National Assembly for Wales

We've got one paper to note. We've had a letter from the Finance and Public Administration Committee in Scotland. I have written to them with our European funding report and acknowledged their letter in that, so we'll note that, if that's okay with Members. So, there we are. Right, we'll move on, then, to item 3.

Item 3 is the scrutiny of the annual report and accounts of the ombudsman and the estimate for 2023-24. Croeso cynnes—welcome. Would you mind stating your names for the record, and your roles? Michelle.

Bore da. Good morning, everyone. My name's Michelle Morris. I'm the Public Services Ombudsman for Wales.

Katrin.

Katrin Shaw, chief legal adviser and director of investigations.

Diolch. Chris.

Bore da. Good morning. Chris Vinestock, chief operating officer and director of improvement.

Wonderful. 

We've got about an hour and a half, so we'll go straight in. Initially, I'd like to understand a little bit about what you've done since you've been in post, and congratulations on that. It's nice to say I think this is probably the first proper session we've had with you as the ombudsman. So, this is your first annual report and accounts since you've taken up your position. Obviously, part of the accounts and annual report was based on some of the work that your predecessor did as well. How have you brought yourself up to speed on the information in there and how have you sought assurances to make sure that you're comfortable with what you've reported?

Okay. Thank you. Yes, you're correct, this is a strange situation, I guess, in my first year in front of committee, because actually the annual report and accounts at the time of presenting were the work of my predecessor and, obviously, the executive team and staff at the office. I took up post on 1 April. But you're absolutely right, it's now my responsibility to bring this forward and to assure myself that it's correct and accurate in terms of bringing it forward to you. 

So, I took a lead role in overseeing the compilation and the sign-off of the report, the corporate governance statement and the annual accounts. It was important, obviously, that what we present to you is balanced and properly reflects the work and the performance of the office in the past 12 months, in that financial year. But I needed to take personal assurance, as you said, in order to be able to take on that responsibly. My predecessor, Nick, helpfully, did leave me a hand-over letter, which gave me assurances around his confidence about the way that business had been conducted, and that he was handing over a clean bill of health, if you like, and I think that was very helpful from the outset. But there's a number of controls that are in place to ensure that we do operate properly. We've got some very good, strong governance wrapped around the work that we do. I met early on with the chair of the audit and risk assurance committee that we have, and that was really important to get his take on where we were at, our governance arrangements and the work of the office. That was a very positive conversation. Obviously, we've got an internal audit plan, and there's been a lot of work done throughout the year; independently, internal audit have looked at areas of business and given good assurance, strong assurance, and largely substantial assurance, about our operations. 

The other thing I did early on was to meet with our external auditors, who are Audit Wales, again to get their perspective on how we operate and whether they felt there were any particular issues that I needed to be aware of as the new ombudsman coming in—and, again, that was a positive conversation; there weren't issues that they raised with me that raised any concerns with me. So, I think that allowed me to confirm that there were proper internal controls in place around risk management, financial management, performance management, in terms of how the office runs.

And then, finally, and probably most importantly, I spent time with staff in the office, with Chris and Katrin as the executive team, with the wider management team. I spent time understanding what each team in the office has done, if you like, as part of my induction—so, sitting down with each team, understanding what they do, where they fit into the work that we do, and just understanding how the place works. It was quite a different environment for me to step into, having spent practically all of my career in local government. I'm very grateful to everyone's patience and the staff support during that period, but that gave me an overall picture of what was happening and how the place operated, and significant assurance, really, about the commitment of the staff and the work that we were doing. So, I think all of that has helped me be able to bring these documents forward to you today. 

And I think the other thing—and perhaps we'll touch on this, I'm sure, at other points during our session—is I've been getting out and talking to stakeholders, to public bodies, particularly in health, because, I think, as I identified at my last meeting with yourselves, that's not an area that I've got as strong a network in as I have in local government, so I've actually now been able to get out and meet all the chief execs of health boards across Wales. And so, meeting with stakeholders and external bodies like that also gave me a picture and a feel for how our work is regarded, how the office is regarded and how we interact with those and work with those public bodies in what we're trying to achieve. So, I think all of that has brought me to a position of being able to present this to you today and being assured about the work that was done over the past 12 months and the strong basis that I've inherited as ombudsman. 

Okay. Thank you very much. Did you want to come in? No. Sorry. Great. Thank you very much. Obviously, getting into a new role and getting up to speed takes a little bit of time, as I know from experience; becoming finance Chair in my first term as a Member obviously takes a little bit of getting used to as well.

A number of the performance indicators relating to the timescales for decisions to investigate or for cases to be closed have been missed. Has the organisation been taken by surprise by the volume of cases this year, and how will you deliver on these targets for 2022-23 and beyond?

Yes, I think you touched on the key thing there—the volume of work that has been coming into the office. That continues to grow and increase, and that's continuing to increase this year as well. So, I think that's probably a good place for me to start, in terms of the context that we're working within, and the annual report makes reference to these figures. So, workload—the number of cases coming into the office—increased by 32 per cent last year, compared with the previous year. The previous year was slightly unusual; it was right in the middle of the pandemic and numbers did drop. That was the first time that case load numbers had ever dropped into the office. But if you go back to, if you like, the last normal year before COVID and look at those figures, we're still 14 per cent up in terms of the number of cases that came into the office last year. So, there is continuing to be an increase in the number of cases that come to us and, of course, that's good, that people are finding their way to us, they understand our work and what we can do to help them, but it does put pressures on the organisation. We've highlighted in the papers that we've presented to committee that, over the last five years, there has been a trend upwards in terms of workload, but there hasn’t been a proportionate increase in staffing to support that, and I think at some point that starts to show in the performance.

it has to be said there is a COVID legacy here. Last year, there were 400 cases carried over from the previous year. So, we don’t start with zero at the start of each year, because there are cases in train, things that have come in later in the year. So, there were 400 cases carried over last year, and this year we’ve actually carried over more cases; we’ve carried over 600. So, that does show there’s a bit of a—. It’s not a backlog, because the cases are being dealt with, but there is certainly a build up in the work that we’re carrying forward.

We do a lot of early resolution, which I think is really important, and I think I talked to you about that when I met with you last time. The team does a lot of good work on that, and we need to continue that. That’s about making sure we only do in-depth and lengthy investigations where it’s absolutely necessary. Those do tend to be cases associated with health, because they are the more complex cases; about 80 per cent of the cases we investigate are health related, and they do take some time to investigate properly. There have been some issues around access to independent professional advisers, and that’s particularly linked to our health work, and, again, I think we’ll probably touch on that a bit more later in the morning.

