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Helping Achieve a Public Service which is Open, Fair and Accountable (11 December 2002) (11.12.2002)

Address by Kevin Murphy (Ombudsman) at Dublin Castle Conference Centre

In the Conference Programme the Taoiseach is quoted as saying "This Conference is an opportunity ...to discuss how to further develop and deepen service to the citizen across all Departments and Offices". I am taking this, Chairman, as an invitation to put forward practical suggestions which will help to achieve this.

Before I do so I want to state again that my Office supports the initiatives which have been taken in recent years in the area of Quality Customer Service (QCS).

In 1999 I made a presentation to the QCS Working Group; I also made presentations to the Joint Oireachtas Committee on the Strategic Management Initiative (SMI) in relation to quality customer service in the Office of the Revenue Commissioners and the then Department of Social, Community and Family Affairs. And last year my Office hosted a seminar for the QCS Officers' Network at which members of the Network had an opportunity to work on some case studies illustrating the principles of good administration which I bring to bear in deciding on complaints which come before me.

There is no doubt that great strides have been made in highlighting the importance of civil servants adopting a customer or client - centred focus in their work. Indeed, this is one of the key objectives underpinning the SMI. And, of course, as Ombudsman, I am ideally placed to see what effect the SMI and, in particular, the QCS Initiative is having on the users of public services. Because I deal with complaints I also think that I am entitled to be more impatient than most when I see gaps between what is espoused in the QCS initiative and how clients of public services are treated on a day-to-day basis by public bodies.

Obviously, the complaints which come to my Office reflect but a tiny proportion of the number of transactions conducted by public bodies. But they come from people who feel aggrieved at the way they have been treated and 50% of the complaints coming to me are found to be either completely or partially justified.

Why should this be so? There are many reasons and we do not have time to go into all of them today. But two issues surface time and time again. One is the adoption of an adversarial attitude once the public body comes to realise that it is in the wrong and where payment of compensation may be at issue. The second is a failure to look at the circumstances of the complaint from the complainant's perspective. In my presentation to the 1997 National Conference of the Institute of Public Administration, I put the matter in the following terms:

"This attitude is, I suspect, influenced by their (public bodies) legal advisers who are steeped in the adversarial system. But there is an arrogance about the view which I find disquieting. It treats as adversaries the very citizens whom public bodies are elected or appointed to serve. It also ignores the provisions of the Ombudsman Act which permit me to recommend"... that measures or specified measures be taken to remedy, mitigate or alter the adverse affect of the (public body's) action...". There are no financial or other limits on what I may recommend and no restriction on my dealing with complaints which could involve very large sums of damages. This adversarial view also assumes a level playing field, which clearly does not exist, between the individual complainant and a large organisation with its own legal and other expertise. ... It is for these reasons that I have included in my Guide to Standards of Best Practice for Public Servants the admonition that public bodies should not adopt an adversarial approach as a matter of course where there may be a fear of litigation."

In addition to my Guide to Standards of Best Practice, I also published a guide on how to establish an internal complaints system and both have been well-received by public bodies. But it became clear to me that useful and all as these guides were, public bodies were not coming to grips with the question of making redress. It was for this reason that I published my Guide to Redress entitled "Redress - getting it wrong and putting it right" in conjunction with my 2001 Annual Report.

The title of this conference is "Quality Customer Service : Next Steps for the Civil Service". I think it will be clear from my opening comments that I would like to see the QCS Initiative taking a greater interest in the redress issue and this is the key element in the remainder of my presentation.

The Principles of Quality Customer Service (QCS) were first published in May, 1997 and included under the heading "Redress" a commitment to:

"Introduce a formalised system for customers who are dissatisfied with decisions "

In the revised Principles approved by Government in July 2000, the heading "Redress" was replaced by the heading "Appeals" which reads

"... maintain a formalised, well - publicised, accessible, transparent and simple to use system of appeal/review for customers who are dissatisfied with decisions in relation to services."

