With the release of the Sir Alex Allan’s  independent review into Issues concerning PHSO we now have a greater understanding of why Ombudsman Dame Julie Mellor decided in July 2016 to resign her post following the earlier resignation of her deputy  Mr. Mick Martin in March.  The current legislation provides the Ombudsman with omnipotent powers.  The Office is independent of government, so beyond the scrutiny of ministers, MPs or civil servants, the Ombudsman handles all complaints about its own service, the wide legal discretion ‘to act as she sees fit’ prevents uphold at judicial review and the ‘secrecy’ of the investigation process leaves it shrouded in mystery.  The Ombudsman can choose to leave office early, but can only be removed by agreement from both Houses of Parliament.  The independence of the Ombudsman allows parliamentarians to walk away from public body scandals with clean hands as they can’t interfere with the decisions of the Ombudsman.  A neat arrangement until it is clear that someone in parliament needs to take control.

There are two things you need in an Ombudsman.  The first is a safe pair of hands, someone who knows the unwritten rules of the establishment.  The second is a friendly persona, a smiling face to give confidence to the public that the Ombudsman really cares about them.  When Ann Abraham stepped down from the Ombudsman hot seat in 2011 following difficult questions over Mid Staffordshire  and the failure of PHSO to investigate a single complaint during the time of the Francis review,  Dame Julie Mellor appeared to be the perfect candidate.  She had 30 years experience of public service, had turned around the failing Equal Opportunities Commission (EOC) and in her pre-appointment interview stressed her ability to appeal directly to the public.

To give one example, I think where the role of the Ombudsman is talked about could be shifted. For example, I used to do lots of breakfast TV, sitting on the sofa, because you reach a much wider audience that way. That is the kind of thing that I think  we could do.  Q22 Appointment hearing – oral evidence

And so the decision was made, Dame Julie Mellor DBE stepped in to lead PHSO through a five-year change programme in January 2012 and everyone went home happy.

Strategy and Staff

It took until November 2012 for PHSO, under Ms Mellor’s leadership, to launch its new strategic plan – to investigate up to 10x more cases than previously under a scheme entitled ‘more investigations for more people’.  The number of cases investigated was to rise from approximately 400 per year to 4,000 per year and all without increasing staff or resources.

The strategy was launched in  April 2013 and despite being over a year in the planning there had been little consideration regarding how to deliver significantly larger numbers of quality investigations.  Like a factory producing faulty widgets the decision was made to produce 10x more faulty widgets before turning attention to improving quality.  Staff newly reassigned as ‘investigators’ were given no additional training but told to utilise ‘peer support’ while senior management benefitted from a significant bolstering of staff and £120,000 kitty for management training.   money_spent_on_training_front_line_staff FOI

Unsurprisingly, by December 2013 the staff were unhappy.  The PCS Union submitted a scathing account of the strategy changes to the Public Administration Select Committee, who had so recently selected Dame Julie to be the new Ombudsman.

 The strategic shift towards investigating more cases was, therefore, welcomed by our members. But from the outset they questioned how, with a reduced budget, decreasing staff numbers, and the hugely increased work load resulting from the proposed tenfold increase in investigations (4,000 instead of 400)- the Office could possibly cope. It was feared that a massive backlog of cases would build up, and so it has proved.

Short of the Treasury coming up with more funding, or the Ombudsman pruning its well-staffed external facing departments, or cutting back on other less essential budget heads- including the £430,000 set aside for consultants in 2014/15 and the controversial £120,000 ‘Board Development Budget’ – all of which, at present, seem unlikely, the solution is not immediately obvious.

written-evidence/public-administration-committee

In 2013/14 the staff turnover rate was 21.3% and despite efforts from Dame Julie to ‘turn this around’ by 2014/15 they continued at 21.7%, much higher than expected for a public body.  staff_turnover_at_phso FOI

The staff survey of 2013 reflected the impact of the new Ombudsman since her arrival in January 2012 and on all measures of satisfaction there had been a steep decline.

PHSO staff survey graph

 Only 19% of staff expressed confidence in the leadership of PHSO 

in 2013 and by 2015 this had fallen to just 11%. 

Dame Julie Mellor clearly did not engage the staff with her strategy of setting targets to crank up the number of investigations in a ‘never mind the quality, feel the width’ manner and by March 2016, disheartened by the empty rhetoric coming from the top, they took the unprecedented step to deliver a vote of no confidence in senior staff. phso-staff-vote-no-confidence-in-leadership

Finance

With ‘people skills’ well under par let us turn to control of the purse strings.  Dame Julie Mellor is the Accounting Officer for PHSO with ultimate responsibility for the distribution of a near on £40 million annual budget.  In times of austerity it is important that PHSO delivers value for money and if possible a surplus back to the Treasury.  By increasing the number of investigations the Ombudsman was able to reduce the high headline figure of £88,000 per investigation, but at the same time there was an increase in other costs such as external affairs and strategy which rose by 24%.  Q90 Oral Evidence to PACAC  With a plan to investigate 10x more cases the imperative must be on bolstering the front line staff yet investment was at board and management level during the Dame Julie’s tenure.  We learn from Sir Alex Allan Report  [71]  that Dame Julie strengthened her immediate office staff by appointing a new principal private secretary supported by an assistant private secretary and a diary secretary while the number of full-time equivalent staff had fallen leading to a backlog of 1,222 cases for assessment.  Oral Evidence to PACAC [Q40]

In September 2014 the National Audit Office (NAO) reported on a procurement investigation regarding the employment of Rosemary Jackson Consulting to carry out ‘Governance Development Coaching’ for PHSO on a three-year contract worth over £50,000.  rosemary_jackson_consulting FOI  Rosemary Jackson was an ex-colleague of Dame Julie’s and the questions raised following this procurement triggered an investigation by the NAO.   The NAO decided, on balance, that there was no evidence of a conflict of interest but concluded that;

The Ombudsman felt it essential to take a strong personal interest in the procurements, drawing on her business experience to identify potential suppliers. Although no conflicts existed, prior relationships gave rise to potential conflicts of interest which were not well managed. In the absence of firm procedures, ad-hoc arrangements for managing interests were often made, but these were rarely proportionate to the risk that procurements might be seen to be unduly influenced. As a result the perception of risk remained; it was only through doing this work that we were able to satisfy ourselves that the risk had not materialised.