So, this is just to present the context to you of what’s happening in terms of workload and some of the challenges that have led to lengthening of timescales for the work that we’re dealing with. So, you’re right, we’ve missed some KPIs. We’ve not always been able to respond to customers as quickly as we would want to in terms of telling them whether we’re able to progress with their complaint or not. And more complaints took longer than 12 months to conclude, and that is one of our key indicators, that we would conclude any investigations within 12 months, and we have got more cases that have extended beyond that period. But, because we’ve had a higher case load, it’s also the case that last year we actually closed more cases and investigated and intervened in more cases than the office has ever done in a single year before. So, that just shows you that this is about the volume, really, and that’s our biggest challenge. And as I said, the early resolution’s good—69 per cent of cases were resolved early. So, that means they don’t go to investigation, it’s a better outcome for the complainant, they don’t have to wait a long time, and it’s also something welcomed by our public bodies, by local authorities and health boards. If they can achieve an early resolution working with us, they’re always very keen to do so.

I think the final point, which is of concern to me, is just the impact it’s having on staff, because, particularly in our investigation team, the people who do these in-depth investigations, the case load that individual investigation officers are carrying is much higher now. It’s in the low 20s—21, 22, 23 cases per person. Pre-COVID that was more like 15, 16 cases per person, and we know we’re carrying higher case loads than some of our other ombudsman colleagues in other parts of the UK. So, that’s the impact, really, that this volume coming into the office has had. But we need to deal with it, as you quite rightly say, and we’re taking actions already within the year to try and address this. We’ve done some restructuring in the team, cutting down on management posts and putting more resource to the front line of investigations, if you like. We’ve been working as well on communications with our complainants. I think we all recognise we need to improve on that, and what we find, what the team finds, if they go back to someone and say, 'Look, this is the situation. We’ve got your complaint, but it's going to take us longer than 12 months’, generally, complainants are understanding of that, as long as they know what’s happening and as long as we keep them updated. I think we’ve got some work to do on that, to make sure we do that more diligently and keep people with us.

We have improved, and we’re starting to improve access to our independent professional advisers, and that’s really important, because that removes delays from the process, and we’re continuing to really focus on early resolutions. When I’ve been out talking to chief execs, I’ve been talking to everyone about that, and everyone is keen that we maximise the opportunities for early resolution whenever that is possible. In the longer term, then, the strategic plan sets out a number of actions that I would like to take forward from next year onwards to really look at how we deliver services, look at how we do our business processes, look at whether we're using digital and technology to the maximum benefit, and how we can help use some of those things to manage case loads in the future. Because this year the case loads have continued to increase. We're projecting 6 per cent more again this year; it's already got to 4 per cent more in the first two quarters, so we're on target for that. And I think with what's happening in the public sector and the challenges everyone in the public sector is facing, we don't see our workloads going down in the near future. 

I think Peter wanted to come in on something. 

Thank you, Chair. I just wanted to understand a little bit more about that. I can understand why the numbers would perhaps be rising, certainly in the health sector at the moment, because it will mirror, in some ways, some of our inboxes. I just really wanted to understand the nature of those increases, because I would imagine there's probably quite a lot that are raised as a concern, need some initial research, but are then let go because what somebody feels is an issue may not be really an issue when it's dug down. I wondered how big a proportion of the extra cases are those frustrated individuals who just want to vent because they've had a long wait in an ambulance, or whatever. I'm trying to understand how much of this increase is perhaps shorter term, once we've had the systemic failures of the wider health service and the social care side of things dealt with. So, is this—? I can't call it a blip because it's going to last for a couple of years, but is this something you think is going to continue to be a long trend?

I'll bring Katrin in in a minute, because Katrin leads more on investigation work. But I think you're right; during the pandemic, our sense is that people didn't bring complaints forward because they could see the pressure public services were under. It was a very strange time, wasn't it? I think what happened then was perhaps some of those complaints were waiting, and when things started to ease, people brought those complaints forward. That's been exacerbated, as you say, now by frustrations perhaps around having to wait for services, and the difficulty that some will be finding in accessing services. I think that's the case. 

It is the case that they do need to take their complaints first to the health board, and they do need to exhaust that process. I think one of the things that particularly struck me when I started looking at some of the data and figures was that, of the cases that we receive through the door, about 80 per cent we're not able to deal with. And that's because, largely, they're out of jurisdiction, i.e. they're not something under the Act that we can deal with, or they're what we call premature, which means they haven't really given the health board the opportunity to address the issue.

Those are the early resolution things that I think the team is very good at doing, because they can pick up the phone to the health board, and sometimes when we're involved, it moves things along and people get a response to their complaint. And then, if they're dissatisfied, they can still come back to us. So, I think there is a lot of that in the system, and that's why the early resolution work is really important. It can be dealt with quite quickly and is not so time consuming. I don't know if you want to talk more about what we're finding in the investigation work. 

Yes, certainly. As Michelle was saying, we do take a proportionate approach. We appreciate the frustration people feel, but we do have to decline to take forward the majority of issues. We try and give clear messaging as well, for example on ambulance delays, around where we can and can't intervene. But certainly, the cases coming through for investigation are more complex; they do need that full and rigorous investigation, the obtaining of records, and that's where the clinical advice is critical, really. And also, that's where the new draft strategic plan is key to us, in those early stages of giving the right messages to complainants. But, certainly, in terms of our uphold rates, they are relatively high, and we do have to obtain sometimes multiple clinical advice. The concern that we have in the future, as we set in the estimate also, is in relation to nosocomial complaints. They are likely to require investigation also. That's what our estimates are based on—our estimate of what will reach us after health boards have dealt with these matters.   

Thank you. I'll bring Rhianon in briefly, and then I think we'll have to move on, and maybe keep our answers and our questions short. 

Thank you, Chair, for your indulgence. In regard to what you've presented—a clear uplift in trajectory in terms of your casework, and that's not looking to dip any time soon—my question really is in terms of your extended powers. You've only taken on three extended investigations. Thematically—and we've talked around health and possible trends—would you be looking to use that in terms of what would be a shared experience in many cases?

