Examination of Witnesses (Questions 40-59)
DEPARTMENT FOR
BUSINESS, ENTERPRISE
AND REGULATORY
REFORM
12 NOVEMBER 2007
Q40 Mr Dunne: Thank you. Given the
passage of time, we really need to be coming from a perspective
of lessons learned. The Ombudsman's fifth recommendation, as set
out in page 28, about dealing with ex gratia payments,
suggested that there was no established system within government
for dealing with ex gratia compensation schemes. Are you
able to enlighten us on where the Government have got to in responding
to that?
Paula Diggle: I can help on that.
We have, in fact, made quite a few steps on that. In the summer,
we issued some fresh guidance about the use of public money, which
came into force last month and has a whole annexe on remedies
and a whole section on setting up schemes of any kind. All that
is set out in that guidance.
Q41 Mr Dunne: Is that based on the
recommendations?
Sir Brian Bender: Absolutely,
it picks up the good practice guides in this report and some of
the recommendations of the Ombudsman's report. They have been
very much taken into account.
Paula Diggle: They follow on from
the Ombudsman's principles for remedy, which came out recently.
Q42 Mr Bacon: Sir Brian, in one of
your earlier answers you said that the Department had responded
initially to the Ombudsman. When did it do that?
Sir Brian Bender: I would say
in the spring, maybe March or April. It was shortly after the
Ombudsman's report was published.
Q43 Mr Bacon: Was that just a holding
reply?
Sir Brian Bender: We responded
to the recommendations in the Ombudsman's report and, therefore,
I have written personal letters to the five complainants, including
Mr Mitchell's constituent, who was the initial complainant. We
have made consolatory payments, as recommended, with interest[3]
to those five. The second recommendation was to review the scheme
criteria and rules to see whether they were consistent with the
policy intention underlying the scheme. This internal review has
taken place and the matter is with Ministers in my Department.
They have not reached a decision on that. The third and fourth
recommendations flow from the decision that will be taken by Ministers
in response to that, and the fifth recommendation is the point
that Mr Dunne was just asking about.
Q44 Mr Bacon: Was that all given to the
National Audit Office?
Tim Soane: Yes.
Q45 Mr Bacon: I have just spoken
to the National Audi Office. Since this Committee hearing has
started, our brief says that the Department is considering the
Ombudsman's report. It would have been helpful to have been able
to compare the Ombudsman's report with a detailed analysis by
the Department of what it thinks of the report.
Sir Brian Bender: The central
aspect of the Ombudsman's report, apart from the payments to the
five individuals, was to review the scheme criteria and rules
to see whether they were consistent with the policy intention
underlying the scheme. The NAO is correct that we are still reviewing
that.
Q46 Mr Bacon: How long does that
take? I know that the Department took 20 years to get on with
that. You said, "I apologise for the length of time, after
20 years, it has taken to sort this out." This report was
published on 21 February. Today is 12 November. That is nearly
nine months.
Sir Brian Bender: The issue is
with Ministers. Mr Mitchell has had, I think, a private meeting
to discuss it. It is not straightforward, because rerunning the
scheme would create a lot of losers and aggrieved people. Therefore,
managing expectations and getting—if I may put it frankly—the
least bad decision moving forward is what Ministers are presently
considering.
Q47 Mr Bacon: I really want to know
how the civil service, in compensation schemes of this kind, manages
to get it so wrong. We looked at the miners health compensation
scheme recently, which you will be aware of. Of course, more was
spent on administration and so on than was paid in compensation.
The scheme made some lawyers multi-millionaires. Here we have
a different scheme with huge problems. The civil service hires
bright people from the best universities. The Ombudsman's report,
in paragraph 79, states: "I consider that, in order for any
ex gratia compensation scheme both to accord with principles
of good administration and to have a reasonable prospect of being
run effectively, a number of conditions need to be satisfied."
