Parliamentary Commission for Administration and Health Service Commissioner for England

Charlie Elphicke Excerpts

Monday 18th July 2011 Commons Chamber

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I do not intend to detain the House for long. However, with my colleagues’ permission, I would like to place one or two points on the record. In particular, I would like to join the tributes paid to the existing ombudsman, who has done such a fantastic job over so many years. Ann Abraham has stamped her authority on the office of the Parliamentary and Health Service Ombudsman. In particular, she fought a gallant battle over the Equitable Life issue. I am pleased that in the end it was resolved amicably between her and the Government. No one can say that she did not change the course of history on that question, as she has on so many minor issues that are equally important to the people concerned.

Ann Abraham will continue in office until the end of this year. She gallantly gave notice in good time that she wished to step down to give us time to decide not just to appoint a successor but how to appoint one. Traditionally, under legislation, the appointment is made by Her Majesty the Queen on the recommendation of the Prime Minister and with reference to a resolution of both Houses of Parliament. However, traditionally, the appointment process has been handled entirely by the Cabinet Office. Quite early in the process, the Public Administration Committee made it clear that we thought that this was no longer a process that reflected the present times and that Parliament should be much more at the forefront of this procedure. I am grateful that the Government readily conceded this point and handed the whole process over to the House of Commons.

I am extremely grateful to those who took part in the appointment process, notably the Principal Clerk of Select Committees, the permanent secretary at the Department of Health, Una O’Brien, who was the Government nominee on the panel, Professor Alice Brown, who is a former public service ombudsman in Scotland, David Prince, who was the external assessor appointed by the Appointments Commission, and myself. I am pleased to tell the House that we reached a unanimous decision in favour of Dame Julie Mellor. We had a strong field of acceptable candidates from which to choose and many of them were capable of doing the job, but Dame Julie Mellor has an outstanding record of achievement in the public and private sectors.

In particular, Dame Julie Mellor excelled as chairman of the Equal Opportunities Commission between 2005 and 2009. I can assure the House that we are fortunate to have her. That judgment was confirmed by the pre-appointment hearing conducted by the PAC on 6 July, which was chaired by a colleague on the Committee, the hon. Member for Luton North (Kelvin Hopkins). I absented myself as I had served on the panel and therefore had a conflict of interest. I wanted to ensure that the Committee had a free run in making its own judgment about the ombudsman. Again, she received unanimous approval from the PAC, and I am sure that the House will wish her well in her appointment.

Perhaps the more important issue to raise, however, is the ombudsman’s remuneration. As the hon. Member for City of Durham (Roberta Blackman-Woods) pointed out from the Opposition Front Bench, we have slipped into the habit of aligning the ombudsman’s salary with that of a High Court judge, which was appropriate, because, like a High Court judge, the ombudsman has the right to summon persons and papers to resolve the issues before her. However, in the interests of pay restraint, and with the Prime Minister’s salary in mind, the Government have set about trying to re-evaluate the correct salary for quite a large number of public appointments.

The Committee was, shall I say, distressed that the ombudsman’s salary was caught up in that general process. The difficulty that we had in arguing for the status quo was that the Parliamentary Commissioner Act 1967 makes no reference to a High Court judge; rather, it says that the salary should be fixed to that of a permanent secretary. Unfortunately, unlike in 1967, when the legislation was passed, the salary of a permanent secretary is a moveable feast these days. Their salaries extend from a little over—or even a little under—£100,000 to well over £200,000. Fixing the salary to that of a permanent secretary has now become an arbitrary process, although we did not feel it right for the Government simply to take the matter into their own hands. The Government were determined that we should advertise the post with a salary range that we describe in our report on the remuneration as “arbitrary”, and we are distressed that we were left in that position.

The current ombudsman has been clear that de-linking the ombudsman’s salary from that of a High Court judge leaves the office vulnerable to the charge that it is being downgraded by the Government. The office used to be analogous to that of the Comptroller and Auditor General, who now earns a significantly higher salary than the ombudsman. At some stage this matter will have to be addressed, but, as the hon. Member for City of Durham said, the most invidious part of the process is that the ombudsman, having been approved by the panel and agreed by the Government in principle, then had to negotiate her salary within the range offered by the Government, which was between £152,000 and £172,753. We did not feel it right that someone who will be responsible for holding the Government to account on behalf of complainants should have to negotiate her remuneration with the very Government whom she should be regulating. Having discussed the matter with one of two others in prominent public positions who had found themselves in the same situation, I can state that the Committee is entirely right to have concluded that this is an entirely unacceptable basis on which to proceed.

[Charlie Elphicke (Dover) (Con)]

It is a great pleasure to serve on my hon. Friend’s Committee. I would like to hammer home the point that the function of the ombudsman is analogous to that of a High Court judge, in that the ombudsman acts as a large-scale arbiter and provider of justice. As such, it is right and proper that the ombudsman’s salary should be on a level equivalent to that of a High Court judge. Does my hon. Friend agree that the appropriate course is for the Minister to listen to this debate, go away and reconsider the matter?

[Mr Jenkin]

I have great sympathy with my hon. Friend’s comment, but the Committee concluded that it would be wrong to upset the arrangements that the new ombudsman had negotiated with the Government. To her credit, she did not argue the toss. She simply said, “I want this job, I want to serve Parliament” and decided that, for her, the remuneration was not significant. However, it is instructive to quote what she told the Public Administration Committee during her pre-appointment hearing. On whether it was right to downgrade the job and to negotiate her own salary, she said:

“I have to say that I do not think it has been a satisfactory process, and I have found myself making the principled argument…around what the criteria should be for determining the pay, and I do not think as an individual I should have been put in that position.”

