Examination of Witnesses (Questions 60-79)
SIR MICHAEL BUCKLEY AND MR ALAN WATSON
THURSDAY 21 MARCH 2002
60. I think the Committee ought to congratulate on you the work you have done on this front in bringing a more flexible approach to the handling of complaints and therefore being able to resolve more speedily, in a variety of ways, the things that come to you. If we extend the perspective back to the 1960s when the institution was first set up, do you think now, as you think about leaving it, that it has fulfilled the expectations of its founders? Also, tell us again why you now come to feel that it needs in some respects root and branch change.
(Sir Michael Buckley) There are two reasons why I believe root and branch change is necessary. One is about the structure of the ombudsmen arrangements in this country, where you have separate schemes for parliamentary and health and local government, which is increasingly unsuitable. Looking at the Office of the Parliamentary Ombudsman more narrowly, it is actually quite hard to know what those who devised the scheme were really expecting. Certainly, as I have said on a number of occasions, they were devising what I have called a research facility for Members of Parliament rather than a complaintshandling institution. That is the whole thrust of the 1967 Act. In that sense, I think, their expectations were fulfilled. However, I think some of these expectations may have been based on a false premise. For example, there were many analogies between the Parliamentary Ombudsman (Parliamentary Commissioner for Administration) and the Select Committee, and the Controller and Auditor General and the Public Accounts Committee. I think those analogies were in many respects misplaced. But probably most fundamentally of all, if one looks at the history of the office over its 35 years of history, on average it has received about one and a half complaints per Member per year. Since, for most of its history, the only way of dealing with a complaint, taking positive action on a complaint, was to issue a statutory reportand there were lots of thoseon average a Member of the House of Commons has received a report perhaps once every three years. It does seem to me that if Richard Crossman had gone down for the second reading of the Bill in 1966, if he had been asked that question, "What is the workload of the Office?" and he had had a good crystal ball with him and had said what I have just said, he would have been laughed out of the chamber. Clearly there were differences of view as to what the likely workload would be, but I cannot imagine it would have been that small. Indeed, it is said that Sir Edward Compton, in an interview he gave to the media shortly before the Office opened for business on 1 April 1967, said that he expected to receive between 6,000 and 7,000 complaints a year. It has never got near that. The Office has done, of course, very good work. It is particularly well equipped to pick up the difficult case for sustained investigation and so on. It has not been well equipped, it has not been successful, in dealing with the run of the mill complaints which are both the normal bread and butter work of most ombudsmen abroad and alsoand I think this is all too often overlookeda very necessary part of some of the wider lessons which an ombudsman can draw.
61. Some might say that the Office has had difficulty enough over the years in dealing with complaints that it gets. We are constantly nagging you about backlogs, throughputs and all this sort of stuff. If you were not getting such a modest quantity of complaints, how on earth would the Office operate?
(Sir Michael Buckley) It would be necessary, of course, to change working methods, but I think we have shown this year that it can be done. I think it is more or less certain that in this current year we shall receive over 2,000 complaints. If one looks back a few years to see what happened when the Office received 1300/1500 complaints, it got into serious trouble. We have been able to deal with those 2,000 complaints. In fact, we will have reduced the investigation backlog yet further by the end of this year. We have been successful in resolving a very large number of complaints informally and I think those methods could be taken still further. Again it is worth noting that my colleagues, the local government ombudsmen, last year received 19,000 complaints. They have something like twice the number of staff that I have on the Parliamentary side of the Office, but they still managed to deal with those 19,000 by less formal methods. I think one has to take the thing as a package. I cannot disagree with you, if the Office received two, three, five times as many complaints as it does now and tried to deal with them with historic methods, it just could not function.
62. The key constraint in all this has been the MP filter. Did you feel when you began the job that that was not useful, or have you come to feel that while doing the job?
(Sir Michael Buckley) I have always been somewhat sceptical, I have to say, about the MP filter. I have become increasingly so as I have served. Again, I think one needs to be clear: it is not just the MP filter in the technical sense ( that a complaint may be referred only by a Member of the House of Commons), it is the whole structure of the Act that, as I say, emphasises investigation and reporting rather than resolution of complaints. I believe that is unhelpful. It is one of the reasons for the low output of the Office, the reason the Office does deal by international standards with relatively few complaints, and I believe the long-term implications are serious to Parliament.