I have often wondered what gave rise to this change in approach to Redress because it seems to me that redress is central to the principles of quality customer service. On 7 December 1999, I made a detailed presentation to the QCS Working Group in which I highlighted three areas where I considered much more needed to be done, viz. :

• the provision on information about services to improve people's understanding of them and particularly the basis of which decisions are made;
• the necessity for internal complaints and appeals systems;
• the provision of a formal system of adequate and appropriate redress when things go wrong.

The FOI Act has helped considerably in relation to the first area (the provision of information) as a result of section 15 and section 16 manuals and the right of people to get reasons for decisions affecting them provided for in section 18 of the Act. But there still remains considerable room for improvement in oral communications with clients especially in sensitive situations which, for example, occur quite frequently in hospitals. As I have spoken on this subject on a number of occasions, I do not propose to say anything further to-day except to repeat what I said in my 1996 Guide to Standards of Best Practice for Public Servants:

"Dealing properly with people means dealing with them

• sensitively having regard to their age, to their capacity to understand often complex rules, to any disability they may have and to their feelings, privacy and convenience"

There has also been considerable progress across the public service in the second area with the setting up of internal complaints and appeals systems and, as I said earlier, I am aware that some health board systems have received the ISO 2002 Quality Standard.

I was particularly disappointed, therefore, that in the third area a formal system of redress - the QCS Principles 2000 make no provision for such a system. Let me nail my colours firmly to the mast on this; the best test of whether or not a public body is really committed to QCS and to delivering on its principles is the provision of adequate and appropriate redress when things go wrong. The absence of the Principle of Redress in the list of QCS Principles carried over into Departmental Customer Service Action Plans for the years 2001 - 2004. There is no reference at all to redress in the Action Plans of the Department of Social and Family Affairs, the Department of Education and Science and the Office of the Revenue Commissioners. In the Action Plan for the Department of Agriculture and Food under the heading "Complaints" there is, however, a reference to redress.

The Department is to be commended for including a provision on Redress but unfortunately, the emphasis is on giving redress where the Department considers it appropriate not on giving appropriate redress. Likewise, in fairness to the Department of Social and Family Affairs, its more recent publication Complaints Handling, includes a section on Putting Things Right. Again there is no commitment to adequate and appropriate redress although, in practice I would commend that Department for its positive approach to redress in individual cases. I have concentrated on these four Departments or Offices because almost 85% of all the complaints I got in 2001 about the civil service related to these four, equivalent to 35% of all complaints against public bodies.

The reason I put so much emphasis on redress is that the key and essential function of an Ombudsman's Office is to provide redress when citizens or clients of public bodies are not dealt with properly, fairly and impartially. The failure to address this essential element in client/public service relationships made it necessary for me to deal with it in some detail in my Annual Report for 2001.

As I have already mentioned, in conjunction with that Report I produced a leaflet entitled " Redress - Getting it wrong and putting it right." As the leaflet makes clear, money is not the only suitable remedy when things go wrong; apologies, explanations and assurances that there won't be a recurrence are often more appropriate. But the financial dimension cannot be ignored.

Before I elaborate on this, let me expand a bit on the euphemism I have been using so far "when things go wrong." What I mean, of course is "when maladministration occurs". The term maladministration is not used in the Ombudsman Act, 1980 because to define the term is to limit it. The Act, however, very clearly lists certain actions or inactions, which if they adversely affect someone, may be considered as maladministration. The list includes actions:

1. taken without proper authority,
2. taken on irrelevant grounds,
3. the result of negligence or carelessness,
4. based on erroneous or incomplete information,
5. improperly discriminatory,
6. based on an undesirable administrative practice, or
7. otherwise contrary to fair or sound administration.