The Government, having accepted that principle, are addressing the matter, but I have spoken about this matter with such force because it raises questions about every single public appointment that the Government make, and the independence of the appointments is at stake.

I am bound to tell the Minister that, on the advice of the Public Appointments Commissioner, we shall return to the way in which public appointments are made in a future inquiry, because we think that the use of the Prime Minister’s salary as an arbitrary benchmark for salaries for positions such as these is neither a scientific nor a reasonable basis for making such appointments.

--- Later in debate ---

[Mr Jones]

The hon. Gentleman cannot have it both ways. He cannot say that he is objecting to the arrangement and that he has obtained some kind of victory for the future when he has not. I am sorry to say that what was wrong was the fact that the Government intervened by imposing an arbitrary cap and then saying to the ombudsman, “Sit down and negotiate your pay.” He has obtained something for the future but it is not going to affect the starting salary or the situation now. He is asking whether it would have been wrong for his Committee to have suggested something, but it could have proposed a mechanism that would have possibly increased a larger salary. If it is okay for Bernard Gray at the MOD to be paid £250,000 a year plus bonuses, why are the Government not having consistency across the board? This is a very important job, as it involves independence from the Government and from Parliament, and it is wrong for the Government to be interfering.

[Charlie Elphicke]

I say to the hon. Gentleman that under the previous Government there was a lack of ability to check pay and keep it to the correct level. As a matter of policy, it is right, in general, that officials should not be paid more than the Prime Minister. Nevertheless, the failure and misunderstanding of the policy in this particular case relates to the fact that the ombudsman’s role is akin to that of a High Court judge, and her office means that she should be treated in the same manner as a High Court judge. That is what I hope Ministers will consider, and will perhaps reflect upon and act upon.

[Mr Jones]

I know that the hon. Gentleman is a new Member, but he is living in hope if he thinks that any future Government are suddenly going to throw money at individuals once the salary has been set; he is being a bit naive to say the least. He makes an interesting point about the figure of £142,500. The policy is that nobody should earn more than that. Why? Where has that come from? We know where it came from. It came from the soundbite machine at the general election, from this Government and from a Prime Minister who does not need the salary in any case, because he has independent wealth. If someone could argue that that was the proper level for the job, that would be fine and I would have no problem with it. However, no evidence is being put forward to support that figure of £142,500. That is an absolute fortune, and most of my constituents could only dream of earning anything like that, even in 10 years, let alone in one year. None the less, I would have more respect for the Government’s approach if there were an evidence base to suggest that that figure was the norm, rather than people plucking it out of thin air and then trying to give an impression that it is the norm and capping the pay of the ombudsman—the one post that it should not have been applied to—while having different arrangements for other positions, such as the MOD example that I gave, and others.

I opposed bonuses when I was a trade union official, and the hon. Gentleman is right about our approach. The last Government used them all the time; we tried to say that we were keeping civil service pay down but we were paying bonuses instead. I was always against bonuses because they do not accrue in terms of pensionable entitlements. Let us be honest and say that the Government should try to get away from this whole idea.

The Government have put forward the same argument in respect of local government. The idea that cutting the salary of the chief executive of Durham county council by £5,000 a year or £10,000 a year will actually make a difference in delivering £140 million-worth of cuts over the next three years is completely bonkers. It is nice for the newspapers and it is a nice soundbite at elections, but it does not do the job. What we need in all these situations, as we need in any organisation, is well-thought-out remuneration structures. I am not happy about the cosy relationship between the Chair of the Committee and the Prime Minister in determining the salary of this individual. What the Committee should have proposed are the proper, thought-out, independent salary review processes that we need. As I said before, all Governments try to ignore them when they do not quite fit what they are arguing for, but that is what we need in this case.

The Government have done the ombudsman a huge disservice by intervening in such a way. I feel sorry that she is now lumbered not only with this salary but with a feeling that she somehow has to negotiate her own salary. The Committee did not pull its punches. It said:

“We believe that this is neither a sound nor desirable way to proceed.”

One of the many things about the Government that concern me is the fact that they are completely ignoring processes in devising any type of policy. That leads not only to inconsistencies but to changes that will have an effect, over time, on how the ombudsman service is seen.

My final point concerns the motion. We will agree a salary of £152,000, which the motion says is

“within the range of salaries payable to Permanent Secretaries”.

It is and, as I have already demonstrated, it is not. There are some who are on possibly £100,000 more than that and who are eligible, as the ombudsman is not, to receive annual bonuses. The hon. Member for Dover is right. On some occasions in the Ministry of Defence, I could never quite work out which targets some people got bonuses for meeting. Bonuses were used as a way of avoiding giving pay increases.

The motion says that the salary should be subject to

“any relevant increase…recommended by the Senior Salaries Review Body and…after the end of the current…freeze, 1% annual uprating in lieu of performance pay”,

and that the House considers

“that in future, and subject always to the statutory requirements, the remuneration of the Parliamentary Commissioner…should be agreed by the Prime Minister”.

That is fine for the future, but why 1%? What is that figure based on? Trying to do something at the end is not very satisfactory. Although the motion will be passed tonight, the Government have a lot of questions to answer about why they have intervened in such a way.