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Parliamentary Ombudsman v Government – the sequel
On July 27th the long-awaited report into Equitable Life was published by Ann Abraham, the Parliamentary Ombudsman. Unambiguously titled ‘A decade of regulatory failure’, there was little room for confusion about the report’s conclusions. And yet again the report raises important questions about the role and the authority of the ombudsman.
The Department for Trade and Industry, the Government Actuary’s Department and the Financial Services Authority all came in for various degrees of criticism for their failure to provide oversight and regulation to a standard that might have been expected. The ombudsman found that this constituted maladministration causing injustice, and recommended that the government should apologise for its regulatory failures, and set up and fund an independent scheme to assess claims and determine compensation within six months of the publication of the report, with the aim of completing payments within two years.
The Equitable Members Action Group estimates that the cost of such a compensation scheme would be around £4.7 billion, and there have been predictable debates in the media about whether or not such a use of taxpayers’ money is justified. But so far there have been no public statements from any of the government departments or statutory bodies concerned. The only comment, from an un-named Treasury spokesperson quoted on the BBC website, was that ‘the length and complexity of the report mean it would be inappropriate to comment before giving it our full and careful consideration. We expect to provide a full response to the House [of Commons] in the autumn.’ Although this is indeed a long and complex report (running to 2,800 pages), the Treasury has had plenty of time to give it full and careful consideration. The original draft report was sent to the Treasury and the other public bodies concerned in January 2007, and they in turn submitted a substantial joint response – over 500 pages, Ann Abraham writes in her somewhat irritated letter to MPs in May last year. Her revised draft report was sent out again to all the interested parties in February this year, and in May she set the final publication date for the week beginning July 14th.
So would it be appropriate to assume that ‘full and careful consideration’ is a euphemism for ‘no’? Not necessarily. There have been two recent issues over which the government has initially refused to accept the recommendations of the ombudsman. Not surprisingly, they both involved the suggestion that significant sums of money should be paid out in compensation for maladministration by public bodies. But in both cases, after initial refusal, the government has in fact complied.
MOD compensation for British internees
The Ministry of Defence refused to accept the ombudsman findings concerning a compensation scheme for British internees in the Far East during World War II, and only agreed to implement her recommendations when the House of Commons Public Administration Select Committee took evidence on the issue.
Occupational pensions
The ombudsman report into the role of government bodies in advising on occupational pension schemes, ‘Trusting in the pensions promise’, was published in March 2006, but the Department for Work and Pensions (DWP) contested the findings of the report, and rejected its recommendation that some form of compensation should be considered on the grounds that it would be too expensive for the public purse, and was therefore unjustified.
The Parliamentary Select Committee for Public Administration considered this refusal, and published a damning report. It concluded that ‘It would be extremely unfortunate if government became accustomed simply to reject findings of maladministration, especially if an investigation on this committee proved there was indeed a case to answer. It would raise fundamental constitutional issues about the position of the ombudsman and the relationship between parliament and the executive. At the heart of every case of maladministration is someone who has suffered injustice. By concentrating its energy on denying findings of maladministration, rather than on considering what remedies might be practical and proportionate, the government has caused further distress to complainants. It has delayed any resolution of their problems.’
An application for judicial review was made, but in December last year the DWP conceded, and announced an extension to the Financial Assistance Scheme so that those who had lost out on their pension as a result of their employer going bust would have 90% of the value of their pension restored. At the time, Ann Abraham commented, ‘I warmly welcome this announcement, which constitutes full compliance with my key recommendation and which also remedies the deficiencies in the Financial Assistance Scheme identified in my report.’
Equitable Life
In the case of the Equitable Life report there have been no immediate denials of maladministration, and no high-profile refusals to consider compensation. This may mean that the government has learned from past experience, and is planning to comply with the ombudsman’s recommendations. On the other hand, it may mean that it has learned the value of exploiting the short attention span of the media, and is hoping that some other story will be monopolising their attention when that promised statement is made to parliament in the autumn. We should not lose sight of this issue – not just because it will affect my pension (!) but because those fundamental constitutional questions about the relationship between ombudsman, parliament and government are important.
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