Had she been found guilty of arranging lucrative contracts for her friends the integrity of the office would have been severely jeopardised.  Steps were immediately put in place to ensure no further oversights occurred.  Then  in 2014/15 the accounts were qualified by the NAO due to ‘lack of management oversight’ which resulted in funds being overdrawn by £275,000.  Due to a combination of losing all senior staff in the finance department, flawed information reaching the audit committee and the board, PHSO failed to draw down sufficient funds to cover their costs.  It is interesting to note that the flawed information was not checked by the Ombudsman personally although as Accounting Officer she had ultimate responsibility.  But once the oversight was highlighted by the NAO Dame Julie Mellor took immediate steps to tighten all financial processes.

The steps that I have taken are that we now have a monthly rolling cash flow, forecast and monitoring, and I have a monthly assurance meeting with the Executive, which now includes updating me on exactly what the cash flow forecast is for that month and to the end of the year. We are putting in place a set of financial management arrangements in terms of process maps, procedure guidance for staff, and the way in which we will audit whether they are being followed. We have put in some new software that will give better information to our finance team so that they have to spend less time on manual spreadsheets and more on what are the implications of the data. Finally, I have asked our executive director of finance, who is new to the organisation, who joined just as we were closing the accounts, what more we can learn from other Departments that have had their accounts qualified for similar reasons about failing to monitor their supply estimates.  phso-annual-review/oral/2016 [Q2]

With these robust measures in place, it is somewhat surprising to find that in September 2016 the Health Service Journal once again reported that PHSO failed to follow its own procurement guidance in awarding a £100,000 contract to Baxter Storey to run an on-site cafe for staff.  HSJ Sept 2016

I would appear that Dame Julie is very good at retrospective learning.  Very good at describing the plans she will put in place to ensure the same mistakes are never repeated and yet somehow, like groundhog day, PHSO has staggered from one crisis to another under her stewardship.

Sir Alex Allan’s report

Finally, in February 2016 there came a crisis too many.  The Health Service Journal reported that the Deputy Ombudsman, Mick Martin had been named in an Employment Tribunal as complicit in a cover-up whilst at Derbyshire Healthcare Foundation Trust.   Dame Julie Mellor had been provided with evidence taken directly from the Employment Tribunal report by Helen Marks in July 2015.  On receipt of this information Dame Julie had an off the record, 1 -1  meeting with Mr. Martin where she accepted his account without reading the tribunal documentation. A short letter of acknowledgement was sent to Helen Marks who had questioned whether Mr. Martin passed the fit and proper person test. deputy-ombudsman-complicit-in-cover-up

 In August 2015 Dame Julie Mellor was again informed of the tribunal findings by Monitor, but failed to take any action and failed to inform the board.  HSJ Sir Alex Allan summary  It was only when the story was released by the Health Service Journal in February 2016 that any action was taken.  This led to the resignation of Mr. Martin and shortly after the resignation of the ombudsman herself.

The question this raises is why did the Ombudsman act in such a cavalier manner when provided with correspondence that her Deputy Ombudsman had been found guilty of conspiracy to cover up a sexual harassment complaint?   There is a clue in  Sir Allan’s Report [45]  where it is stated that;

She explained to me that at the time the letter from Mrs Marks had been received, PHSO had a process for dealing with correspondence alleging cover-up or collusion by staff in relation to casework. Given the nature of PHSO’s work, such correspondence was received every week. There was a standard procedure for referring this correspondence for fact-checking and advice, and she had learnt to suspend judgement while the allegations were looked into.

Although qualified by the judgement ‘given the nature of PHSO’s work’ this statement reveals a fundamental truth about PHSO which deserves further analysis.  Namely, that the Ombudsman receives correspondence on a weekly basis that PHSO staff have been involved with cover-up or collusion.  If PHSO staff are carrying out independent and unbiased investigations, then why such a high level of correspondence alleging cover-up and collusion?  The ‘standard procedure’ referred to here is not explored further by Sir Allan, but fundamentally it involves taking the allegations of wrong-doing to the accused staff member who denies everything, then sending a short acknowledgement to the complainant or no acknowledgement at all on the basis that  ‘no further correspondence required’.  No evidence is reviewed and no internal investigation takes place.  In this respect, the behaviour of the Ombudsman regarding Mick Martin followed standard procedure to the letter.  When you are totally in control of handling complaints about yourself you can devise any system you like. PHSO state in their annual report that they have an error rate of 0.2%; a figure which represents their accepted error rate and not the high number of errors reported to them on a weekly basis.

If Orwell is right and ‘absolute power corrupts absolutely’ then the new Public Service Ombudsman must be accountable to parliament and the public.  As Dame Julie Mellor herself might say, ‘… as soon as we realised there was a problem with accountability we took steps to ensure it would never happen again.’

So Bernard Jenkin, Chair of PACAC, when you are ready to break your silence on this issue can you please inform the public of what steps you are taking to ensure that the new Ombudsman is held to account by parliament on behalf of the long-suffering public.