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Appeals, Ombuds and reviewers, Scotland, Social security and welfare benefits, Tribunals

Analysis: Innovation in Scottish Administrative Justice – Where Next for the Ombudsman Model?

By Tom Mullen, University of Glasgow, and Chris Gill, Queen Margaret University

Edinburgh_Scottish_Parliament01_2006-04-29Scotland continues to demonstrate innovation and distinctiveness in its approach to administrative justice. A current proposal before the Scottish Parliament involves granting the Scottish Public Services Ombudsman (SPSO) a new appeal jurisdiction. This will involve the SPSO considering the merits of decisions reached under the Scottish Welfare Fund. If this proposal becomes a reality, it will represent a bold departure from the traditional model of United Kingdom ombudsmanry, with its emphasis on maladministration and service failure.

How this new function, more akin to the work of tribunals, will be integrated into the SPSO’s current framework is a matter of significant interest, with implications not only for Scottish citizens who wish to challenge decisions made under the Scottish Welfare Fund. More broadly, the proposals ask questions about what ombudsmen are for, what roles they can fulfil and what limits there are to their functional diversity. Can ombudsmen effectively combine both complaint investigation and appeal adjudication? If so, does this have implications for the wider administrative justice system? Might other appeal functions be transferred from tribunals in future? What limits are there and should there be on what an ombudsman can do? This post provides an analysis of the proposals and begins to evaluate their significance and potential.

 Background

The Social Fund was originally created by the Social Security Act 1986 to meet special needs, primarily of claimants of means-tested benefits (see, generally Tom Mullen, ‘The Social Fund – Cash-Limiting Social Security’ (1989) 52 Modern Law Review 64). Some types of payment were a matter of entitlement and were governed by regulations (maternity grants, funeral payments and cold weather payments); others were paid at the discretion of the Department for Work and Pensions (DWP) in terms of directions and guidance issued by the Secretary of State (community care grants, budgeting loans and crisis loans). Discretionary payments were subject to cash limits.

The discretionary payments were abolished with effect from 1 April 2013 and replaced by a new scheme under which payments were to be made by local authorities. The UK government transferred funding from the DWP budget to local authorities to enable the making of such payments after abolition of the discretionary Social Fund. For Scotland, this meant that the appropriate amount was transferred to the Scottish block and an order was made under section 30 of the Scotland Act 1998 extending devolved powers to enable the Scottish Parliament to legislate on what would otherwise be a devolved matter (social security). Since April 2013, the Scottish Government has used the additional amounts in the block grant to fund payments by local authorities.

Different approaches to this type of welfare payment are now being taken in different parts of the UK. In England, such payments are being made by local authorities under schemes of their devising. There is, therefore, no national scheme. By contrast, the Scottish Government decided that the UK Social Fund should be succeeded by a national Scottish scheme, the Scottish Welfare Fund. In Wales, there is also a national scheme, the Discretionary Assistance Fund. In Northern Ireland, there is currently a national scheme, but it is planned to replace this with a local welfare assistance scheme if the Welfare Reform (Northern Ireland) Bill becomes law.

The Scottish Welfare Fund (SWF), therefore, replaced aspects of the discretionary Social Fund in Scotland. The SWF became operational from April 2013 on an interim and non-statutory basis. The Scottish Government wishes to put the making of payment on a statutory footing and the Welfare Funds (Scotland) Bill is now being considered by the Scottish Parliament. The Bill obliges each local authority to maintain a welfare fund which it may use only ‘to provide occasional financial or other assistance’ to or for individuals for either of two purposes:

  •  (a) meeting, or helping to meet, an immediate short term need arising out of an exceptional event or exceptional circumstances, which requires to be met to avoid a risk to the wellbeing of an individual, or
  • (b) enabling qualifying individuals to establish or maintain a settled home.

Qualifying individuals means individuals who, if they did not get the assistance, might otherwise be in prison, hospital, a residential care establishment or other institution, or homeless or otherwise living an unsettled way of life. Payments may be made either direct to the individual concerned or to a third party and assistance may take the form of cash payments or provision of goods or services. Payments are, therefore, to be made for broadly the same purposes as under the discretionary Social Fund. Under the interim non-statutory scheme, local authorities have been making two types of payments: crisis loans and community care grants. There is no provision in the interim scheme for making budgeting loans as there was in the social fund.

The similarities between the proposed statutory scheme for the SWF and the former discretionary social fund are:

  • the purposes of payments are similar;
  • payments are discretionary rather than entitlements; and
  • payments are made subject to budget limits.

