Part 9: Our analysis of the problems and possible solutions

Summary of our findings

9.1
We began our inquiry in late 2008. During our initial work in 2008 and early 2009, it became apparent that the issues that concerned us about the way the Board was operating were wide ranging and significant. As we have explained in the preceding Parts, we found problems with the way that the Board was performing nearly all of its functions.

9.2
We spent some time considering this range of problems to identify common themes and any underlying causes. We discuss those themes and causes in this Part. In our view, the main challenges for the Board are:

• to fundamentally change the culture of the organisation – from one that is closed, defensive, and relying on the way it has done things in the past to one that is open and engaged with the changing needs of the sector;
• to develop the Board's capacity and capability so that it is able to maintain a coherent overview of the emerging challenges for the sector and for its own role, its relationship with other organisations, and the policy issues that affect it;
• to ensure that it puts legality at the heart of everything it does, because at present we consider that it simply does not have a clear enough focus on the requirements of the legislation and administrative law disciplines, and of the legal risk attached to its activities; and
• to produce the comprehensive, clear, and practical policies and procedures that are needed to turn the legislative rules into good administrative processes and to ensure that the decisions made using those processes are consistent and appropriate.

9.3
These general points underpin the problems we have outlined with supervision and training, registration and licensing, enforcement, the treatment of overseas applicants, and aspects of the gas certification and auditing systems. We discuss each of these general points below.

9.4
Before we do so, we must record our appreciation of the way that the appointed members of the Board and Board staff have responded to our concerns. We discussed our initial findings with the Board in late 2009, and it has been working since then to address many of the issues that we identified. The Board has made good progress. Whenever we have raised issues with it, it has considered them carefully, even if we do not always agree. In our view, the Board is motivated and committed to improving.

9.5
However, the problems that the Board faces are still significant. The Board's strategic, policy, and legal capacity is not yet what it needs to be. As we have noted, the work it has done so far to issue policy statements is good, but is only a beginning. There is much more to do before the Board's policies and processes will be at an appropriate standard and sufficiently comprehensive. Further close work with the Department of Building and Housing to identify and work through policy and legislative issues is also needed.

9.6
To achieve what it has so far, the Board has been contracting in expert help as needed. Although this has enabled it to address immediate needs, we are aware that it does not yet have the in-house capacity to sustain this level of activity. We are also aware that the work of the last year has required a substantial time commitment from individual Board members, which may also not be sustainable in the longer term.

9.7
There is a risk that securing the necessary in-house capability to develop and maintain the regulatory system appropriately will increase the Board's costs. Given the level of concern in the sector about rising fees, any cost increases will need to be carefully analysed and discussed with the industry.

Organisational culture

9.8
In 2008/09, the Board had poor relationships with other organisations in the sector. In some cases, these poor relationships had significant effects, such as the delay in implementing the new unit standards.

9.9
We also found that the Board's culture and its poor communication had led to the perception among some in the trade that it was acting vindictively or in bad faith.

9.10
In our view, a large part of this reputation has arisen because of ineffective and inappropriate communication. In 2008/09, the Board secretariat was also in poor shape, with nearly all of the staff unhappy with the environment they were working in.

9.11
The Board has started working to mend its poor relationships with other organisations in the sector. This has included signing a memorandum of understanding with the ITO and starting to work more closely with the Department of Building and Housing. We encourage the Board to maintain this activity and its investment in effective and collaborative working relationships with other organisations.

9.12
The culture of the Board, and the perception among some members of the trade that the Board has acted in bad faith in the past, is going to require significant effort by the Board to change. Part of this involves communicating more openly with those it regulates, in a more appropriate manner, and more frequently.

9.13
Consultation needs to be meaningful and extensive, especially where it will result in increased costs to those in the trade. If the Board does not consult adequately, it risks increasing the number of disaffected members of the trade, possibly leading to some deciding to work outside the system.

9.14
We have been encouraged by the approach to consultation that the Board has taken during the last year, as it has brought the 2006 Act into force and reviewed its fees. It needs to embed this type of interaction and openness into its daily working behaviour.

Capacity and capability

9.15
In 2008/09, the Board lacked strategic capability. It lacked the skills it needed to address the problems it was facing with very dated legislation, or to address problems that arose. Examples of this included how it responded to problems with the gas certificate system, the high examination failure rate, and situations where people were choosing to work in new ways to take advantage of niche business opportunities. The failure to respond to weaknesses identified in the gas certificate system has meant that the problems that arose in 2008/09 were not avoided. As a result, significant questions have been raised about the integrity of the gas certificate system as a method of ensuring the safety of gas installations.