Absolutely. Part of the strategy is that we can use those new powers that we have. In the last year, my predecessor took forward an own-initiative around homelessness, and that report was published in February. That was the first own-initiative under the new powers. But the officers have also done last year five extended-initiatives. I think there's real scope with the extended-initiatives, because what it means is that, if a complaint comes in and we see something there that is more systemic, in that it's been brought to our attention by an individual, but actually the impact is going to affect lots more other people who haven't brought forward complaints, we're now able to go into that and look at it. There was a really good example of a piece of work done in north Wales on prostate cancer care, where, from one complaint, one individual, we were able to offer some redress and support for eight people, who didn't actually know they were in that situation. So, it's a really powerful tool when used in the right way, and absolutely, we do want to use that. If we see themes emerging, we will use it to go further, and that would allow us perhaps to bring a number of complaints together into one investigation. So, it is a really helpful and powerful tool, and we'll keep on using it.

Okay. Thank you.

In the papers, you've said that you were unable to undertake as many quality assurance reviews as you wanted to, and that a new service quality officer has been appointed. What are the expectations of that, going forward?

I think that that comment related to the fact that there wasn't really resource in place last year to undertake the quality assurance work that we wanted to do. A service quality officer was appointed in May, so they're now starting to look at how we can use their capacity to be really proactive around looking at quality assurance. So, instead of waiting until people ask for reviews of decisions, this officer is putting together a programme at the moment of how they will go out, look at open cases, closed cases, and be proactive—on a sampling basis, obviously—looking at the quality of the work that we deliver. Because, you're right, it's not just about the timescales, it's making sure that we come out with a quality outcome. I would rather we take a month over an investigation and really deliver a quality outcome. That work is important.

I should add that that's a new approach that we'll be putting in place. But for quite some time, there's been the approach in place where people can ask for reviews. So, if someone brings a complaint, goes through an investigation, if they're not happy with the outcome, if they don't think that that's appropriate, and they've got good reason for that, then we have an independent review officer, separate to the person that undertook that investigation, not in the team that undertook that investigation. They will review that and make an assessment about the quality of the work that's been done. As we said in the report, we upheld last year only 7 per cent of the reviews that were requested, so it's a small proportion, but nonetheless it's 7 per cent, and, in those cases, we've had to go back and look again. We need to keep an eye on that work as well.

Based on that, there's a code of conduct case where leave to appeal is being sought. Did that go through that process initially, then?

I'll ask Katrin to respond to that, as she dealt with that case.

And then maybe if you could let us know—. Obviously, we had a snapshot as it was then; has that moved on any further, or can you give us any more detail on that?

No, it hasn't moved on any further. I think it's important to give you the context of that case. It was a report that the ombudsman issued, and, as you know, in serious allegations of breaches of the code of conduct for elected members, we refer the case, the serious ones, to the Adjudication Panel for Wales. The tribunal considered the case fully, held a hearing, heard witness evidence from fellow members, the clerk of the council, and serious breaches of the code were found. Our investigation report was independently reviewed, and we were really satisfied and pleased with the outcome. As you say, permission to appeal has to be sought. In relation to that case, again to provide you with some context, when we started the investigation, the individual sought an injunction from the High Court to stop the ombudsman investigating, then attempted to appeal it to the Court of Appeal. So, there's been a history of this pattern. When the tribunal issued its decision, it disqualified the member for 12 months, which again verified our approach, and we feel we need to strongly and robustly defend that. The unusual position, perhaps, is that it's tribunal's decision, and we have to defend the court proceedings. But we feel the tribunal issued a very clear and reasoned decision. It was a serious case of bullying, harassment, misuse of position towards the clerk and in relation to expenses claims. So, we feel we have a very strong case. The permission stage hearing is the very early stage, so costs are very limited at this stage. If for any reason permission is given on one or more grounds, we'll be able to assess the position more fully then. But as I say, we do feel we can robustly defend that and have a strong case.

And at that point, you'll be able to let us know.

I think that's due later this month, so hopefully we'll know soon.

Mike.

If you suspend an elected member for more than six months, does that automatically create a by-election, because they would not have been able to attend a meeting during that six months?

I don't believe a suspension kicks in those provisions under the local government Act, where you have that by-election provision. In this case, the former member was disqualified, and he wasn't then able to stand in the recent elections. So, he's not a member any longer either.

The point I was making is that, if you don't attend a meeting for six months, you automatically become disqualified, unless the council give you dispensation. What I'm saying is, if you do that, does that mean that people get disqualified? If you don't know the answer today, which you may not do—but Michelle might—can you write to us?

My view is that it doesn't, because the provisions in the local government Act don't apply in relation to the suspension; it's a different provision. But we can confirm that in writing, if that's helpful. 

Okay, yes, because we have a different understanding. My understanding is that attending one meeting in six months is absolute, and if you suspend somebody for six months, they can't attend a meeting within that six-month period.

It's a different provision, I think, in the 1972 Act, but we can confirm that.

We'll confirm that.

That would be great. Thank you. Finally from me: under the new powers, you received 221 oral complaints—that's up from 63 last year—and conducted three extended and own investigations. To what extent are you seeing the benefits of the new powers under the Act? I know you've touched on a little bit that, so just succinctly.

I'll keep it brief, then. I think oral complaints are great, because that's about accessibility. It's about people being able to access our service who would have difficulty completing the forms or perhaps accessing the website for a number of reasons. The fact it's been so well used is good, and it's shown that we're reaching people who probably we weren't reaching before. So, there are definite benefits there, and we need to keep growing in that.

I've already mentioned the first own-initiative investigations, so that's been used. And we're doing a benefits realisation on that at the moment, to understand the impact that that's had. And then, the extended-initiative, I think they really are powerful. That north Wales example, which I won't go over again, really did bring out systemic issues and address problems for a number of people. With the extended-initiatives, there's a number of other areas we might look at now this year as well. So, it really does give us greater reach. It allows us to look at systemic issues, which perhaps individual complaints would not, and to the benefit of service users.

I think the final point would be the Complaints Standards Authority work. We've now got 39 bodies that are part of that Complaints Standards Authority—all local authorities in Wales, all the health boards—and we're now working with the housing association sector. This is about lifting the standard of complaint handling right across the public sector. Ultimately, in years to come, we would hope, if the complaints are dealt with by public bodies in a way that customers and service users are satisfied with, fewer will be sent through to us, eventually. So, the complaints standards work is really important, and we've done a lot of training with public bodies across Wales, and we'll continue to do that to collectively try and improve that aspect of public services.

