Statement on Issues relating to Compensation
Sir Wyn William's has issued his much anticipated statement on compensation.
You can read the Chairman’s latest statement here. It’s a carefully worded rap over the knuckles for BEIS, PO (and perhaps the Treasury) for their failure to resolve a number of outstanding issues. It also prefigures Phase 5, which is slated for June and July. In Phase 5 the Inquiry will look at how the PO (and government) have responded to the scandal and compensation schemes. It is already reasonably clear that their handling of compensation has not impressed upon him a picture of vigour and competence on their part. This investigation of a wide range of very difficult issues will take place in Phase 5 including one other compensation scheme which, putting it very politely indeed, failed to deliver anything other than delay.
That is one basis that one should assess his decision not to deliver an interim report to Parliament making recommendations on compensation as he has threatened. Williams calculates that making recommendations now would increase, not lessen delay. He is right I think (although he might have dealt with some points hti way, such as the contingency planning point below). Although he does not say so in terms, he may be thinking Phase 5 is ‘only’ 6 months away. I place ‘only’ in ironic quotes because we should not diminish the passing of time for the victims; a point I am sure Sir Wyn is alive to and which will weigh on his assessment of competence and vigour when it comes to Phase 5.
The second point, against which one judges his comments is a most interesting statement he makes at the end of his report.
52.I have no doubt that if there were no compensation schemes yet in existence and that I was making a recommendation about a process for compensating wronged SPMs with a blank piece of paper there would be considerable merit in there being one scheme with a completely independent advisory board and independent assessors determining levels of compensation. However, that is not what exists. There are 3 Schemes in various stages of their development which are functioning in substantially different ways. In my view it would not now be possible to appoint a person or board to supervise all the schemes without there being a significant risk of substantial delay as a result. In relation to all schemes that would be very undesirable. In relation to the GLS [compensation for those who settled under the Bates litigation, which has an inpendent panel and advisory board], however, such delay could be disastrous.
He is in effect saying, I think, this is a rather terrible mess and that there are significant structural problems with the schemes as designed [save perhaps the GLS scheme] which at the very least make the schemes sub-optimal. He is also acknowledging that rectifying it now, especially with Phase 5 relatively close will create more problems that it solves. It reminds us of the rather appalling possibility that we get to June and the claimants’ legal teams convince the Inquiry that the schemes were indeed unfair, have led to unfair results, and should be re-opened (or more likely reviewed and selectively reopened).
It follows that PO, and BEIS, may yet pay a higher price still for a botched job based on a scheme based, in my view, too heavily on their own interests.
I should emphasise Sir Wyn has himself not reached that opinion yet. He very clearly indicates (when discussing the HSS):
I consider that the Scheme is capable of delivering full and fair compensation to applicants. Whether it has done so, however, will be scrutinised with care in Phase 5.
However, the report suggests the PO has a great deal of work to do to persuade him for Phase 5. Having already (in his August update) criticised undue delays and insufficient progress on finalising the terms of the GLS, he now looks at the three different kinds of compensation scheme and concludes:
Progress on the HSS[Historical Shortfall Scheme (“the plain fact is that there are a significant number of applications unresolved more than 2 years after the applications were made.”) in his prelimary view (to be visited properly in phase 5) does not persuade him that , “complex applications within the HSS are being processed with sufficient vigour,” even given, “a balance has to be struck between speed of decision making and ensuring that offers in settlement are full and fair.” This is a fairly clear, get your finger out to the PO and the Governemnt.
The issue of how to deal with insolvency cases remains with a warning to all sides not to delay resolving this just because Williams is taking his own legal advice.
Whilst there has been progress on the issue of legal costs uncertainty, and apparently paltry costs offers, continues to dog the process, with quite firm indications from Williams to the PO to be more reasonable. He highlghts the possibility of considering whether the PO/government has sought to set these levels “unrealistically low” and gives at last one quite clear indication that he thinks they might well have been.
The failure to deal resolve clearly the issue of late applications causes, I interpret from the tone of the report, some consternation, with PO and BEIS not singing from the same hymn sheet (suggestive of a lack of competence or vigour too ). In effect, Williams’ tells them to stop mucking about and accept the inevitable. One reading of para 17 suggests, in a very polite way, that a barrier has been placed infront of these late applications which serves no purpose. He might pause in Phase 5 to ask teh question, why?
He quite clearly raises a judicial eyebrow at what he seems inclined to see as failures to provide full transparency around the Dyson early neutral evaluation on non-pecuniary loss arising from malicious prosecution. Hudgells have full access to apparently necessary information, Dyson’s work was based on their clients, the other solicitors do not. Whether this is another example of a somewhat botched approach to an issue central to compensation for many of the most harmed victims (it was always strange to structure it this way but perhaps there are reasons for it we do not know) or an attempt by PO/BEIS to play claimant firms off against each other, or signals tension between those firms, we might yet see.
More importantly, “While I accept that some progress has been made in negotiating settlements relating to nonpecuniary losses the reality appears to be that comparatively little progress has been made in negotiating full and final settlements in respect of all losses and/or in respect of pecuniary losses.” Here deliberately leaves open the causes of this to Phase 5.
He expresses quite strong, preliminary concerns with the way the PO has dealt with some other cases (the point that acquitted victims who should clearly have money they paid to the PO as proceeds of crime back, for instance is (probably) not properly reflected in the PO’s approach).
He also points out the apparent total absence of contingency planning if the compensation scheme for those convicted and acquitted fails, it ultimately relies on victims agreeing. He reminds everyone he raised this five months ago. And repeats his concern that PO have refused interim payments to some acquitted victims (para 48).
So the overall message to the PO and BEIS is that they are in significant difficulty already, on something largely within their control if competent and with the Treasury onside. Their failures continue to be the focus. They continue to wipe the slate clean with an inadequate cloth. There are some hints too that the claimant lawyers need to not exploit that difficulty and proceed with alacrity themselves but they are very subtly rendered.
Meanwhile Phase 3 opens today…
It's a very fair point Scott. Whether he's giving them more rope or kicking the can down the road is the critical q. I'm really, really sorry things aren't moving quicker
Unfortunately a rap on the knuckles is all it is. I think POL will be very happy with this. They don’t care anyway so they certainly won’t be worried about this report. It needed to be much harder hitting than this. Him saying that changing things will just add more delay is silly because more delay is introduced by waiting for stage 5 of this inquiry. Something else could have been well on the way by then. I think this is a poor outcome for me and I suspect others will feel the same. Where is the power ? It’s still wholly in POLs hands.