9.16
The Board has been carrying out an organisational review. We consider that this is a vital step to ensure that it has the appropriate mix of skills that it needs. We understand that the morale of staff has improved significantly in recent times.

9.17
In carrying out its organisational review, the Board needs to ensure that it has staff with the appropriate strategic capability. The Board and the Department of Building and Housing are aware that the 2006 Act will need further work. We agree with this assessment and note that the Board will need to maintain some policy capability and a close working relationship with the Department of Building and Housing for the foreseeable future.

9.18
Given the problems we have identified throughout this report, we also encourage the Board to secure stronger in-house legal capacity and capability.

Legality

9.19
Throughout this report, we have raised questions about the legal basis for the Board's policies or actions. Some of these have related to general operating policies, which in our view were not well grounded in the legislation; others related to the process by which individual decisions were made, and an apparent lack of explanation of procedural rights to affected individuals.

9.20
In late 2009, we discussed our concerns about legal issues with the Board. The Board obtained external legal advice, from a Queen's Counsel, on some of the issues that we had raised with it. We have summarised in this report the differing views on these legal issues. In general, the Board's legal advice was that it had legal authority to do many of the things we had questioned, although in some cases the advice was that these powers were implied rather than express. In some cases, we accepted the arguments and did not pursue the issues further. In other cases, we did not regard the arguments as persuasive and so have recorded the differing views in this report.

9.21
We cannot finally determine these legal issues: only the courts can do that. In any event, some of the issues are historical because they related to the 1976 Act and have been resolved by the implementation of the 2006 Act.

9.22
We have devoted some time to these issues because we see them as indicating a more general organisational problem. Our concern is that the Board has, in the past, not shown enough appreciation of the need for a public sector decision-maker to be scrupulous about the legal basis for its actions, and about the process by which it is making decisions that affect the rights of individuals.

9.23
In our view, many aspects of the Board's basic activities had a significant level of legal risk that the Board does not appear to have been aware of until now.

9.24
When we have raised questions, the Board has had to obtain external expert advice on these legal issues. There has not been clear internal documentation that the Board could draw on, setting out when and how policies and practices have been adopted, and the legal basis for them.

9.25
In our view, it is unsatisfactory that a regulatory authority, which makes decisions that are significant both for the affected individuals and for public safety more generally, should operate on such an uncertain legal basis and be so unaware of the risks that it is taking. We appreciate that no organisation can be totally free of risk, but we expect that an organisation will consciously manage its risks. We do not consider that that has been the case here.

9.26
We expect the Board to take the issue of legality to heart, and place it at the centre of its work. We would like to see a clear and obvious basis for all of the Board's operating policies and decisions in the legislation, and that the processes by which it makes decisions are transparent and have natural justice protections built in at every stage.

Policies and procedures

9.27
To ensure that its decisions are lawful, the Board needs to ensure that it has clear policies and procedures that are well grounded in law. One of the main problems in the past has been that the Board has lacked clear policies on its various operational functions to guide its decision-making. Now that the 2006 Act has come into force, the Board will need to carefully review its current policies and procedures to determine whether they meet the requirements of the 2006 Act. The Board also needs to write a wide range of new policies to guide its decision-making under the 2006 Act. The Act is now in force, so it is important that this policy work occur quickly.

9.28
In 2008/09, we found examples of inconsistent action by the Board. For example, the Board took varying stances on the supervision of limited certificate holders by craftsmen. As we noted, the Board lacked written published policies for most of its core functions. One of the risks of not having such policies is that a body will act inconsistently or inappropriately, or follow a poor process.

9.29
As we have discussed, one of our core findings was that there was a perception by some people that in some cases the Board was acting in bad faith. Without policies, and where people do not understand why decisions are made or the reasons for them, it is easy to attribute such decisions to bad faith on the part of the decision-maker. An unusual or tough decision can easily be seen as arbitrary or punitive. Policies can help in making decision-making more transparent. People can see why decisions are made, and that they are in keeping with policy.

9.30
We discussed our concerns about the lack of policies with the Board in late 2009. The Board has recognised that it needs to write policies and has started working on these. We have reviewed the three policy statements that it has issued and found significant problems with one of them. We also note that the Board has adopted processes that it used under the 1976 Act, such as the IQAS, without apparently questioning whether such processes fit with the 2006 Act or whether they are appropriate. In our view, the Board needs to completely overhaul all of its systems.