Thank you very much. Mike.

I want to talk about staff experiences. One of the things I always feel with organisations is that you have lots of services, et cetera, and I'm going to talk to you about that next, but the first thing I'm going to talk to you about is staff turnover, because staff turnover is probably the best indicator of staff morale and how staff feel.

Yes.

So, what level of staff turnover are you running at at the moment?

Well, last year, the staff turnover was 9 per cent across the office, through the year. That arose from, I think, a couple of retirements, planned retirements, and then a number of people who moved on to other positions outside of the organisation, and career progression, really, was their motivation for that. One of the challenges of being a smaller team—75 staff—is we can offer career routes and promotion opportunities for some people, but not for everybody, so some people have, unfortunately, moved on to progress their career. So, to answer your question, it’s 9 per cent turnover last year.

Thank you.

Mike, if I may, I'm going to jump in on a question that maybe Peter had later. There's a special payment in your accounts for £29,000. Is that related to somebody leaving the organisation, and could you give us any further detail on that?

I'll ask Chris to give you the detail on that. Chris.

Thank you. The was a special payment, as you know, reported in the accounts. It was related to a staff settlement agreement and related to a single member of staff and was connected with termination of employment and was concluded by agreement. The process that we followed was in line with the ACAS code of practice for settlement agreements and we were very much aware of and took account of and met the requirements of 'Managing Welsh Public Money', which includes quite a lot of detail about how those payments should be managed.

I think we got to that point following consideration of human resources issues, financial issues, legal and risk issues, and we did prepare a full and detailed business case. That was something that we reported. The settlement agreement was something that we reported to our audit and risk assurance committee, and we also shared the details, including the business case, with our external auditors. They went through it, they talked to us about it, asked questions and went through all of the analysis and considerations that we'd done. They were satisfied as to how it was handled and how it was reported. So, we're satisfied that it was an appropriate and sensible and reasonable approach, and that we have reported it appropriately in the accounts.

Okay, thank you. Mike, sorry to cut in there.

I won't read out what your staff survey said—I'm sure you're quite aware of it—but I want to tell you about the increase in sickness, and I'm sure you're aware of both of those. Are you concerned about staff well-being, and what action are you taking to resolve these issues?

Well, I think, yes, those figures—. I have to be concerned about staff well-being, and I think it's linked back to the conversation we had at the beginning of this session about workloads. So, I think staff are indicating to us that, over the two-year period since the last survey, they do feel that workload pressures are higher, that they're less able to cope with those, plus the resources they have available to undertake their work has reduced. So, quite significant, the figures there. So, that is of concern and something we take very seriously.

So, the work that's in place to try and address that, particularly around stress assessments within the workplace, using the Health and Safety Executive stress assessment process, particularly training managers of teams so that they're better equipped to be able to identify perhaps when people are under pressure and under stress, and then put in place adjustments and support to help them cope with that. So, there's been a lot of work done around that. We've got a well-being group that's been established, and they're very active, I have to say. They do a lot of campaigns, trying to identify things that will help staff. And then we've got access to things that you would expect us to have access to—things like counselling and occupational health—so that if people need help, they can get that help. And something that we're introducing just at the moment, and we discussed yesterday, is a well-being passport for staff, so if people have got adjustments or arrangements in place to help them particularly cope, we document that with them, if you like. It's a deal we make with our staff, and they can take that with them even if they move roles within the office.

So, there are a number of things that we're doing, and we need to keep an eye on that. We do have work-related stress, and that's in the report, but the majority of absence due to stress is because of other issues not related to work. It's still important that we are aware of that, and it's still important we help staff where we can with it. So, are we concerned? Yes. Are we doing things? Yes. I think we're doing hopefully everything that we can reasonably do as an employer to support our staff through that, and we need to keep an eye on those figures as well.

Can I start off the next question by saying that I chair the cross-party group on the Public and Commercial Services Union, but I am not and never have been a member of the PCS? We had a letter of concern from them regarding the threat of the use of fire and rehire, which is new to the public sector. I've worked in lots of public sector organisations, as Chris can tell you, and we always used a red-circle method, where if they were being paid higher than the grade the job should be, they red-circled it until the two, the salary and the grade, came in line. That's a pretty standard thing right the way across the public sector. But fire and rehire and the threat of fire and rehire is new. It's one that I find reprehensible, and I'm sure other members of the committee do as well. So, can I ask you why you didn't use the old red-circle method?

Well, I think, from my understanding of what you said, that is what was used. Can I firstly say that we don't support the dismiss and re-engage approach, and that is not the way we would go about undertaking changes within staffing in the office?

The particular situation, just to give other Members the context here, was that this change affected four members of staff—a small team within the office—and this involved the need, as you've indicated, to make sure that—. These staff had been paid 20 per cent additional on their salary to undertake additional duties. Because of the new powers and the establishment of the service improvement team, they were no longer required to undertake those improvement duties, and therefore those additional duties fell away from their role, but they were still paid the additional money. We had to deal with that in the office in order to be equitable to other members of staff who weren't getting the benefit of that 20 per cent uplift.

So, in effect, what did happen was that there was—I think from November through to March—a lot of consultation with the staff and their unions, as you would expect. That's the starting point: talking about the change and the reason for it. The position that we reached—I think it was in April, just after I started in the role—was that the staff did agree to the adjustment and we were able to achieve it through agreement.

In effect, we wouldn't necessarily call it the red-circle approach, but in effect what has now happened is that those staff continue on their existing salary under a pay protection scheme, and that pay protection scheme is in place for four years. Coming from where I worked previously, four years is quite generous for a pay protection scheme, but they will remain on that salary for those four years and, as you say, that brings down the difference between where they will end up, because of increments and the cost-of-living increases, and where they are now. So, they don't see an immediate drop, as a result of that pay protection.

So, that's what happened, but to try and reassure Members, where we start is not to dismiss and re-engage; where we start is talking to staff about the change and how we want to try and achieve that through agreement, and in this case, we did.

Okay. Can I move on to governance arrangements? I'm going to talk about things that happened before you were there—I know Chris was there at the time—so apologies for that, but I'm sure that you've been brought up to speed on this. The Public Accounts Committee of the fifth Senedd made a recommendation with regard to cross-over membership of your advisory panel and audit and risk assurance committee and independence. Are you happy and satisfied with the governance structures you have inherited?

