Foreword
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I am laying this report before Parliament pursuant to section 10(4) of the Parliamentary Commissioner Act 1967 because I consider that it is in the public interest to do so. The report contains the results of the investigation I have conducted following a number of complaints that I received about the administration of the ex gratia compensation scheme for Icelandic water trawlermen which was operated by the Department of Trade and Industry between October 2000 and October 2002.
The results of this investigation naturally are of interest to those affected by the events that are outlined in this report. The loss of the Icelandic water fishing industry in the aftermath of the resolution of the ‘Cod Wars’ of the 1970s had a profound effect on whole communities.
The scheme to provide compensation for the livelihoods that were lost as a result was a much welcomed initiative by the Government to remedy the effects of the collapse of the industry on those directly involved.
That the operation of the scheme led to many complaints as a result of certain perceived administrative shortcomings in the way that the scheme had been devised and announced and as to the way that applications for compensation were handled is a matter of regret.
The findings and recommendations I make in this report – and the Government’s response to them – will, I hope, both provide a full explanation as to what went wrong and result in a positive outcome for the people who complained to me.
The issues I have dealt with in this investigation are, however, by no means specific to this particular ex gratia compensation scheme or limited to the administrative practices within the Department of Trade and Industry.
On 12 July 2005, I laid a report before Parliament that set out the results of my investigation into complaints about the administration of the ex gratia compensation scheme, operated by the Ministry of Defence, for British groups interned by the Japanese during the Second World War.
In that report – A Debt of Honour – I set out my findings that those who complained to me had been caused injustice in consequence of maladministration. I found that:
- the scheme had been devised overly quickly and in such a manner as to lead to a lack of clarity about eligibility for compensation;
- the announcement of the scheme had been unclear and imprecise and gave rise to confusion and misunderstanding;
- when problems had been identified no review of the impact of new eligibility criteria on applicants whose cases had been already decided had been undertaken; and
- applicants had not been given sufficient information when the new eligibility rules were enforced.
In addition to the recommendations I made on that occasion to remedy the injustice caused to those directly affected by that scheme, I also made three more general recommendations, which I took up with the Government.
These were that, in the absence of detailed rules or a statutory basis, ex gratia compensation schemes should always be devised with due regard to the need to give proper examination to all of the relevant issues before a scheme is announced or advertised. Once advertised and implemented, any changes to eligibility criteria within a scheme should be properly publicised and explained to those potentially affected by such changes. And where a scheme is the subject to mounting problems, a considerable number of complaints, or other criticisms from Parliament or the courts, it would be good administrative practice to review that scheme.
The reader of this report will see that many of the issues I identified in relation to the scheme covered by A Debt of Honour arose similarly in relation to the scheme covered by this report. An effective ex gratia compensation scheme that accords with principles of good administration would have:
- scheme rules that are clearly articulated and which directly reflect the policy intention behind the scheme;
- systems and procedures in place to deliver the scheme which have been properly planned and tested;
- sufficient flexibility built in to the rules and procedures to recognise the level of complexity in the subject matter covered by the scheme; and
- mechanisms which enable the success of the scheme in delivering its objectives to be kept under review.
That did not happen in either case.
In addition to making recommendations to remedy the injustice I have determined was caused to the representative complainant in this investigation and to others in a similar position to her, I have therefore also recommended that central guidance for public bodies should be developed that specifically relates to the development and operation of ex gratia compensation schemes.
The Government have accepted the need for such guidance. The Permanent Secretary at HM Treasury has told me that HM Treasury is planning to take forward my recommendation for specific guidance on the development and operation of ex gratia compensation schemes and that this work will be incorporated into the revision of ‘Government Accounting’, which I understand is due for publication later this year.
I welcome this commitment and hope that, through this guidance which should be of considerable assistance to those tasked with the administration of ex gratia compensation schemes, this report will make a lasting contribution to the improvement of the delivery of public services.
Ann Abraham
Parliamentary and Health Service Ombudsman
February 2007