Then those conditions are gone through. In paragraph 82, having
regard to those conditions, the Ombudsman says: "I would
expect an effective scheme to have scheme rules that are clearly
articulated and which directly reflect the policy intention behind
the scheme"—that is pretty obvious—"to have
systems and procedures in place to deliver the scheme which have
been properly planned and tested"—again, that is pretty
obvious—"to have built in sufficient flexibility in
rules and procedures to recognise the level of complexity in the
subject matter covered by the scheme". Again, that is pretty
obvious. You yourself said that it is important to consult all
the players and that was not done, and that the Department mistakenly
thought that merely talking to the BFA was sufficient when it
plainly was not—that was in parentheses. The quote from
the Ombudsman continues: "and to have mechanisms which enable
the success of the scheme in delivering its objectives to be kept
under review." All of this is pretty good solid, basic stuff
and principles of good administration. You are the Permanent Secretary
of a major Department. You are on a very high salary and will
have a very high pension. To go back to the Ombudsman's report,
paragraph 22 refers to Mrs A, one of the complainants, who said
that in February 1972 her husband would have much preferred to
stay at home, particularly because his wife, Mrs A, was unwell.
However, the operation of the pool system was such that he had
no choice. The report states: "She said that `the trawler
owners behaved like Gods'. Her husband had been told, a few weeks
after he had been discharged from the Ross Rodney, that he was
required to work aboard a North Sea vessel, the Saxon Forward.
If he had refused he would not have been able to obtain unemployment
benefit. It was simply not possible to keep a family of five without
any income at all and it was in that sense that her husband had
had no choice. It was literally a question of taking the job offered
or the family would starve." The people doing the administration,
such as yourselves, will not starve, as I pointed out. You will
be fine. They will not necessarily be fine. You hire the brightest
people from the best universities. Why is it that with the miners
scheme and with this one, the Department manages to get these
things this badly wrong?
Sir Brian Bender: First, there
are differences between the two schemes, but in both cases there
was enormous complexity as a result of the rules, going back over
a very long time, and the Department did not stand back, consult
properly and do the proper risk planning and risk management,
proper project planning. In this case, matters were made more
difficult by the changes of the rules along the way, but those
are the fundamental points on it.
One of the lessons that I hope we have
learned along the way is the much closer and better involvement
of those who will be responsible for doing it, because the bright
people, as you describe them, who sit in headquarters do not have
much experience of operational delivery on the ground. One of
the issues that the Cabinet Secretary has often discussed with
other permanent secretaries is how we can ensure that the future
generations of people at the top of the civil service have the
operational delivery experience of turning bright ideas into things
that work on the ground. We are working on that at the moment
to make sure it is built into people, that a graduate entrant
to a Department will have to do one spell somewhere in operational
delivery—
Q48 Mr Bacon: One?
Sir Brian Bender: Sorry, in their
first three or four appointments. The point is that you will not
get into the senior civil service without operational delivery
experience. It does not matter how bright you are, if you do not
have practical experience and you do not stand back and plan these
things with programme/project management and risk management techniques,
you risk screwing up. I would say this, wouldn't I, but I do believe
the civil service has got better at these things. Both the schemes—the
last one I was here for and this one—date back to 1998,
1999, 2000, but they are very powerful lessons and we need to
make sure they are learned, rather than that we come here saying
again, "We must learn the lessons."
Q49 Mr Bacon: You have been very
candid and acknowledged many mistakes. The points you have just
made are generic.
Sir Brian Bender: Yes.
Q50 Mr Bacon: They affect a whole
range of things that this Committee sees. I have to say that in
my six years on the Committee, I have not noticed things getting
a whole lot better. You have been more candid than many permanent
secretaries have been in the past, which is very welcome, because
if you are to make things better, you need to have an intelligent
discussion about what is wrong. The Chairman intervened on me
in the Public Accounts Committee debate on the very point that
only one programme manager—I think he used the phrase "project
manager"—had been made a permanent secretary, rather
than that being a matter of routine. When do you see this kind
of change percolating through the civil service?
Sir Brian Bender: There is a little
known, little read NAO Report from about a year ago called, Successful
IT Projects in Government. There are cases and areas where
Departments are doing these things successfully. The question
is about whether we are learning lessons from the successes as
well as the failures. The short answer to your direct question
is that the Professional Skills for Government programme, launched
by the last Cabinet Secretary and pursued enthusiastically by
the present one, is intended to ensure that people have a broader
experience and have things such as programme project management
skills, and that these things are inculcated. These changes cannot
be made overnight, but they must be made.
