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76. Having set out above and in the Annexes to this report the evidence disclosed by my investigation, I now turn to consider whether that evidence suggests that Mrs A has sustained injustice in consequence of any maladministration in the actions or inaction of those responsible for devising and operating the ex gratia compensation scheme.

77. In order to determine this, I will consider three questions: first, whether maladministration occurred; secondly, what, if so, were the consequences of any such maladministration; and, thirdly, whether Mrs A has suffered an injustice as a result which has not been remedied.

78. Before doing so, I will set out the approach that I have used to ascertain whether the actions or inaction of DTI in relation to the scheme constituted maladministration. This approach is one that I would use when considering complaints about any ex gratia compensation scheme similar to the one that forms the subject of Mrs A’s complaint.

My approach to maladministration in this context

79. 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.

80. These conditions relate to the policy intention behind the scheme; the rules and systems that are devised to govern the operation of the scheme in the light of that intention; the way in which the scheme is administered; and whether the scheme is monitored to ensure that it is able to continue to meet its objectives once it becomes operational.

81. In detail, the conditions that I would expect to be satisfied are:

(i) that those responsible for setting the policy intention behind the scheme – that is, what the scheme is meant to recognise and how, broadly, that is to be achieved – should formulate, articulate and, where appropriate, announce that intention clearly, setting defined objectives that are not ambiguous and which are workable and can reasonably be delivered by those who will take forward the work to devise the detailed rules and systems of the scheme;

(ii) that those responsible for devising the detailed scheme rules should have sufficient knowledge of the background to the sector and the events, issue or problem that the scheme is intended to recognise or address, to enable them to devise eligibility rules and the systems to support the scheme that are fit for purpose. That is, allowing sufficient time where necessary:

  • to research the context to establish all the factual considerations that are relevant to the subject matter of the scheme and which may need to be reflected in the detailed eligibility criteria – to ensure that, where the subject matter is complex, such complexity is recognised within the scheme rules by a degree of flexibility which enables those operating the scheme to deal with unusual or unanticipated cases fairly and appropriately;
  • to consult those with particular expertise about that subject matter where such knowledge is not readily available within the relevant Department or agency – including, where possible and appropriate, seeking the views of those representing the people who may be most directly affected by the scheme;
  • to seek advice from whatever source is appropriate – be it from legal or other professional advisers, from other Departments or agencies which have operated similar schemes, or from external consultants with relevant experience – as to the practical issues that may arise in the operation of the scheme as it is envisaged, before finalising draft scheme rules; and
  • to pilot the scheme, where possible, to enable those who will administer claims under the scheme to receive proper training and to allow those who will manage the operation of the scheme to identify any potential systemic problems, before the scheme becomes fully operational – thus limiting the scope for any such problems to impact adversely on those who are (potentially) covered by the scheme;

(iii) that those responsible for operating the administrative systems, policies and other infrastructure of the scheme, once it is in operation, should fully understand the rules of the scheme, making informed and properly recorded decisions on each case – and should apply the rules consistently and fairly having regard to the relevant circumstances of each applicant;

(iv) that those administering and managing the scheme should put in place systems to enable them to undertake effective monitoring of the operation of the scheme. Where they find that the rules and systems that are being operated are ineffective, unworkable or unfair, prompt action should be taken to review the scheme and to rectify any problems that are identified – while ensuring that such action does not unfairly affect those whose cases have already been decided.

82. Having regard to the above four conditions, I would expect an effective scheme to have scheme rules that are clearly articulated and which directly reflect the policy intention behind the scheme, to have systems and procedures in place to deliver the scheme which have been properly planned and tested, to have built in sufficient flexibility in rules and procedures to recognise the level of complexity in the subject matter covered by the scheme, and to have mechanisms which enable the success of the scheme in delivering its objectives to be kept under review.

83. Any scheme which does not meet these criteria will not have been designed or operated in accordance with principles of good administration.

84. However, that does not mean that it necessarily follows that I will uphold any complaint from an applicant to such a scheme who is dissatisfied with the result of their application.