Let me put flesh on these rather abstract criteria by reference to actual cases. Over recent years I have completed a number of systemic reports covering actions which I considered involved serious maladministration. They were

• School Transport for Children with Disabilities
• Lost Pension Arrears (Contributory Old Age and Widows Pensions)
• Local Authority Housing Loans
• Nursing Home Subventions
• Tax Reliefs for Passengers with Disabilities
• Redress for Taxpayers

The classic example of a body acting without proper authority was the decision by the Department of Health and Children and the various Health Boards to take the income of children into account when assessing the means of an older person seeking a nursing home subvention. The regulation giving effect to the decision was clearly ultra vires. I also found the decision to be improperly discriminatory and generally contrary to fair or sound administration. Thousands of people received rebates as a result of my special report. In the special report on Local Authority Housing Loans, I found a majority of local authorities were continuing to take repayments of housing loans in cases where these loans had already matured or been redeemed. Their actions were clearly negligent and careless as well as contrary to fair or sound administration. There were nearly 6,500 cases involving refunds of almost ?700,000.

The Report on Tax Reliefs for Passengers with Disabilities brought to light serious issues relating to the general administration of the scheme and the treatment of the applicants by the Revenue Commissioners. These included the making of explicit threats as to the possibility of legal proceedings, vehicle seizure and the imposition of penalties for false declarations where a right of appeal had yet to be exercised. I found that the Revenue's actions fell far short of any acceptable standards of dealing properly, fairly and impartially with its clients. Revenue accepted my recommendations for redress and estimated that total refunds of the order of ?850,000 would ultimately be made.

Time does not permit me to go through each and every case, but I would mention that, in the Lost Pensions Arrears Report, I observed that the pensioners who lost out were not in a position to organise themselves either to take legal action or for political lobbying and this was one of the reasons why administrative convenience took precedence and their case remained unaddressed for so long. The Redress for Taxpayers Report goes to the heart of whether or not there is real commitment to Quality Customer Service. It is also the first time since the Ombudsman's Office was set up that I have had to Report to the Oireachtas that a formal recommendation has been rejected and because of its importance I will return to it later in my speech.

I mention these special reports to underline that the relationship between the State and its clients or citizens is substantively different to the relationship between a private sector firm and its customers. The citizen/state relationship is governed by public law and the Ombudsman is there to ensure that the principles of good public administration are followed and that there is administrative accountability just as the Comptroller and Auditor General is there to ensure financial accountability. Public bodies take thousands of administrative decisions every single day affecting citizens, each of whom is rightly concerned that he/she be treated properly, fairly and impartially. I think more could be done by central Government Departments to emphasise the importance of administrative accountability. Some years ago, the United Kingdom Cabinet Office issued a booklet of guidance to all government departments which was entitled "The Ombudsman in your files". The purpose of the booklet was to give advice to Departments on how to reduce the risk of criticism from the Ombudsman by improving their standards of administration . The advice was based on a study of individual cases on which successive Ombudsmen had reported.

My British counterpart has indicated that he has found it encouraging how often he sees in departmental files warnings to the effect that a particular course of action would be inadvisable because it offended against good administrative practice and could attract criticism from the Ombudsman. While I have not seen similar notations here, I am hopeful that the new Code of Conduct for Civil Servants will highlight the need for administrative accountability and that codes for other groups of public servants will do the same. Unlike the British civil service, we now have in the Public Service Management Act, 1997 a statutory outline of the responsibilities and accountabilities of Secretaries General and Heads of Offices. I have already suggested an addition to section 4 of that Act to make explicit the responsibility for their ensuring fair or sound administration in accordance with the Ombudsman Act, 1980.

Let me now return to the financial dimension of redress. In his 1986 Annual Report, 15 years ago, my predecessor Michael Mills said :

"In both my previous Annual Reports, I drew attention to the need to compensate people for delayed payments. I considered that, where payments were wrongly withheld for long periods, not only should full arrears be paid but the person affected should also be compensated for the loss in value of the money during the intervening period."