'Yes' is the answer. I think there's very strong governance in the office. The recommendation you referred to has been implemented and is now in place. So, we have a member of our advisory panel who is independent and does not sit on the ARAC. And in fact, we have two vacancies on the advisory panel and one on our ARAC, and we'll be doing recruitment to those this autumn. So, we will have more than one independent member in position.

I am satisfied with the governance. As I said, early on I met with the chair of the advisory panel, I met with the chair of our ARAC. I took the opportunity over the summer to do a quick review of governance arrangements, and we made a few changes on things like training and development for members, and we took into account the feedback that they'd given us through their annual review process. So, I think we've got two good bodies there. They will help me. The advisory panel is an excellent sounding board with lots of expertise on it, and the ARAC, obviously, is hugely important to ensure that I'm fulfilling my responsibilities as accounting officer. So, yes, I'm satisfied. 

I think Rhianon just wanted to come in.

Just very briefly on that particular point, obviously there is a historical element to this, but in terms of reassurance, there is currently no cross-over of membership between your advisory panel and independence in that regard. You have got your established systems; we're not swapping over. The way this question is worded, I'm needing that.

Okay. So, what I've got in place is that I have a chair of the advisory committee and a chair of ARAC, and the chair of ARAC sits on the advisory committee as a member, and the chair of the advisory committee sits on ARAC as a member. The reason why I think that's important is to ensure there's a good understanding across the two committees as to the work they're doing, that they work in a complementary way and do not duplicate. So, that's in place. And then we have one member who is on ARAC and advisory, but when his term comes to an end, that will stop. 

And when will that term come to an end?

Can you remember when his term comes to an end?

I think it's about another three years.

Another three years. But, in terms of the actual recommendations, as I understand it from PAC, it was that we should have at least one member of the advisory panel who was independent of ARAC, and we do at the moment. And I'm giving you hopefully the assurance as well that, when we recruit to the two vacant posts this autumn, we will have another two members who are. So, the majority of the advisory committee will be independent of ARAC.

Okay. That's obviously an important point. Okay. Thank you. Sorry.

I'm now going to talk about a thing that keeps most people who are at the head of public sector bodies awake at night: cyber security.

Yes.

Everybody faces a threat, everybody tries to do everything they can to stop it, and every now and again, somebody gets a cyber attack. And you wake up in the morning, when you hear about a cyber attack, being very pleased it wasn't you.

Yes.

I assume you're doing everything possible to mitigate the risk, because if you said you weren't, I think we'd be very concerned. Are you able to learn from other public sector bodies in this area? You're a reasonably high-profile body, so if I was looking to make a cyber attack on an organisation, you and the Auditor General for Wales would probably be high up on my list of people in Wales for a cyber attack. So, are you learning from other bodies and other public services ombudsmen across the world on exactly how they're working to stop cyber attacks? You can't make sure it'll never happen—if you were to tell me that, I'd be really worried—but are you doing everything you possibly can and are you learning from others?

Yes, okay, I feel like I've got a target on my back now. [Laughter.] But, no, seriously, you're absolutely right, it's one of our red risks and I think it will remain so for some time for the reasons you've outlined. I'll pass over to Chris in a moment, because he can give you some detail around how we are mitigating those risks and to answer your question about other public bodies. But, I do feel we're doing everything that we can at the moment, but we're going through—I think this is important, that's why I mention it—a cyber essentials self-assessment at the moment, which will identify whether we've got any gaps in our armour and make sure that we can address those. So, without wanting to say too much more in a public forum, we're going through that external scrutiny and challenge as well, to make sure we've got everything we need in place, but do you want to talk about the public bodies?

Yes, thanks. As you say, it is an ongoing thing; it's not something that you can just deal with, cyber security, and move on, it's constant and ongoing. And our focus is very much on thinking about what we can do, both to reduce the likelihood of an attack and also the impact of an attack, and particularly about our recovery arrangements—that is a clear focus.

We recognise that a lot of cyber attacks have, at their core, a failure of staff or staff being caught out by a phishing e-mail or an attachment or link, which actually is very easy to do and we've had quite a lot of e-mails, including ones that appear to be from somebody who they're not, so, a lot of the emphasis is on staff training and prevention in that way. And we share details of new risks with staff. We've done a lot of work on penetration testing. We make sure that we get external advice from IT security specialists and our IT support provider, and we have strengthened our back-up arrangements. I think one of the key things in our consideration is cyber security in terms of identification and management of risk. We had an internal audit last year, which is focused on cyber security and mentioned in the annual report. We're pursuing cyber essentials plus accreditation, as Michelle mentioned, which is meeting a very clear set of standards, but also having the reassurance of external accreditation, which I think is important.

We've also got a workshop, by coincidence, next week, in which we're going to be hearing from Audit Wales on the findings from their work on cyber security. We've got somebody from the Welsh Language Commissioner's office talking to us about their experiences, and that is a session for some of the key staff, but more specifically for our audit and risk-assurance committee and advisory panel. So, we will be drawing on that expertise and those experiences, as you suggested. 

Next week, we're going to be introducing the National Cyber Security Centre toolkit for board members and, without going into too much detail, we do have plans and we are in touch with the National Cyber Security Centre to do further work that is very much tailored to us and the risks that face us and how we might manage them in the future. But the only other thing I would say is that I hope, Mike, that you don't set up as a cyber criminal and you choose us as a target. [Laughter.]

No, I've certainly no intention of doing that. From my experience, from the days when I used to do this for a living, I think there were two things that really caused problems. One was guessable passwords—people putting their children's names, their partner's name, their dog's name as their password. And the second was, which was an even bigger problem, software engineers, who come in to do maintenance et cetera, giving themselves a backdoor in so that they can access and have full control of the system, which you want them to do, but they'd set that up so that every time they'd go in, they could do it without having to go through any checks. And that backdoor then was open to anybody else who came in, masquerading as a software engineer or software support staff.

If I can just respond to that, and I'll perhaps preface my comments by acknowledging what you said at the beginning—that there is no-one who can say that cyber security is not a threat; it is a threat and always will be something that we need to keep on top of. But, in terms of passwords, we have got specific guidance for staff on passwords and we did run a session with an external provider that covered phishing, but also password security and password choice and gave some suggestions about how to come up with complex but personally memorable passwords.

And in terms of the software engineers, you're absolutely right—that is a risk. It's one of the reasons why we have engaged external penetration testing services and they have identified some areas that we have since addressed. I think they were quite obscure and Mike would probably understand some of it better than I do in terms of the exact detail of how it's described, but there were some areas where there were perhaps vulnerabilities that we have addressed, following advice from external security advisers.