85. When considering whether maladministration has occurred, I will always have regard to the circumstances relevant to each case. I will consider the extent to which the action taken in the particular situation departs from principles of good administration – and whether such a departure is reasonable in all the relevant circumstances. I will also consider the nature of any deficiencies in the design and operation of a scheme – and also consider the effects of those deficiencies on the person making the complaint. I then have to consider whether those effects constitute an unremedied injustice to that individual which should be put right.

86. Having set out my general approach to determining whether maladministration occurred in relation to complaints about ex gratia compensation schemes, I now turn to make findings in relation to Mrs A’s specific complaint – and those similar complaints identified in Annex C to this report.

Did what happen constitute maladministration?

87. I will now turn to determine whether that evidence discloses maladministration. I will make four findings. Two of these relate to the development of the scheme – that is, the genesis of the scheme and whether the resulting eligibility criteria were fit for purpose. A further two relate to the operation of the scheme – that is, how claims were assessed and whether the ability of the scheme to deliver its objectives was properly monitored.

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The genesis of the scheme

88. It is clear that the events which the ex gratia compensation scheme were intended to recognise and the financial losses for which it was to compensate occurred during the 1970s and 1980s (paragraph 10). This may seem obvious and hardly a matter of special note to the reader of this report.

89. However, this – coupled with the fact that the policy decision to establish the scheme was at least in part a response to a campaign for what was seen as adequate compensation that had originated in the early 1980s (paragraph 10) – meant that, in this case, it was not necessary to work up detailed scheme rules and supporting processes quickly or without proper consideration of all the relevant factors that might have borne on the delivery of an effective scheme.

90. I recognise that, in some cases, government departments or agencies have to deliver ex gratia compensation schemes very speedily in order to deal with emergencies or unforeseen circumstances. However, this was no emergency.

91. Indeed, my first finding is that the scheme was devised and launched before it was appropriate to do so. Given the complexity of the industry to which it related, the time elapsed since the relevant events had occurred, and the lack of direct knowledge of the subject matter on the part of those responsible for the scheme, what happened did not accord with the principles of good administration that I have outlined above – and was so far short of what was appropriate in the circumstances that this constituted maladministration.

92. The first submission to Ministers recommending the setting up of a scheme in response to the campaign for compensation was made on 18 October 1999 (paragraph 24). It had been agreed on 28 February 2000 to establish a small inter departmental group to conduct a scoping exercise and to explore the feasibility and design of a scheme. This group was required to report to Ministers within two months (paragraph 25).

93. Following the work of this group, agreement in principle to the establishment of an ex gratia scheme had been given by the Chief Secretary to the Treasury on 22 June 2000 (paragraph 28). The intention to establish the scheme was announced by way of a written Parliamentary answer on 28 July 2000 (paragraph 31). The scheme was launched on 2 October 2000 and had a deadline for admitting claims of 31 December 2002 (paragraph 28).

94. Thus, the scheme was developed in the approximately 12 month period between 18 October 1999 and 2 October 2000. That may not, at first sight, appear to be an unreasonable timescale for such a project.

95. However, it is not the timescale within which the scheme was developed itself that I criticise. Rather, I am concerned that the scheme was devised without full appreciation of the nature of the industry, of the differing working practices in each of the affected ports, and of the detailed provisions of the ‘pool system’ (paragraphs 12 and 13) – and how these factors might affect individual claims.

96. Furthermore, I am also concerned that the scheme was launched in this context in spite of warnings – from those who had a more detailed understanding of these matters – that the scheme as it was proposed was not fit for purpose.

97. This came to be accepted by officials once the scheme had been launched. As noted in paragraph 45 of this report, officials had recognised in February 2001 – four months into the operation of the scheme – that some of the problems that had been encountered were a necessary consequence of the haste with which the scheme had been developed.

98. The note of the meeting referred to in that paragraph stated:

‘… the Scheme was set up in a hurry, at the insistence of Ministers, and… we were still having discussions with the BFA right up until the days before the Scheme opened. We also know more about the trawler industry than we did at the beginning and this is why some of these problems have arisen.’

99. It might equally have been noted that, during the ‘discussions’ with the BFA immediately before the launch of the scheme, the BFA had been warning officials that the scheme would not deliver its policy objective.

100. I note the assertion made by an official in March 2001 (paragraph 46) that, when the scheme had been devised, Ministers and officials had taken careful account of advice and information from a wide range of different sources, including experienced and qualified marine personnel.

