The Ministry of Justice has tightened its grip on arm’s-length bodies in the wake of the Legal Ombudsman’s expenses issue.
Richard Heaton (pictured), permanent secretary at the MoJ, told the Public Accounts Committee of the House of Commons on Monday that the organisation has ‘strengthened its defences’ against a repeat of the crisis.
Accounts for the 2014/15 year, published in January, found ‘novel and contentious’ payments had been made to ombudsman staff and were not approved by the MoJ.
The previous year’s accounts had been qualified on the basis of what the National Audit Office called ‘irregular expenditure’ totalling £22,300.
Heaton said the complaints-handler had been treated as ‘low risk’ and subject to quarterly checks on expenditure.
It is unclear whether the Office for Legal Complaints (OLC), which runs the ombudsman service, is now classified as higher risk, but Heaton said lessons have been learnt from the matter.
‘The OLC was not a high-risk organisation compared with CAFCASS or the Parole Board,’ he said. ‘There was a governance failure in the OLC, which meant that expenditure took place that was irregular in Treasury terms and, frankly, should have been picked up.’
Heaton accepted that the problems were picked up due to the actions of a whistleblower and not by internal checks of the arm’s-length body. He admitted it was ‘arguable’ that the issue could have been raised sooner had it been administered within the civil service.
‘The OLC was part of an essentially regulatory regime that was levy-funded by the legal profession, and none of it was within government,’ he said.
‘It was monitored by government, because it is public money, it was a compulsory levy and it serves a public function, but it was never a government function in the first place.’
Asked by committee member Stephen Phillips if the same mistakes would have happened if the OLC had been run by the civil service, Heaton replied: ‘Not unless someone was ignorant of their responsibilities. Every civil servant has line-management responsibility, which includes knowing how government money works.’
In January, the OLC reported it was on the way to bringing expenses issues to a resolution, although the report’s governance statement said the office was required to continue these payments under ‘contractual commitments to its employees’.