Can I just finish on this, then, as I've got 20 seconds left? The only way to make yourself cyber secure is to take yourself off the internet.

Yes. We're not going to do that.

No, but everything beyond that then, you're just trying to mitigate vulnerabilities. 

Thank you, Mike. 

That was three seconds. [Laughter.]

Peter. 

That brings back memories of my father when he was doing national service, and his job was to try and break through the defences of bases. It’s just the same physical version of the new problem we’ve got with cyber security. Anyway, I digress.

Michelle, I just wanted to touch on your draft strategic plan that you're currently consulting on, and the themes around that; those four key strands. And I wouldn’t mind just understanding how you have developed those strategic aims, because I know that you’ve said that business can’t continue as normal, so you’re trying to invoke some significant change. How have you developed those? 

Yes. Okay. I think, hopefully, you might recognise them from when I was before yourselves when I was appointed for the job—so, a lot of this is about my vision and what I’d like to bring to the role and to work with the team on delivering.

But it was important when I came into the organisation that I sense checked that. As I said earlier, I found out what was going on, I understood the organisation, rather than just land in and say, ‘Right, this is what we’re going to do.’ That might not have fitted at all, so that isn’t what I did. So, during my first six months—and that’s why it took us until the autumn to put this strategic plan out—I was doing that work. There’s been a lot of engagement here, obviously, with my colleagues on the executive team but the management team as well. We held a number of staff engagement events through the summer, three different events, and I think we got pretty much all members of staff to those events, which was great. It gave me an opportunity to meet them, because in the world of flexible working, the office is not as busy as it would have been pre COVID, but importantly, to talk to staff about the challenges they’re facing and what they see as the opportunities for the future. So, we had some really good conversations about that, and a lot of those things are reflected in what’s in the plan.

Talking as well to public bodies, I’ve been very keen to understand their perception of us as an organisation, how we interact with them, the work that we do, the quality of it, how its lands with them and whether they feel that it has the right impact, and I’ve done a lot of that. And then, I think you’ve already referred to earlier, we’ve got a lot of data, so, when I arrived, there’d been a lot of work done around talking to our service users, advice and advocacy groups, understanding what they felt about the organisation and some of the challenges and perhaps opportunities we had. So, a lot of data as well as engagement that could bring it together, and I suppose I used that to try and validate what I hoped that I could achieve in the role, and to shape the strategic aims around that. I mean, you’re right: we do need to change, and challenge how we do things moving forward. But we’ve got a clear focus as an office, and that’s around delivering justice, and that’s why that’s our first strategic objective. We can’t forget our core business and that is our core business. But it’s about having a positive impact for not only people but for public services in that work.

I think when I met Huw last year, we talked about a lot about my hope that we could improve accessibility and inclusion, and I think that’s why that’s set very much in the strategic aim there. Things like the oral complaints are having a positive effect on that, but I want more people to know about our work. I want us to be relevant, and we know that there are certain communities or parts of our communities in Wales where people don’t tend to reach us, they don’t come to us, so, how do we address that? We can use things like own initiative and extended initiative, perhaps, to look at those groups and what’s happening there. So, there’s some really positive stuff that we can do there, because the people who don't approach us probably are the ones who most need our help at times.

We’re expanding on the proactive improvement work, and again, we’ve already touched on that; the new powers are really important. The Senedd will review the Act and the impact of that, I think, in 2024, and I hope that we'll have a really positive story to tell there. But that is about going where we think we need to in terms of identifying those systemic problems. And that’s about service improvement, this isn’t just about dealing with complaints.

And then the last objective we’ve touched a lot on already. We’re using public funds, we’re a public body and I want us to remain a healthy, efficient and accountable organisation, and the governance and the work that we do around financial management of public funds is really important in that respect, as is being an organisation that people want to work for and stay with.

So, that’s what the four aims mean to me. I brought a lot of those sorts of ideas and thoughts with me, but I’ve used my discussions with people and the data we’ve got to try and validate that, and I think we feel now that that's a plan that we'd like to take forward. But we're consulting on it to see what other people's views are.

Thanks, Michelle. It's great to understand some of your thinking. I'm going to move on now and start exploring the estimate, if I may. Obviously, you've talked about consultation, and engagement is really important to you. So, I wonder if you can talk us through how you have gone about preparing this estimate and how you've engaged, and I wouldn't mind, actually, linked to what you've just said—how much has your draft strategic planning influenced the shape of this estimate?

The strategic plan has heavily shaped the estimate this year, because the previous plan has come to an end and this is where we would want to take our work in the future. So, the two are inextricably linked, which is why it's referred to in the estimate and why we've taken the opportunity to provide you with a draft plan for these discussions today.

I didn't do a separate engagement on the plan and then on the budget, I did one engagement. All of that work that I've just described to you, really, was about saying, 'Where are we? Where do we want to be going in the future? How do we want to take the organisation and our services forward?' That informed at least part of the budget estimate in terms of what we would need to help us do that in the future. The staff engagement in particular—we've talked quite a bit about what the pressures were, where we might want to direct budget and resources in the future to try and deal with some of those pressures. I've not said it, but I should: the thing I've been hugely impressed with is the commitment and professionalism of all the staff in the office. They're really committed to what they're doing, and we had some really good conversations. I think they're realistic about the fact that we'll never have all the money we need and be able to do all the things we want to do, but I think they were realistic about where we could make same real improvements.

So, the two are linked. The engagement was very much the same for both. We broke the estimate then, I guess, into two parts. The first part is the pressures on our budget, particularly around pay and cost inflation. I know everyone in the public sector is experiencing those, but we've tried to be very clear about what that means for us. And then we've separated that, in a separate line, we've talked about investment around strategic priorities and case load management. So, I've tried to separate the two in terms of what we're facing.

Thanks for that. I took it that you'd probably done all of that in the same engagement. So, if we move on to the harder figures now, obviously, your estimate is requesting £584,000. That's around about an 11 per cent increase compared to last year. In the context of everything that we're facing and what local authorities and other public bodies are facing—and you know as well as anybody what they will be—why would the committee support such an increase and how does that thinking play into that wider context that we're all wrestling with at the moment?