101. However, I have seen no evidence that would support such an assertion. While there had been some informal telephone conversations between officials and the office-bearers of the Hull BFA prior to August 2000 (paragraph 32), officials had only met representatives of the BFA some three weeks before the scheme had been launched. That appears from the evidence I have seen to be the extent of consultation with those with direct knowledge and experience of the relevant industry.

102. The scheme was launched before the resolution of all the outstanding issues that were then known to relevant officials to constitute potential problems. Such problems included:

(i) the difficulty of distinguishing between those individuals who had lost their job as a result of the agreement with Iceland and those who had lost their job for other reasons, which had been identified in a paper attached to the DTI submission of October 1999 (paragraph 24). This became an ongoing issue during the operation of the scheme;

(ii) the difficulty of obtaining confirmation of individual eligibility, a potential solution for which – the interrogation of National Insurance contribution records – had been suggested by Treasury officials in May 2000 (paragraph 27). However, DTI did not make a formal approach about obtaining access to those records until more than one year after the scheme had been launched (in December 2001 – paragraph 61). It was established in January 2002 that DTI could not obtain that information easily (paragraph 63), with the result that officials were not able to satisfactorily verify complex claims; and

(iii) the difficulty of identifying which vessels had trawled in Icelandic waters. A paper attached to the DTI submission of 9 May 2000 (paragraph 27) set out three options for eligibility under a scheme and suggested that payments could be restricted to those former trawlermen who had worked for vessel owners known to have trawled in Icelandic waters – although in practice, most vessel owners were likely to have had interests in most distant water fishing operations. However, by 16 January 2001 (paragraph 44) officials were conceding that it had been very difficult to find out which ships sailed to Iceland and also pointed out that according to maps, parts of the Faroe Islands’ territorial waters were actually within 200 miles of Iceland, so that those who fished the Faroes might also be eligible for the scheme.

103. Equally, several critical issues were never considered by those responsible for devising the eligibility rules before the launch of the scheme.

104. For example, in March 2002 the issue arose as to the interpretation of the scheme criterion above, which depended on the claimant having trawled within ‘200 miles’ of Iceland – and specifically whether that reference was intended to have been to imperial or nautical miles (paragraph 64). I would concur with DTI’s legal adviser, who commented at the time that this was a relevant consideration which appeared to have been ignored – perhaps because of a lack of awareness of the industry, a failure to properly consult those with direct knowledge and experience, or the haste with which the scheme had been devised.

105. Another example is the failure prior to January 2001 to consider the position of trawlermen who had gaps of longer than twelve weeks between voyages because they had been in prison and to consider whether that counted as ‘other work’ that broke continuity (paragraph 44). That discussion, once it had begun three months into the operation of the scheme, was to continue throughout its life.

106. In summary, as events unfolded after the launch of the scheme it became clear that the eligibility criteria had been devised and the scheme launched before several critical factors had been properly considered and addressed by those responsible for devising the scheme rules. It is to the adequacy of those rules that I now turn.

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The scheme rules

107. My second finding is that the scheme eligibility criteria that were devised did not properly reflect the policy intention behind the scheme. This mismatch

– between what the scheme was supposed to deliver and the design of the mechanism to achieve this intention – did not accord with the principles of good administration that I have outlined above. It was so far short of what is acceptable in the circumstances that this constitutes maladministration.

108. The policy intention underlying the decision to establish the scheme was, in the words of the original scheme rules, ‘to compensate former UK-based Icelandic water trawlermen for the loss of their industry due to the settlement of the “Cod Wars” of the mid 1970s’.

109. A letter sent by the relevant Minister in July 2000 (Annex B) to MPs with a constituency interest in the scheme – in which the decision in principle that a scheme should be established was announced, to coincide with the written Parliamentary answer referred to above – reinforced this, and stated that:

‘… former Icelandic water fishermen who lost their jobs when the industry collapsed following the settlement of the “Cod Wars” of the mid-1970s are to receive Government compensation. This is because the Government recognises that the former Icelandic water fishermen suffered an injustice when many of them lost their jobs through no fault of their own and received little or no help.’