He went on to confirm that the Department of Finance had delegated sanction to the Department of Social Welfare to pay such compensation for all future claims arising from excessive delays in the payment of social welfare entitlements. The sanction would operate on an ex-gratia basis until statutory provision was made. On the question of compensation where excessive delay occurs in other Government Departments, the Department of Finance agreed, pending further consideration of the matter, to have regard to the precedent set in the social welfare case. Indeed the Department of Finance, which has overall responsibility for civil service superannuation, applies the social welfare compensation scheme to cases where there is excessive delay in awarding or paying civil service superannuation benefits. All Government Departments, with the one exception of the Revenue Commissioners, all the health boards and the local authorities have committed to paying compensation for loss in value where payments are delayed and the public body is solely or significantly at fault.

Before I completed my special report "Redress for Taxpayers", I discussed this matter with my British Ombudsman colleague Sir Michael Buckley who gave me a copy of a speech he had made on the subject. Let me quote from that speech

"As recently as 1992, government departments in the United Kingdom were extremely reluctant to pay reasonable financial compensation for maladministration ......... This attitude was strongly criticised by the Parliamentary Select Committee which oversees the work of my office. It held several hearings and issued a report which recommended, among other things, that the approach to compensation which had long been advocated by successive Ombudsmen should be accepted by the government: that is, that the aim of redress for maladministration should be, so far as possible, to put the complainant back in the position that he or she would have been in had the maladministration not occurred. That is now universally accepted in central government departments.

Moreover, those departments which have extensive dealings with the public - essentially, the tax-collecting departments and the departments responsible for social security payments - have introduced codes of practice governing redress for maladministration. Not only do the codes incorporate the principle of compensation for direct financial loss: they also allow the payment of compensation for distress, embarrassment and what we call the "botheration" of pursuing a complaint against continued and unjustified resistance."

Here in Ireland the First Report of the Joint Oireachtas Committee on the Strategic Management Initiative on Quality Customer Service in the Office of the Revenue Commissioners published in December 2001, recommended that the Revenue should bring forward proposals to compensate individuals and companies where Revenue make mistakes which cost taxpayers money. However, there is no indication that Revenue intends to give effect to the Committee's recommendation. The examination which follows of Revenue's refusal to implement my recommendations will hopefully, provide you with a practical example of what needs to be done to improve quality customer service in the civil service.

The Revenue rejected two recommendations I made in my special report for compensation for loss of purchasing power. My first recommendation related to a number of individual cases where there was no doubt that lengthy delays in the making of refunds of tax wrongly raised were due solely or significantly to maladministration on Revenue's part and where the case for compensation for loss in value was "open and shut" by reference to other similar cases in which Revenue had already paid such compensation. My recommendation applied generally to widows of public servants who had been wrongly taxed up to 1988 on the pensions payable to their children. The Revenue had refused to pay full arrears of overpaid tax and, while they have now conceded on that, they are still refusing to pay compensation for loss in value. My second recommendation related to the introduction of a compensation scheme on the lines of that already operated by the Department of Social and Family Affairs. There were two substantive reasons advanced for the Revenue rejection;

• first and I quote "because of the far reaching implications these (recommendations) would have ........ in effect the entire population of income tax payers are potentially 'on all fours' with the eight cases." In support of this argument the Revenue argued that they repay in the region of ?4 billion across all taxes each year. At no stage however, have they produced a figure of what my recommendation would cost.
• second because, in Revenue's view, it did not have the statutory authority to make such payments. They argued that any scheme on the lines of the social welfare compensation scheme would have to have a clear legislative basis similar to that in the UK which they claimed and I quote "is grounded in legislation."

When I received the letter setting out Revenue's position I was so taken aback that I asked my officials to contact Revenue to clarify that they fully understood my recommendations. I wanted to be absolutely certain that Revenue understood that compensation for loss in value would only apply where maladministration had been established and not to repayments of tax in general and that the general scheme I had recommended was the one already in operation in other Departments and approved and indeed operated by the Department of Finance. The Revenue made it clear that its reply was a considered reply.