I do understand. This isn't the year to be—[Inaudible.]—with this sort of estimate, but it's my first year, it's the year I'm putting my plan together. So, I suppose, just to say up front that I do recognise—listening to the news this morning and last night—that it's not a great time to be coming forward with this. One of the challenges of a smaller budget is that the percentages look worse when you're looking for investment. But I do recognise the difficult economic climate, and the Senedd and Welsh Government will have, I know, a huge, huge challenge in putting together public sector budgets for next year.

But this is where I'm at. I'm new to the role, I've got the plan in front of me, this is what we would like to do. We feel that it's ambitious but realistic; we haven't gone over the top. We do feel that that's where we need to take the organisation. I think we've got some really difficult years ahead again for the public sector—we always say that, don't we, but we never seem to reach the end of it. And that really does mean that we need to be on our game as an ombudsman, as an office, as well, because people will need our help. There's going to be huge pressure on everyone who works in the public sector, things will not always go well, and it's important that we're there for people and they can always come to someone who can independently and impartially look at their situation and perhaps come up with a different conclusion than they've had before.

So, all of the pressure makes our work all the more important, I guess is what I'm saying. And while I recognise that asking for investment in this year is difficult, we believe we've been cautious and realistic in what we've put in, rather than going too far. But I do understand the challenges you face. I suppose what I'd add to that is about half, about 5.7 per cent, of that increase is cost pressures. So, it's things that are outside of our control; it's about pay in this year and next year, and costs. And then about 5.2 per cent is investment, in terms of trying to improve services in the future. 

I suppose I can link back to something that I said right at the beginning about trying to recognise if the case load and increase is more of a short- to medium-term problem, and that the estimate is needing to gear up for that. But what happens after that, and trying to understand that? Now, I can see that you're suggesting that casework could increase by about 12 per cent next year. I just wondered, perhaps to understand a bit more about the assumptions you've made around that too, because it's quite a fundamental increase, again, for that following year on the estimate—.

Yes, it is. So, earlier I mentioned that we're seeing year on year increases in case load. That's been borne out this year. So, in the first two quarters of this year, case loads increased by a further 4 per cent on top of last year. So, we do feel that, by the end of this year, we'll be—. Our projection is about 6 per cent up, and, where we're at at the moment, it would seem that that is likely and we might actually exceed that. The further increase, then, for next year relates to the risk we feel there is around the nosocomial work. So, we've referenced this in the budget estimate. Welsh Government is pursuing this programme, and, based on the level of referrals we usually get though from health bodies, which is normally 4 per cent—that's a pretty static figure, year on year—using the figures that we understand that Welsh Government are working to, that could mean a further 800 cases coming through to us over the next two years. So, that is a particular issue for us. So, on top of an increasing case load, we've got this additional work. It's a risk, and we've made an estimate around that, but I think that's what's driving those case load figures, and that's why, in the estimate, we've put in a budget estimate for two additional investigation officers. That's the team that's under particular pressure, and that's the team I referred to earlier that are carrying very high case loads at the moment and are dealing with some of these more complex, in-depth complaints that we referred to.

Thanks, Chair.

Thank you. Rhianon.

Thank you, Chair. We discussed earlier workload and stress, but there have been some very clear indications from the Minister for Finance and Local Government around public sector pay—the pay bill will have to managed within existing resources. So, the majority of your request relates to staff pay increases, which, as you know, are linked to the local government National Joint Council pay negotiations. So, given those clear indications from the Minister, who has also written to this committee in July, saying those increases will need to managed within existing resources, the No. 1 question, and we've started on this, is: why should we do this? You've touched on some of the issues.

Yes. Well, I suppose, coming back to when you looked at the budget estimate for the office 12 months ago, what was put into the estimate at that point was a prediction, if you like, that there'd be a 1.5 per cent increase in pay. Now, given where we've been over the last few years, that wasn't unrealistic—no-one could have anticipated what's happened since and the big increase that there has been. And I believe my predecessor did say that, obviously, if the pay settlement was above the 1.5 per cent, they would look to come back for a supplementary. The world has changed; I appreciate that—I appreciate that. But that's the backdrop to it from our point of view. The challenge I have is a fixed budget—91.5 per cent of my budget is fixed; 80 per cent of the budget relates to staff costs. So, that makes that potentially around the 5 per cent increase, if that's where local government settles. That makes it quite a significant chunk of the budget as far as I'm concerned. And we've already talked about the increase in case load.

The other thing I find strange, coming into this role from where I've worked in previous years, is there are no reserves, there's no contingency and there's no project budget. So, there's nothing—there's nowhere to go in terms of meeting those costs other than to reduce staff and that just feels like the last thing I need to be doing for the next few years. So, I do appreciate what you're saying, but that's the position, I guess, that I'm in.

We can meet the costs in-year. So, perhaps I should say that, but if the local government budget settlement settles at the current offer—we don't know where it'll end, but if it did settle at the current offer—we can meet those costs in the current year through one-off and in-year savings, largely around vacancies where we've got turnover of staff and where we're recruiting but we're waiting to fill those vacancies. So, if it stays where it is, then we'd anticipate not needing to come back for a supplementary around pay this year, but then I'm looking to recruit to those vacant posts and to fill those posts, so  that removes my wriggle room for next year, which is why we've put that amount into next year's budget.  And then we've made an estimate of 3 per cent for next year. Again, that's an estimate as to what the pay settlement might be next year.

And what would the impact be in terms of the workload context that you set out for this committee earlier, if you were to manage that in-year?

Next year, you mean.

Yes.

Well—

Within your own—

—within our own budget: £180,000—two/two and a half members of staff. Yes, between two and three members of staff would equate roughly to that figure. What would need to happen, obviously, with increasing caseloads and if we were in that position where we'd have to reduce staffing is we would have to look at service levels and, inevitably, it would mean that we'd have to look at our key performance indicators, which we're going to do anyway, linked to the new plan. But we would have to look at service levels, because it's the people who deliver the service and it's inevitable that we would be able to do less.

And on your service delivery, your offer to the public of Wales, what impact would that have?

We would be able to help fewer people. So, we intervened, as Katrin said, in about 18 per cent/20 per cent of cases this year, but we would be able to do less and we'd have more disappointed people. 

Okay. Thank you. I'm going to move on to your estimate request for an increase to office costs. You're currently reviewing your accommodation requirements and you say that you'll look to offset some of those increases. What are the changes that you expect to implement in regard to your accommodation? 