9.31
The Board needs to continue to prepare these operational policies as a matter of priority. Until these are prepared, it cannot be certain that its decision-making will be transparent, consistent, and lawful. It will also not be able to fulfil its obligations under the Official Information Act 1982 to provide people with basic information on the way in which decisions about them will be made.

Creating effective accountability

Practical complaints mechanism for people with concerns about the Board's decisions or actions

9.32
We spoke to a number of plumbers, gasfitters, and drainlayers who had concerns about the Board's decisions or actions. Until now, the Board has had no complaints mechanism for people who had concerns about those decisions or actions. Legally, these people might have had the right to seek judicial review of such decisions or actions, but in reality this will not usually be feasible. Judicial review is expensive and can take a long time. Similarly, the appeal rights provided in the Act are expensive to exercise and do not provide a swift remedy. A person who has been refused renewal of a licence, and therefore had their ability to work removed, needs a speedy and inexpensive process.

9.33
The Board needs to have a practical complaints mechanism for people with concerns about the Board's decisions or actions, to sit underneath the formal legal avenues for challenge. It needs to be swift and to carry little cost. Ideally, it would involve an independent person who could impartially assess the actions of the Board's decision and recommend practical steps that could be taken to resolve the problem.

9.34
Given the previous perceptions that the Board was closed and defensive, establishing a system of this kind would be a powerful demonstration that the Board's culture has changed. It would help people gain some assurance that decisions were properly made, and that the Board was prepared to be scrutinised and correct errors that might be identified.

9.35
The Board has indicated to us that it will accept this recommendation and put in place a system for receiving and considering complaints about itself. It also intends to publish user-friendly information about the system and other avenues people have to question or challenge decisions, including the ability to ask the Ombudsmen to investigate.

9.36
The Board also intends to monitor the number and type of complaints that it receives. We encourage it to publish this information periodically, as a form of accountability to the industry.

Addressing past grievances

9.37
As we discuss elsewhere in this report, we spoke with a large number of plumbers, gasfitters, and drainlayers who had grievances with the Board. Many of these were deeply held concerns.

9.38
We appreciate that most organisations receive complaints from people who are simply unwilling to accept a decision that has gone against them. Not all complaints have merit. However, in the Board's situation, we consider it possible that some grievances may be well founded, and that there are likely to be some people who have been disadvantaged by poor or possibly unlawful decision-making. The Board should not assume that people who have complained to it are merely disaffected.

9.39
In our view, the Board needs to find a way to address these grievances. Where they prove to be well founded, it should consider what can be done to put things right, so far as possible. Some of the solutions may be very simple, such as letting a person sit an examination again, waiving a fee for a reconsideration, or reconsidering a licensing or supervision decision.

9.40
The appeal rights provided under both Acts are subject to limitations on when proceedings can be filed. These are likely to have passed for all historic grievances, and these rights will be unavailable. We do not consider that judicial review proceedings are a feasible option for most of those affected, because of the cost involved and time for the proceedings to be heard.

9.41
We are concerned that, if the Board does not acknowledge and resolve them, these past grievances will continue to be discussed in the industry and will fester as a source of discontent and distrust. The risk is that they will impede the Board's progress in rebuilding its reputation and the trust of the industry. The Board might also otherwise find itself caught in a series of complex and time-consuming arguments about the rights and wrongs of its past actions.

9.42
Again, there is the potential to send a powerful message about the new Board's willingness to hold itself to account and to deal openly and fairly with people, if there is a systematic attempt to address the needs of people who may have been wronged in the past.

9.43
The Board told us that it accepts that there is a need to address past grievances, and that it has begun to talk with individuals with concerns about registration on a case-by-case basis. The Board's aim is to consider a workable way forward for those people, but on the basis that appropriate standards for registration are still met. The Board has told us that, where it is appropriate to apologise for past treatment, it will do so.

9.44
The Board told us that, where it has worked with individuals to date, it has received positive feedback from the individuals.

9.45
We realise that the Board will not be able to solve all of these problems, or address every perceived grievance. But we are very pleased with the steps that it is taking to reconsider what has been done in the past and to apologise and look for solutions where appropriate. Although these are individual cases, rather than system-wide solutions, there is huge value in addressing them. We encourage the Board to continue its efforts.