63. I am sorry to keep pressing you on this, but if the Government keeps on dragging its feet about the fundamental reform of the whole Parliamentary Ombudsman system, would a good fall-back position be to try to sort out some of these problems on your side of the business? Trying to sort out the filter, trying to sort out some of the problems with the original legislation causing problems about length of investigation?
(Sir Michael Buckley) That would certainly, be a useful thing to do. It would be half a loafbut we all know what the proverb has to say about half loaves. As I say, I think one has to be clear: it is not just a matter of Parliament changing the one section of the Act that says, "Complaints may be referred only by an MP"; it has to go further. But, certainly, provisions which enabled the Office to deal more flexibly and more expeditiously with complaints would be a valuable step.
64. At the moment we get, you know, an annual report session like this, and we can look through the cases that you have done in relation to particular departments and we can drag the particular departments in and give them a hard time about the investigation you have done. But is it not the case that, in a sense, it is a bogus enterprise, because one of the expectations about the Office was that it would be an instrument to allow Parliament to do some kind of administrative audit of departments, and yet, on the basis of the number of complaints that you are getting, you are not really able to do that, are you, and therefore we are not able use it for that purpose?
(Sir Michael Buckley) I think that is right. That is precisely what lay behind some of my remarks about a new institution being able to give a better service to Parliament. It will have a wider range of institutions to look at, so it will be able to look at things across the public sector; it will have a larger case load, I think, on the basis of which you could produce more soundly based recommendations. I think this is very much the way forward. Although, as I have said repeatedly, I am no friend to the MP filter, I do very much believe that the Ombudsman's office should be closely linked with the legislature and should be one of the ways in which the legislature can hold the executive to account. The way in which that should be done, in my view, is precisely by producing some of these more wide-ranging, deeper studies of the public administration, essentially as it affects the citizen. It is not so much that we would go in and audit the computer system; we are not computer experts. What we can say is that from our experience of individual cases and from what my overseas colleagues say, we can tell you how this is affecting the citizenry and how that may derive from features of the system.
Chairman: Yes. Thank you very much for that.
65. In a couple of weeks' time we are going to have major reforms to the Child Support Agency and new child support is going to come in. Given your experience in the Child Support Agency in the first place, do you have any systems in place for dealing with the increased volumes of complaints that are likely to arise from the new system?
(Sir Michael Buckley) There are two points on that. The first is that I read in today's paper that this new system may have to be put off because of yet more problems with computers. We will wait for harder news on that. It may be that the Office will actually receive fewer complaints. There will be complaints from those who are dissatisfied with the transitional arrangements. The arrangements, as far as I understand it, are that those in the current system will continue; new cases will go into new system. But I think there may well be complaints from members of the public about "the system". Now that is not a matter for the Ombudsman, because the detail of the systemthe allegation, for example, that those on higher incomes may pay an excessive amount of moneyis what Parliament has decreed. That is therefore not for the Ombudsman. We have had so many and such difficult CSA cases because the administrative system, the way in which the CSA try to give effect to the wishes of Parliament, is just so complicated and, candidly, so badly run, that the ombudsman receives many complaints. So it may be a rather different situation. Certainly we are not ignoring this. We try and keep in touch, we do keep in touch, with the CSA. We keep in touch with the independent case examiner to see, so to speak, what is coming over the hill. But it may be that at least the medium term effect will be a reduction in the number of cases we are seeing.
66. I am interested in how you prepare for Job Centre Plus. That is another major reform. How do you as Ombudsman prepare for those kinds of systemic changes that have happened? Do you put in place a separate procedure to cater for that, or do you wait for the crisis to hit you and then deal with it?
(Sir Michael Buckley) We try to make sure we understand what the system is and how it works so we will not have that learning curve, but we do not, on the whole, install extra capacity until we can see that we need it. One advantage of the way in which, so to speak, the Ombudsman tends to be last resort, is that we do get a fair amount of early warning, whether from the department itself or in some cases the internal complaints' examiners or, indeed, from Members of the House. So it is not that something is going to hit us immediately, we do get early warning. But Alan Watson may want to say a bit more about that.
(Mr Watson) Yes. We do keep in close touch with the chief executive's boardour major customers really!and we try to anticipate what is going to happen, to understand what changes are going to be made, and we do have regular meetings at chief executive levelindeed, we have one coming up shortly with the chief executive of Job Centre Plus. It is an ongoing situation really, where we exchange information.
67. Can I move on to the operation of your Office. There have been some complaints recentlyand we had an exchange last time you were hereabout the pay situation. Would you like to comment on where you think it is at at the moment?
