheld, because we would have investigated
further, found more information and then paid that person more.
As it is, the low number of appeals is commensurate with us having
erred on the side of generosity.
Q36 Mr Dunne: Approximately one third
of the cases of those sampled by the NAO were appealed.
Sir Brian Bender: That is true.
Q37 Mr Dunne: Was any compensation paid
for the cost of taking those to appeal? Do we have a sense of
what it would have cost an individual to appeal a case?
Tim Soane: The appeal mechanisms
were not onerous on those appealing. The first course of appeal
was to an official in the Department, who was separate from the
redundancy payment service, and was simply a review of the case
papers and a check to see whether the case officer had done the
calculations and interpreted the evidence correctly. If the outcome
was unsatisfactory for the claimant, we had a further appeals
mechanism to an independent person whom we had appointed. Again,
that was done with a fairly light touch; it was not like a court
of appeal. It was done in a relatively straightforward way. So
the evidence that had been presented as part of the claim was
re-examined at each of those two stages in order to see whether
an error had been made.
Q38 Mr Dunne: When you applied to
the Inland Revenue for access to the historical records, did you
have to go through a procedure? Have lessons been learned that
could apply in other cases?
Tim Soane: Yes, we had to ask
each of the individual claimants to authorise the Inland Revenue
to release the information to us. That happened as a result of
a machinery of Government change: previously, those administering
the scheme had been in the same Department and, therefore, had
access to those records as a matter of interdepartmental information
exchange. When they became separate Departments, different legal
arrangements applied and that information was not available. If
we ran a similar scheme again in another Department, we would
put on the application form an authorisation for us to have access
to the records, so that we could make that happen as a matter
of course.
Q39 Mr Dunne: Has that lesson been
learned across Government? If not, could you encourage other Departments
to consider it?
Sir Brian Bender: Certainly, if
that has not been learned, we need to encourage it. I think that
the general question about the potential conflict between data
protection and data sharing is under very active consideration
in Government, and it is more common now to encourage individual
citizens to tick a box—or not, if they do not want the material
shared—so that they can get what they want, unless they
are obsessed with protecting their privacy. I think that the lesson
has been more generally shown, but we are happy to reinforce it
with help from the Treasury.
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