110. The letter went on to set out ‘certain strict criteria’ for the scheme, which provided that:

  • payment would be restricted to those ‘who left the industry between 1974 and 1979 and had two years’ continuous service in the industry, but not necessarily with the same employer’;
  • payment would be made ‘on the basis of £1,000 for each year at sea with a maximum entitlement of £20,000’;
  • surviving dependents would also be entitled to claim where eligible former fishermen were deceased; and
  • 'sums received under ex gratia redundancy payments arrangements operated by the Government between 1993 and 1995 [would] be offset against payments under the new scheme’.

111. As my report sets out in some detail, both above and in Annex B, such an intention – to compensate former UK-based Icelandic water trawlermen for the loss of their industry due to the settlement of the ‘Cod Wars’ of the mid 1970s
– was not delivered by the scheme. I consider that this was in no small part down to the nature of the rules that were devised prior to the launch of the scheme.

112. The rules for the scheme lacked clear definitions. Officials struggled to determine in each case whether the claimant had worked as an ‘Icelandic water trawlerman’, what was the extent of ‘Icelandic waters’, and even whether the ‘200 mile’ limit had been expressed in nautical or imperial miles when the scheme rules had been devised.

113. There were also differing interpretations of the rules throughout the life of the scheme as to the work that attracted compensation and work which did not. On 16 January 2001, work in dry dock had represented a valid claim (paragraph 44). By 23 April 2001, it did not count as work as an Icelandic water trawlerman (paragraph 48).

114. Moreover, officials had no procedure for verifying difficult claims where fishing records were unavailable once it became clear, rather late in the day, that access to National Insurance contribution records could not be obtained without further time and cost. This had the effect of making the scheme virtually unworkable.

115. There was also no flexibility in the scheme rules – unclear as they were – to recognise the complexity of the industry and the individual circumstances of those potentially covered by the scheme. There was no provision for deserving or unanticipated cases. This left no room for common sense or compassion.

116. Furthermore, it appears that a desire on the part of DTI for simplicity in the rules of the scheme to assist officials to operate it outweighed recognition of the complexity of the distant water industry. This put the operational needs of DTI ahead of ensuring that the scheme delivered the policy intention behind it – and the expectations of those covered by it. Examples of this approach include:

(i) the belief expressed in December 2001 that having a list of permitted reasons for breaks as suggested by the BFA, who had provided a list of criteria that reflected common situations within the industry, would be too difficult to administer (paragraph 60);

(ii) the recognition by an official in March 2002 that the rules had been put together in some haste due to a concern that they should be as straightforward as possible for operational staff to work with (paragraph 64); and

(iii) the rejection in June 2002 (paragraph 68) and December 2002 (paragraph 71) of amendments to the scheme rules suggested by MPs. These aimed to recognise real instances of individuals who had been denied payment due to the inflexible nature of the scheme rules, but who would reasonably have expected to come within the scope of the scheme if it had been operated in line with the policy intention said to lie behind it. Officials said that this would have been open to challenge and it would be very difficult for them to ‘hold the line’ against other suggested improvements.

117. What I have described above – the lack of clear definitions in the scheme rules, the inconsistency of interpretation afforded in some cases, the inability of those operating the scheme to verify the entitlement of some applicants, the lack of flexibility in the eligibility criteria, and a desire to achieve simplicity for those operating the scheme at the expense, however unintentional, of a full and fair consideration of the applications of all those who had worked in such a complex industry – would all become contributory factors in ensuring that the scheme would not operate effectively.

118. It seems to me that all this was a direct consequence of the failings I have already identified above. Had the launch of the scheme been delayed until all issues had been properly considered and until the eligibility criteria proposed by DTI had been properly discussed with those with greater knowledge of the industry, things would have been very different.

119. The scheme appeared to be set up to fail: not with any deliberate intent, but by failure to have proper regard to the policy behind the scheme and to recognise and provide for the complexity of the general industry and the specific individual circumstances to which the scheme related.

120. I now turn to examine how the scheme handled applications.

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Assessing claims under the scheme

121. While I am clear, for the reasons I have already given, that the scheme failed to deliver compensation – or sufficient compensation – to all those who it had been intended should receive such compensation, I have seen no evidence that the scheme did not operate within the rules that were set for it. Nor have I seen anything to suggest that the delivery of the scheme failed to meet appropriate customer service standards, although I am aware of the concerns which were expressed at the outset of the scheme that payments should be made quicker than was the case at that time.