(Sir Michael Buckley) Where it is at at the moment is that we have implemented the pay offer. I would not suggest that there are no problems with pay; there are issues that we need to address and we have offered to the trade union side meetings next month so that we can think about the longer term. But I do believe that the pay settlement that we put into effect last year, certainly by standards of what is happening elsewhere in the pubic sector and the rest of the economy, is a pretty generous settlementI am always a little cautious about using the word "generous" in the context of a pay settlement, but it is convenientand we tried to address some of the significant problems that we had in the Office by targeting it towards the lower part of the pay band. As I say, I do not want to say that, no, the Office has no problems. It has some problems in the staffing structurewith retention of staff, particularly in the early yearsand we want to address those. But, as far as last year's pay settlement is concerned, that is decided business as far as management is concerned.
68. One of the things that was said a couple of years ago was that the issue of pay progression was going to be sorted out "next year". That was the year 2000. Then it was going to be sorted out "next year". That was the year 2001. What is the current status of that discussion?
(Sir Michael Buckley) The Office settlement includes significant improvements in progression but, as always, one has to work within the amount of money that is available and we did as much as we thought we properly could within that amount of money.
69. Is that the issue that you have been back to government about?
(Sir Michael Buckley) We did go back to government last year. Initially we were given what is called a "pay mandate" which we thought was inadequate and we asked for more. So, yes, we did take government on. We said, "Please, we would like some money."
70. As I understand it, you get people whom you recruit from outside and you get people who are on secondment from the civil service. Can you explain the balance and how you see that developing, or where it is now compared with where it was?
(Sir Michael Buckley) Traditionally the Office staffed itself by people on either secondment or short-term contractstypically, three years extendable to five. We changed that policy in 1997, so that we have an increasing number of staff on what we call "indefinite term contracts", which basically mean contracts like the rest of the world has and therefore they are permanent staff. We still do have some on loan from government departments, and I think that will continue because, for example, there are areas where one does need specialist knowledge; for example, the Inland Revenue. We can certainly let the Committee have a note on the balance, but I should think we probably have something of the order of 70 per cent of our investigation staff now permanently on our books, if you like. But it would probably be sensible if I let the Committee have a note of that.
71. What is the process for the appointment of your successor?
(Sir Michael Buckley) That is perhaps a question which should be addressed to government. As I understand itand certainly the process by which I was appointeda public advertisement will be placed, applications will be received and government will then consequently make a recommendation to the Queen, who makes the appointment. That is what I know from general knowledge, as it were. What the government has in mind for any particular timetable for the process is not yet known to me.
72. On Brian's question: is the dispute in the Office having an adverse effect on work of the Office and on the general morale of the people who work there?
(Sir Michael Buckley) Obviously, in one sense, it does have an effect. Industrial action always has an effect. Certainly it has an effect on morale. It is never good if relations between management and trade unions, to some extent, and obviously the staff themselves are strained. I hope that this is something that we can address between us, because it is just not good for the Office, it is not good for management, it is not good for staff. As I say, we have suggested to the trade union side that we should sit down next month and try to work things out for the longer termI am only too anxiousbut the Office is coping.
73. You were not persuaded at the need to go to binding arbitration?
(Sir Michael Buckley) No, I do not think that is appropriate. Indeed, I cannot think of any part of the civil service that has gone to binding arbitration for many, many years. At the end of the day, management is responsible for running the Office and we have to decide what is appropriate and what we can accept and what we cannot.
74. I would like to ask a bit about Equitable Life and I perhaps do that in two respects: this Committee and also my mail bag. Could you tell us exactly where your department is as far as the inquiry is concerned?
