Protection for Whistleblowing Bill [HL]

Baroness Kramer Excerpts

Friday 2nd December 2022 Lords Chamber

Moved by

[Baroness Kramer]

That the Bill be now read a second time.

Relevant document: 19th Report from the Delegated Powers Committee

[Baroness Kramer (LD)]

My Lords, I thank the All-Party Parliamentary Group on Whistleblowing and its past and present chairs, Stephen Kerr and Mary Robinson, for the APPG’s role in making sure that this issue is heard in Parliament. Lawyers working with the APPG developed the Bill that I am bringing forward today in a further refined version. I thank the academics who contributed to the Bill, but those lawyers, leading practitioners in this field, and WhistleblowersUK made a critical contribution to drafting a Bill which can work in the real world.

Whistleblowers are the canaries in the mine; they give the earliest alert to wrongdoing of all kinds, especially by powerful entities, both public and private. In a meeting last week with major financial auditors, I was told categorically that 40% of fraud is uncovered through whistleblowing rather than formal management, audit and compliance processes. I cannot think of a scandal exposed in any field, from the NHS to financial services to money laundering, where whistleblowers have not played a vital role. I draw noble Lords’ attention to the news today of the scandals at University Hospitals Birmingham and the way in which whistleblowers there were treated.

Good organisations value whistleblowers and act on their information. We rarely hear about those instances because harm is halted in its tracks. Sadly, some organisations turn on whistleblowers overtly or covertly, and with vindictive hostility. Effective regulators and enforcement agencies regard whistleblowers as a citizens’ army that greatly extends their reach beyond their formal resources and acts as a deterrent. However, virtually none of them provides any protection except confidentiality, which cannot be guaranteed, because the identity of a whistleblower is often evident due to the nature of the information and because many people’s first instinct when they see wrongdoing is to speak out to those in charge. When there is retaliation against the whistleblower, there is no regulator batting on their team.

This country led the way in providing legislation to give some protection to whistleblowers with the Public Interest Disclosure Act 1998, but it is limited and virtually unamendable because it functions only within employment law. It covers only workers speaking out about their employers, not clients, suppliers, contractors and others. PIDA provides redress, but only for a worker facing retaliation and through the employment tribunal, which is a costly process and does not allow for the recovery of legal fees.

Dr Raj Mattu faced a legal bill of £1.48 million to clear his name in the employment tribunal and it took seven years, in which he had no work. On winning, he was awarded only £1.22 million. Lawyers tell me that a whistleblower needs at least £40,000 to get to a tribunal, often a three-year process, and that the case then can linger for years, especially with employer appeals. The awards rarely cover the lifetime career impact and informal blacklisting is never considered.

PIDA provides no mechanism to make sure that a whistleblowing report is investigated or that the whistleblower ever knows what happens. These limitations persuade many people not to speak out. Those who do speak out often become so shell-shocked and frightened that they accept settlements that include confidentiality clauses that effectively silence them—the Americans call them non-disclosure clauses. This is the rationale for replacing PIDA. Of all whistleblowing claims brought before the employment tribunal, only 4% succeed, such is the weakness of the Act in upholding workers’ rights.

The various regulators react differently to whistleblowing. Some are very diligent but others, frankly, regard whistleblowers as emotionally troubled people, not a source of vital information. Many do not use skilled investigators to triage the information and therefore tend to overlook it. If anyone doubts that, I recommend Dame Elizabeth Gloster’s excellent report on the FCA and the London Capital & Finance scandal. Identifying who is the right prescribed person for a particular disclosure can be a nightmare; for wrongdoing in the education sector, I defy anyone to tell me which cases need to be reported to the school, the local authority, Ofsted or the Department for Education. The NHS has the National Guardian system, but it is basically a signposting operation with no power of action.

The European Union recently issued a detailed directive on whistleblowing protection. Feedback on this indicates that it lacks teeth, but it goes in the right direction. The USA is aggressive in recruiting and rewarding whistleblowers. The Bill does not copycat the US system, but the key lesson I take from the US is that only if you have very powerful enforcement and a very strong whistleblower regime can you afford to risk lighter regulation. We have neither in the UK. The UK has waited far too long to update its whistleblower protection, albeit that we will do it in a British way.

The Bill adopts the strategy of creating an office of the whistleblower to act as a champion for whistleblowing and to set standards and good practice, particularly among the regulators and prescribed persons. The last time I brought forward a Bill for such an office, the Minister argued that it would be swamped by overseeing 35,000 whistleblower-initiated investigations a year. But of course, the design is for a compact office that works through the regulators and with relevant persons setting standards for procedures, not investigating cases itself except where no regulator is available. The office would be paid for by fines that it can levy against those who retaliate against whistleblowers—an arrangement that I will elaborate on in a moment.