122. My third finding is therefore that, while the scheme could not deliver the policy intention that underlay it, there is no basis on which I can find that officials who administered the scheme provided a service which fell so far short of the standard that the applicants could reasonably expect that it constituted maladministration.

123. There were clearly problems in administering the scheme, but those were not related to the service provided by the relevant officials considering individual applications. I make no criticism of those who operated the scheme on a daily basis or those who, like the adjudicator, had to work within the rules of the scheme as they had been determined.

124. I now turn to the problems that were identified – and to assess how DTI dealt with evidence of the difficulties in delivering the intention of the scheme due to its design, which arose during the operation of the scheme.

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Monitoring the effectiveness of the scheme

125. My fourth finding is that DTI responded in a wholly unsatisfactory manner when problems were identified during the operation of the scheme.

126. Within a few weeks of its launch, officials had identified difficulties with the scheme and its design (paragraph 42). When officials and RPS staff met in January 2001 (paragraph 44), they spoke of increasing problems with the scheme – and, by February 2001 (paragraph 45), were prepared to advise Ministers of a possible overspend.

127. By April 2001 officials had expressed concerns about the definition of an Icelandic water trawlerman (paragraph 47) and their attempt at redrafting operational rules for the scheme had revealed further difficulties, for example in relation to the position of those who had served a term of imprisonment during a between-voyage gap of longer than twelve weeks (paragraph 48).

128. What I find striking is the failure by DTI to fully review the scheme in the face of such increasing problems.

129. Officials recognised in June 2001, when they briefed the then new Secretary and Minister of State (paragraphs 49 and 50), that there had been concerns about the scheme in the ports affected as well as among the port MPs. However, it appears that those officials failed to grasp the significance of those concerns.

130. It was left to the Secretary of State, who seemingly heard about the scheme’s problems at her meeting with the port MPs on 18 July 2001 (paragraph 51), to note the gulf between the expectations prompted by the policy intention underlying the scheme and the scheme rules as they had been designed – and to call for an analysis of how the scheme rules impacted on the various groups of trawlermen covered by the scheme.

131. The Secretary of State then requested suggestions from her officials as to how they could move forward – and required counsel’s advice on the risks of legal challenge to the scheme by way of judicial review (paragraph 52). Officials then had the benefit of discussing the issues with counsel in conference (paragraphs 54 and 55).

132. Yet, even then, DTI officials appeared not to understand how the industry worked in practice and the complexities of the individual circumstances of those affected by the ‘pool system’, which often meant that trawlermen had to undertake specified jobs or risk losing social security benefits. That was so despite the ‘pool system’ being one in which public bodies had participated. None of this was raised with counsel, which was a missed opportunity to address all of the ineffectiveness and unfairness of the scheme.

133. The initial advice provided by counsel, in the words of the notes of the first conference held with DTI officials, was that the scheme was open to challenge for a number of reasons, including that:

‘…the scheme cannot have been intended to have the arbitrary and unfair effect of compensating those who continued to obtain lucrative work in the fishing industry, but not compensating those who worked slightly longer in the dying industry… .’

134. The notes continue to summarise the advice of counsel as being that while there were ‘good points’ in support of the DTI’s position, it was considered ‘that a judicial review would have a real prospect of success, despite the fact that we have a respectable case’.

135. Given the knowledge that officials now had that the scheme had been deficiently designed, that it was having unintended consequences, and that there were ongoing problems in defining key terms and in verifying complex applications, it seems to me that, quite aside from seeking legal advice on the prospect of challenge to the scheme, it would have been appropriate for those commissioning such advice to have also sought to fully understand the causes of the deficiencies in the scheme and to seek to develop solutions to those deficiencies. Only a comprehensive review of the scheme would have achieved that.

136. The failure to review the scheme and to ensure that it effectively delivered the policy intention of providing compensation to those who had suffered injustice as a result of losing their livelihood due to the settlement of the ‘Cod Wars’ was so far from what was reasonable in the circumstances that it constituted maladministration.

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