(Sir Michael Buckley) I announced last year that we would undertake an investigation into a representative case and, in particular, we would be looking at the period from January 1999, when the Financial Services Authority became responsible, by delegation, as it were, from the Treasury, to December 2000, when Equitable Life closed to new business. I selected that period because it had been covered by the Baird Report and I had previously taken the view that it would not be sensible to have two simultaneous inquiries. Of course, immediately before that decision, the Government had announced that it was setting up another inquiry, the Penrose inquiry, which would go still wider and look into the years before 1999, and, again, I took the view that it was not sensible for me to conduct an investigation in that period, particularly, as I shall explain, it would be a rather limited investigation. I have tried very hard to keep all members of this Committee in touch with what has been going on and recently I have sent another letter to Members updating them on the situation. One of the points on which I think it is important to be clear is that the regulation of insurance companies has two aspects. There is what is called prudential regulation of insurance companies, which is concerned with their solvency and whether they can satisfy fully policy holders' reasonable expectations. Then there is the conduct of business regulation, which is advertising and the way they sell things and so on and so forth. I can look at the first of those, the prudential regulation; I cannot look at the second. The conduct of business regulation is outside jurisdiction. Again, I will happily submit a note to the Committee; but I am advised that it has been out of the Office's jurisdiction since 1988, when the Financial Services Act 1986 came into force. So an investigation by my Office could look only at one aspect of the Equitable Life problem: the prudential regulation, not the conduct of business regulations. It is conduct of business, after all, which is essentially the way in which any life insurance company interacts with the members of the public, with policy holders, with potential policy holders. So that is the position from my Office. I have to say that I do not regard the situation in general as satisfactory. I quite understand why a number of Members have been pressing my Office to do more, though I think perhaps based on a misunderstanding of the extent of my jurisdiction. It seems to me that in this sort of circumstance, in this sort of case where one has a very wide range of issuespolicy, technical issues of regulation and so on and so forthinstead of, as the government did, allowing inquiries to come up piecemeal and now there is the prospect of court action and so on, it would be far more satisfactory if there were a proper process for saying: What sort of inquiry should there be? What should it cover? Should it be in public or in private? Again, this is another aspect which is relevant to my investigation. My investigation must, by law, be in private. I think many people would want to see any investigation into Equitable Life, and many other matters of public concern, as far as possible in public. So I think there is a large general issue here, not just for my Office.
75. Can I follow that through, because one area with which my constituents are concerned is in fact the FSA's role in all of this. Though I accept your business point, it is actually the operation or what my constituents see as the inoperation of the FSAand it is still happening. That is what particularly concerns me. There has been a High Court judgment recently and an immediate change of policy, which is the business part, but it is the FSA not doing thing. I think that is what I am asking you to look at.
(Sir Michael Buckley) That is precisely the point. You have put your finger on it. The Financial Services Authority, as such, is not in my jurisdiction. It comes into my jurisdiction only in so far as it is acting on behalf of a government department. It was acting on behalf of the Treasury from 1998. I can only look at that aspect. I cannot look at the Financial Services Authority in its own right, so to speak.
76. You cannot look at it in terms of its processes.
(Sir Michael Buckley) No. The bodies within my jurisdiction are set out in Schedule 2 to the Parliamentary Commission Act 1967. Only bodies that are mentioned in that schedule are, so to speak, in their own right within jurisdiction. The Financial Services Authority is not so mentioned.
77. There is a cause of concern for the general public here. Certainly from my mail bag, that is where we are focusing, that is where the issues are. There is no real feelingand obviously we cannot comment on the Penrose inquirythat that is actually being addressed. If that is not on your list, whose list is it on?
(Sir Michael Buckley) Some cases no doubt could be considered by the Financial Ombudsman Service. But if one is saying, "Whose responsibility is it?"so to speak, between government and Parliamentinitially I just have to say, "Certainly not mine." I mean, I do not know the extent to which the Treasury or whoever would accept responsibility. So I do understand the concern that Members have been expressingit comes through in correspondence to mebut I must repeat that all I can do is to work within the constraints of the Parliamentary Commissioner Act 1967. The Financial Services Authority is not, as such, within my jurisdiction.
78. Do you think it ought to be?
(Sir Michael Buckley) I think that raises a very big question indeed, Chairman, as the Office now is and probably as it would be if there were an extension to the ombudsmen system. It is essentially looking at public services, one way or anotherparticularly, of course, within my present Office, institutions that are accountable through ministers to Parliament. The FSA, as I understand it, is not. I think there are obvious issues to be discussed about the extent of parliamentary or other oversight over bodies such as the Financial Services Authority. There are no doubt many considerations of which I have only tenuous knowledge at best, but this I think is a very difficult issue. Also, when one comes up against the point, my Office is set up to look at individual complaints, not perhaps general issues about the way in which the FSA or, indeed, any other institution conducts its affairs and how it fits into general schemes of financial regulation.
79. As Annette has said, we have post bags bulging with new complaints.
(Sir Michael Buckley) I think this is perhaps something that the Committee should take up with the Government. I am sorry to keep making the same point, but I must. Any concerns certainly about the current operation of the FSA are plainly outside my jurisdiction. Again, I speak without the book, but I think it was in December 2001 that the Financial Services Authority became solely responsible for regulation in this area.