(It is not clear which of the provisions of the Bill are intended to make the budget limits effective.) The key dissimilarity is that payments will be administered by local authorities rather than by a central government department.

 The Review Process for Welfare Funds

The discretionary Social Fund had a two-stage review process. The first stage was an internal review by Jobcentre Plus (the agency which took initial decisions) of the decision challenged. The second stage was an independent review by a social fund inspector employed by the Independent Review Service (IRS). This proved to be a highly successful model of review over a period of 25 years. The consultation document which preceded the Bill also suggested a two-tier review process for decisions on applications to welfare funds. The first tier would be an internal review of the decision carried out by the local authority. Three options were suggested for the second tier review:

  • a local authority panel with mandatory independent membership;
  • scrutiny of decisions by the Scottish Public Services Ombudsman;
  • a tribunal, administratively supported by the Scottish Tribunal Service.

The consultation document also mentioned that a fourth option – a bespoke service like the Independent Review Service – had been considered but rejected because ‘setting up a new body would be against the direction of travel for complaints processes and for the wider public sector landscape’.

After considering the consultation responses, the Scottish government opted for the second option, review by the Scottish Public Services Ombudsman (SPSO). It was preferred because it was thought that it most closely fitted the desired characteristics for the review process and purpose of second-tier review set out in the consultation document, in particular, because it would be independent of local and central government, providing a credible and effective check on local authority decisions and would give users and stakeholders confidence in the welfare funds. Also, the inquisitorial approach used by the SPSO was thought appropriate to the types of questions that are most likely to be raised by applicants to welfare funds, the majority of which are likely to relate to discretionary decisions. Finally, it would effectively support quality improvement and drive improvement in decision making. The basis for the decision is set out in the Welfare Funds (Scotland) Bill, Policy Memorandum, para 47.

Section 4 of the Bill states that the Scottish Ministers may, by regulations, require local authorities to review decisions made by them about applications to the fund. This will be the legal basis of first-tier reviews. It goes on to say that a person who is dissatisfied with the outcome of such a review may apply to the SPSO for a further review. This will be the legal basis of second-tier reviews. If, on a review, the SPSO considers that a different decision should have been made, s/he may ‘quash’ the decision and either direct the local authority to reconsider the application, or direct the local authority to use its welfare fund to provide the assistance concerned, or any other assistance which might be provided under the legislation. It is expected that this legislative framework will be supplemented by further guidance on reviews made by the SPSO. This last point confirms that SPSO review is intended both to provide a remedy for individual grievances and to encourage systemic improvements. We will consider these in turn.

 Individual Remedy

The proposals for SPSO review represent a new departure for UK public ombudsmen in two important respects:

  • The SPSO will have power to quash an administrative decision and substitute a fresh one rather than merely make a recommendation for a remedy;
  • The SPSO has power to review the merits of decisions rather than merely being able to uphold a complaint where there is maladministration.

 

In fact, this puts the SPSO in much the same position as the IRS, which could also review the merits of decisions and substitute a fresh decision.

This new responsibility presents the SPSO with several challenges. In effect, it will become an appellate body. Despite the use of the term ‘review’, its powers in relation to a local authority decision are effectively the same as those of a tribunal in relation to a DWP decision. This will require a new mind-set and skill-set for those SPSO staff involved in Scottish Welfare Fund reviews. They will have to get used to quashing decisions when they are used to making recommendations and they will have to get used to considering the merits of decisions rather than only the way in which they were reached.

That implies that there will be two different modes of decision-making in future: traditional complaints review and ‘appellate review’. The two will have to be clearly distinguished and the new function will require the SPSO to consider carefully the procedures to be adopted; existing complaints processes may not be suitable. There will certainly have to be stricter timescales given the nature of decisions. The SPSO aims to complete investigation of complaints (except in more complex cases) within 50 working days. This is rather long for decisions that may relate to short-term emergency assistance.

While different modes of decision-making will undoubtedly present the SPSO with a challenge, we should remember that it already operates different processes and exercises different powers in relation to its existing jurisdiction. Indeed, in relation to health service complaints, the SPSO is able to review the judgement of clinical staff, effectively empowering SPSO investigators to question the merits of decisions, whereas in other areas of its jurisdiction, they are specifically excluded from considering such matters. The process here involves relying on independent expert advice to allow the SPSO to reach a view on clinical decision- making. While this is a quite different form of review to that proposed in relation to the Scottish Welfare Fund, it suggests that the SPSO will be able to draw on existing experience of operating distinct internal processes within a single framework.