In his objections last time, the Minister also argued that regulators are experts who need no overarching body to set standards or monitor them. If he remains of that opinion, he needs to explain to this House why so many scandals in so many sectors arise every year because whistleblowers have either been afraid to come forward or have been ignored. Other speakers today will provide evidence of failures by citing individual cases. I tell the Minister that—obviously off the record—regulators have told me directly that they wish for the office to be created, as whistleblowing is an area in which they require expert support and help.

The Bill defines a “protected disclosure”, clarifying what qualifies as the content of such a disclosure, and who is a “relevant person” to whom it can be made. It lets the office of the whistleblower set standards for how the information is treated. The office also has principles and objectives that include encouragement and support for speaking out and the establishment of standards for procedures and reporting. It ensures that disclosures are followed by investigation and action—the most important ask, frankly, of every whistleblower. Importantly, that clause is qualified to exclude disclosures that are “frivolous, malicious or vexatious”. Non-disclosure agreements, which I mentioned earlier and are so often used to supress investigations, are banned specifically for whistleblowers.

At the heart of the Bill lies protection for whistleblowers, so that if the office determines that a whistleblower is at risk of retaliation, it can issue an interim relief order. If the office determines that a whistleblower has been subjected to detriment, it can issue a redress order that can include an order to pay compensation. That is a far speedier process than the current employment tribunal and without cost to the whistleblower: in effect, it is a reversal of the power structure as well. Such powers are balanced in the Bill, so that any party disputing an order levied on them can appeal to the First-tier Tribunal.

The Bill in effect reverses the current burden of proof that requires a whistleblower to prove to a tribunal that the detriment they have experienced is a result of whistleblowing. It also removes the inequality of arms, since any entity or employer challenging a redress order is facing the office, not a lonely whistleblower with few resources. Today, other speakers will vividly illustrate the issues with real-life cases. I have with me some 17 letters, primarily from whistleblowers, including some from Ireland, which is going through a revised version of the PIDA, which many people think could be an answer—the letters make it evident that it is not. We need a change to normalise and eliminate stigma from whistleblowing, which we know will not only expose wrongdoing but, perhaps even more importantly, deter it in the first place. The Bill creates the framework for that culture change, protecting those who do the right thing. I beg to move.

--- Later in debate ---

[Baroness Kramer (LD)]

My Lords, I will follow the usual convention of not giving a wind-up speech at the end of a Private Member’s Bill, but I acknowledge that so many of your Lordships spoke so eloquently. There were brilliant speeches about very individual situations that bring to light exactly the culture and reality for whistleblowers today. I point the noble Lord, Lord Callanan, to that. These are not exceptions but, if you like, exceptions that prove the rule. Although he can cite many instances in which known whistleblowers are recognised and acknowledged by regulators, so many scandals continue to occur—week after week, month after month, sector by sector—that it is clear that the current system is completely inadequate.

We have dealt with the problem he noticed in the Bill by seeking to fund the office of the whistleblower through its share of the penalty system. This is a self-funded body. He will recognise that, in the United States, which has a much more expansive system, that works exceedingly well. There are plenty of ways to extrapolate from that opportunity and to make sure that there is no call on the public purse to have this office of the whistleblower in place.

If the Minister feels that the regulators are troubled by the idea of an overarching body, I suggest that he talks to them. I think he will discover that they find this area so difficult to manage that they welcome the idea of having in place an office and someone with the expertise to help make sure that their standards are appropriate.

On the issue that the noble Lord, Lord Browne, raised about the Official Secrets Act and making sure an investigation happens, this is about not exposure to the press but having in place within any organisation the methodologies, procedures and standards to make sure that, when a whistleblower raises an issue, it is properly and appropriately investigated.

I finish with this, because to me this is the absolute key and the reason I beg the Minister to either pick up this Bill or proceed with his review urgently. I echo the noble Lord, Lord Bassam, and so many others who spoke. Every day that we do not have proper protection for whistleblowers, someone is making the decision not to speak out against abuse of people in a care home, misogyny in the police force, or the scam perpetrated by their financial services institution. Carry this across so many entities and the damage to the public welfare and the public interest is recognised as substantial.

As ordinary citizens we pay a price for the absence of an effective, powerful scheme to provide proper protection for whistleblowers to ensure that people speak out at the earliest possible opportunity and that action can be taken to protect us in the many ways that I am sure the Minister believes ought to be available to us. Please will he act with urgency? I was so upset to hear him again use the words “in due course”, which are recognised in this House as the long-grass statement. I hoped we might get a “shortly”. Will he please urge his colleagues to act soon, before more people suffer because detriment is not exposed in the very early days when it could be?

Bill read a second time and committed to a Committee of the Whole House.