Q51 Mr Bacon: You mentioned complexity.
That is a theme that I see in lots of the issues that we look
at. I wonder whether civil servants, because they are bright people,
have an unhealthy attachment to complexity.
Sir Brian Bender: Well, I must
be careful. We have a tendency not to respect what I call the
80:20 rule. If someone in the business sector sees something that
seems to be about 80% right, they will take the risk and go for
it. However, the sector that we work in has, quite rightly, issues
of public accountability, and we tend to spend rather a long time
on the remaining 20%. Sometimes, that is absolutely right and
justified; sometimes, it can add unnecessary complexity. In this
case, the problem was that we were looking at something that was
not directly measurable and we therefore had to find proxies.
There was no register of vessels that had fished in Icelandic
waters; there were no full employment records; and in each case,
we were looking for proxies, which turned out to be very complicated
to find. Everything really flowed from that.
Q52 Mr Bacon: Is it just that the
world is very complex, or, to repeat my question, is this interest
in complexity unhealthy?
Sir Brian Bender: We need to be
better at working out what needs to be done, and where there is
complexity, standing back, consulting and thinking through the
matter, rather than just adding another bell or whistle to it.
Q53 Mr Bacon: You mentioned not consulting
all the players. That is blinding common sense. Anyone with any
sense would say, "Let's figure out who are the main players
in this," and not just take the opinion of some of them,
or one organisation. They would ask whether that is an accurate
portrayal of the universe that we are dealing with—would
they not?
Sir Brian Bender: I find it hard
to understand why it did not happen. It was partly because it
was believed that the BFA was representative, and partly due to
an understandable pressure to get a move on. One of the other
things that the civil service needs to be better at doing under
those circumstances is to say to Ministers, "We need to think
this through more for the following reasons." It is our job
to do that, and not to be pressed into doing things that add to
complexity and then are very difficult to deliver.
Mr Bacon: Thank you.
Q54 Chairman: Sir John, do you think
that it is strange that, 150 years after the Northcote-Trevelyan
reforms created the modern civil service—incorruptible,
with promotion by examination—that we still have a system
that takes until 2007 for the Cabinet Secretary to say that, to
enter the top civil service, you must have run a project? Do you
find that strange?
Sir John Bourn: I find it strange,
although if you look at the history of the country, you can understand
how it comes about. Sir Brian is quite right when he draws attention
to the possibility that clever people make things more complex
than they need to be. We saw that with the Rural Payments Agency
a few weeks ago, when it came to the Committee. There we again
saw a scheme that was more complex than it needed to have been
and more complex than the one in other parts of the country. There
has been a tendency, sitting in the confines of Whitehall, to
think up ways of laying off for everything that we could think
might happen and other things as well. Sir Brian is right to say
that that is recognised and that efforts are being made with the
development of career experience in the civil service, to get
people with a wider range of operational experience. Also very
relevant is the idea of having more secondments into the business
sector, so that people who reach the senior civil service will
have been expected to spend two, three or four years in the private
sector on their way to a senior appointment.
Chairman: Thank you very much.
Q55 Keith Hill: How many claims were
there in total?
Tim Soane: We paid out on 4,400
claims, but there were a further 2,600 claims that were not paid
out on.
Q56 Keith Hill: Where does this figure
of 7,000 come from?
Tim Soane: Those two figures—those
that we paid out on and those that we rejected. There was duplication
or misunderstanding on another 4,000. There was a total of 11,000
claims: 7,000 were genuine claims, of which we paid out on 4,400.
Q57 Keith Hill: And were the remaining
4,000 not genuine claims?
Tim Soane: They were duplicates;
misunderstandings between the parties supporting the trawlermen
and their dependants, which occurred when two copies of the same
material came in within different letters.
Q58 Keith Hill: So you paid out on
about 60% of the claims?
Tim Soane: Yes.
Q59 Keith Hill: Is that an unusually
high or low percentage?
Tim Soane: I do not think that
there is any precedent.
3 Note by witness: The payment was a single
consolatory payment of £1,000 each. Interest was not involved. Back
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