Turning back to how the review function will operate in relation to the Scottish Welfare Fund, we can reasonably assume that where a decision is based on an error of law, or is an abuse of discretion, or any other ground for judicial review applies, it will be set aside. We can also reasonably assume that where a decision is based on a mistake as to material facts that it will be set aside. The most difficult task will be deciding when it is appropriate to quash a decision on the merits, i.e. there is no dispute as to questions of fact or law, but instead a disagreement as to whether any discretion the local authority had was exercised in the most appropriate way. There is nothing new in administrative decisions being subject to review on their merits; most tribunals have this power, but it is a new experience for the SPSO.

In reviewing the merits, will SPSO staff simply substitute their judgment for that of the local authority decision-makers – i.e. will they ask themselves the question, ‘what decision would I have made on these facts?’ and quash or uphold accordingly? Alternatively, will they take a less interventionist approach, quashing decisions only where they can identify some definite defect in the local authority decision? The task of SPSO staff reviewing decisions is further complicated by the existence of the cash limit. Each local authority has a limited budget for its fund and those faced with high demand would only be able to pay claims assessed as having high priority. This means that when reviewing a decision the claim must be viewed not in isolation – ‘on its own merits’ as it were – but in the light of the local authority’s stated priorities and how it has applied them.

Apart from adapting to this new role, a further challenge may arise from a change in the relationship between the SPSO and local authorities. Until now, the public-sector ombudsmen have had power only to make a recommendation and not to quash an administrative decision or award a remedy. Most commentators have thought this preferable to ombudsmen having power to make binding decisions and enforce them on the grounds that the latter approach would be likely to encourage an adversarial relationship, which may not be conducive to getting remedies for complainants. It is to be hoped that giving the SPSO this new role will not have that effect.

Overall, therefore, the proposals indicate that substantial changes will be required of the SPSO. While the functions it has been granted are novel in relation to public services, the SPSO may look to the private sector for inspiration about how to manage its new functions. Private sector ombudsmen (such as the Financial Ombudsman Service – FOS) have tended not to distinguish between complaints and appeals and for a long time have been able to adjudicate on the merits of substantive decisions (with some exclusions) as well as the processes under which they are reached. The FOS’ jurisdiction, for instance, empowers it to reach a view on what, in the view of the ombudsman, is ‘fair and reasonable in all the circumstances of the case’. The FOS’ adjudications are binding (if accepted by the consumer) and the private sector ombudsman model in general may well provide an example of the way of in which ombudsmen can function effectively in a more ‘adjudicatory’ manner.

 

Encouraging Systemic Improvements

 

The second function – encouraging systemic improvements – is one for which the SPSO ought to be well suited. Although primarily ‘grievances-chasers’, it has long been accepted that part of the function of the UK public-sector ombudsmen is to try to identify systemic weaknesses in public administration and guide public authorities on how to improve administration. The SPSO has recently placed more emphasis on the systemic aspects of its work and should, therefore, be in a particularly good position to ensure that local authorities learn from any systemic problems identified in the course of casework.

Indeed, the SPSO’s role in generating systemic improvements was significantly boosted by the passage of the Public Services Reform (Scotland) Act 2010, which granted the SPSO a ‘design authority’ function in relation to complaints procedures operated by Scottish public bodies. This has resulted in the creation of an internal unit within the SPSO called the Complaints Standards Authority, whose role includes developing standardised complaint procedures, overseeing the operation of complaints procedures, promoting good practice in relation to complaint handling and encouraging lesson-learning from complaints. This has been described as a ‘quasi-regulatory’ role, involving a pre-emptive approach to generating improvement in complaint handling and, by ensuring that changes follow from complaints, improving the general quality of administration experienced by citizens. While the outcomes of these changes have yet to be evaluated (see C Gill, “The Evolving Role of the Ombudsman: A Conceptual and Constitutional Analysis of the ‘Scottish Solution’ to Administrative Justice” [2014]  Public Law 662) and while the effectiveness of ombudsmen in general to effect systemic change has yet to be shown empirically, there is no doubt that the SPSO increasingly sees its role as a promoter of good practice and agent of change.

Conclusion

 

The proposals for second-tier review in the Welfare Funds (Scotland) Bill represent a new departure for public-sector ombudsmen. This new departure involves risks as well as opportunities. If successful, it may become a template not only for greater use of ombudsmen as adjudicators who make binding decisions, but also for extending the use of investigative rather than adversarial techniques in providing remedies for administrative injustice.

About UK Administrative Justice Institute

Funded by the Nuffield Foundation, we link research, practice & policy on administrative justice in the UK

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