I felt it necessary to reply to Revenue indicating that I considered its response incomprehensible and I believed it was at best disingenuous and possibly mischievous. I am aware some of my ex-colleagues may feel that I have expressed my views rather trenchantly. My views have if anything, hardened in the light of the Minister for Finance's reply to a PQ by Deputy Richard Bruton on 12 November last. In his reply the Minister said

"..... the House might be interested to note that the Revenue Commissioners pay out billions of euro in tax rebates each year. Consequently, the Exchequer implications of a general interest scheme must also be weighed."

I did not recommend a general interest scheme. My recommendation related solely to cases where refunds arose as a result of maladministration on the part of the Revenue. In other words compensation would only be payable where the Revenue was solely or significantly at fault and the cost would simply depend on the number of cases where Revenue got it wrong. In the case of the compensation scheme operated by the Department of Social and Family Affairs, costs for 2001 have been described by that Department as "not very significant." This is in the context of total scheme payments of ?9 billion by that Department in 2001. In a Press Statement setting out its response to my Report, the Revenue repeated this misrepresentation and I quote

"Having regard to the potential Exchequer implications of a general interest scheme, the Ombudsman's comparisons with some other public service compensation schemes, which involve relatively minor sums of money, are not entirely appropriate"

Are we to infer from this that maladministration by Revenue is always significantly greater and more widespread than maladministration by other Departments? The reference to a general interest scheme is significant. In the UK there are statutory rules which allow repayment supplements by way of interest. However, the Inland Revenue Redress Handbook makes it clear that most compensation payments under the Code of Practice introduced following the report of the Select Committee are:

"ex-gratia, neither made under any statutory entitlement in tax law, nor because the Department is under general legal obligation."

I find it unbelievable that Revenue are not aware of this and that in a letter to me they made a claim which is manifestly untrue.

Advancing the argument of not having statutory authority to pay compensation for loss in value represents an attitude to clients that is well past its "sell by date." The Social Welfare Compensation Scheme operated on a non-statutory basis for fourteen years. The Superannuation Acts do not give statutory authority to the Department of Finance to pay compensation when there is excessive delay in the payment of civil service superannuation benefits. The local authorities paid compensation for loss of value when refunding overpayments of housing loans. Every public body makes ex-gratia payments from time to time. Revenue has at no stage argued that payments of compensation by them in individual cases would be ultra vires the tax laws, so there is no statutory bar to their doing so. The considerable discretionary power which the Oireachtas has given the Revenue in the care and management provisions of the Tax Acts may not be exercised in an unreasonable, arbitrary or inflexible fashion nor may the Revenue refuse to exercise their discretion where the merits of particular cases justify it. While clearly a general compensation scheme should preferably have a statutory basis (and I said this in my report), the lack of specific statutory authority is not a ban to the rectification of injustice in individual cases. A grave injustice was done to public service widows who were not only denied for many years refunds of tax wrongly taken from them but are now belatedly getting what is due to them only in 1980's money values. It is an absolute disgrace how they are being treated compared to other groups mentioned in my report such as branch managers in employment exchanges and bank officials who in very similar circumstances were paid interest on their tax refunds. It seems that the best served clients of the Revenue are those who are well organised or have the resources to employ tax consultants or to take their cases to the courts.

I would have liked, Chairman, to have concluded my speech on a positive note. However, I hope my views, which are strongly held and my comments, which are based on my experience of dealing with complainants and public bodies, will be seen as an effort to contribute constructively to the next phase of the QCS initiative. My Office has been a committed supporter of the QCS programme. Indeed the Report on the evaluation of the SMI prepared by PA Consulting states that my Office was a major catalyst in the development of new attitudes by public bodies to their clients. But if service to the citizen is, as the Taoiseach has said, to further develop and deepen, then an acceptance of the principle of appropriate and adequate redress where maladministration occurs is essential. Otherwise the QCS Initiative will be nothing but a cosmetic PR exercise without any real commitment to putting things right when mistakes are made. And let me end by urging you, Chairman, and other public servants who I know are committed to the modernisation process, to keep in perspective those siren voices which, when it comes to redress, seem to see citizens as adversaries and open, fair and accountable governance as a threat to traditional concepts of governors and governed.

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