Well, I'll hand over to Chris in a minute, who's leading on this project, but I think, like all public sector organisations, we're looking at how we work post the pandemic. Our staff, through our staff survey, gave us a very clear steer on this: they like the agile and flexible working approach, they like the option of being able to work from home and sometimes from the office, and so that's how we're going to continue working. It means we simply don't need the floor space that we've got in our current office and we're looking to consolidate that. Because, as I said, a large proportion of my budget are fixed costs and some of those are costs of property. We pay for a lease and, obviously, with maintenance costs and energy costs, so, we know that we can reduce those costs and that's what we're attempting to do. But, do you want to talk a bit about the project and where we're at?

Certainly. Firstly, just to, obviously, recognise that our premises costs and office costs are significant and that we want to work to reduce those, particularly, as Michelle said, in the light of the move towards hybrid working. In terms of what's actually in the estimates, we're not looking for any increase in premises or office cost funding; we're making efficiencies on both. We're looking to cover the increase in electricity costs within the existing—

Can I just ask you, to interrupt you, how you are making efficiencies on your office costs?

It is a range of things. I think some of them are in the notes to the estimates, but around renegotiating contracts for communications and mobile phones, printing, stationery, reducing travel costs, minimising postage and courier costs wherever we can by using more electronic means. So, we are making those savings. So, in the estimate, there is a small reduction in premises and office costs that we're looking for for next year.

But just to step back from that and talk about the wider plans, as Michelle mentioned, at the moment, we've got office accommodation that reflects perhaps our old way of working, and we are keen to reduce our footprint and our costs. We're in the process of marketing two floors—they're not complete floors, but two partial floors—of the office, so that we just retain the ground floor. At the moment, we've got surveyors involved and those are being marketed at the moment. We don't quite know what the timing will be because, at the moment, we're committed in a lease until 2025, so it needs to be done by negotiation, and we're trying to identify alternative tenants to release, so that we can hand it back to the landlord with tenants identified.

But we do anticipate savings in rent and business rates and office service charges from our landlord, which we will update the committee on as the project progresses. We are under way at the moment. For that to be complete, I should say, there are also potential costs—one-off costs—around dilapidation to the areas we vacate, and, obviously, we will need to look at making sure that the remaining area performs all of the functions of the office accommodation we're losing. We will work to control those costs, but there will be some costs to remodel that, to make sure the remaining accommodation meets our needs. But we will keep the committee informed of progress, and we are keen to make progress on that and release some savings.

Okay. Thank you for that answer—that's a full response. Your professional fee rates are due to go up by 10 per cent, so will you outline how the negotiation of those rates has occurred, and how are you offsetting that increase with reductions to other professional fees?

I'll ask Katrin to come in on that.

Well, the hourly rates that we give our clinical advisers hadn't changed for five years. We do struggle often to find appropriate specialisms for clinical advice, and, as we were discussing earlier, it's really critical for our health case load, which is now over 80 per cent of our investigations. So, it's really important that we keep and have access to as many advisers as possible.

We work very closely with our colleague ombudsmen in England and Scotland, and we share a pool of advisers, and they had increased their rates, so we have matched that with the 10 per cent uplift. It's important, as I say, that we are not less attractive as an organisation to work for than other ombudsmen.

So, to interrupt you, were we the lowest, or not?

We were on a par, but they had reviewed their rates, so we felt it was appropriate to follow suit. I think it's fair to say the advisers don't work for us for the hourly rate; they could get far greater rates doing legal, medical work and that sort of thing. And sometimes, as I say, we do struggle to find appropriate specialists. We do as much other professional advice work, legal work, in-house, and that's where we have indicated savings internally for the budget. We always try and keep everything in-house wherever possible—for example, code-of-conduct hearings, and what have you. So, that's where we're identifying some savings there.

Thank you. I'm going to move on, finally, to your strategic priorities. You've requested £100,000 to develop a new website and £50,000 to start work on a new case management system, and also a further £150,000 for work around that in 2024-25. So, what are the issues with the current system—the case management website—for you to want to change it, and why is that an ask, basically?

I think both the website and case management system, the contracts for those are up for renewal, and so that needs to be looked at, and, obviously, when you renew contracts, that's an opportunity to look at those systems and improve and refresh them. I think we know, our website, it's been in place for about five years and, as we know, that's quite a long time in 'web world'. From the consultation and engagement we've done, we know that it's not as good around accessibility as it could be. We've certainly had feedback from service users and advocacy groups that people find it very difficult to navigate, and it's a bit of a deterrent. It's important, because, actually, it's our front door. Most of our work comes through the website, and it's really not designed around our service users currently. So, we do think that an improved website has a real potential to help us with our case load management.

I mentioned earlier the large level of complaints that we get that we can't deal with because they're out of our jurisdiction or premature. We could use our website much better, I think, and our technology to stop those things actually getting into the organisation, because they take a lot of resource to deal with once they're with us. So, that's the website, and it is our front door to the organisation.

On the case management system, again, consultation with staff showed that they felt that this is an older system, it's a bit slow, it doesn't help with things like reporting and searching. In terms of them feeding back to us on what would help them deal with workloads and speed up our efficiency, they did feel that we need to look at that case management system. So, that's why they're both there, and, alongside that, what I said earlier, looking at how we run our business processes, how we deliver services to make them more efficient.

Rhianon, if I may, if you change the front door, as it were, of the website, have you modelled any thoughts about efficiencies that would come off the back of that, or have you given any thought to the return on investment and how long it would take to pay it back?

No, we haven't done that, because I think we feel that it's an important tool to help us manage case load. So, what we've done in our estimate is identify that if we were really looking at matching our case load with the number of staff we need, we'd probably be looking at four members of staff, but what we've done is we've said, 'No, we won't do that. We'll ask for two members of staff, because we feel we need to address the imminent risk around the nosocomial work, and, if you like, we'll offer as an efficiency the other two because we feel there is work we can do to make ourselves more efficient.' The website is an important part of that.

Thank you. You've touched upon the request around funding for the two additional members of staff, and you just touched upon the context around case management. Why?

Again, it's back to the increasing workload that we have currently and that we're projecting, as I've explained earlier. It's about that case load that our investigation officers are carrying, which is much, much higher than it was pre COVID and much higher than we know other similar roles are carrying in other ombudsman offices in the UK. So, very specifically, this investment is for investment in the investigation team, which is the team that is under the greatest pressure. It's because we want to sustain our performance, and that would help us to do that.

Thank you. Thank you, Chair.

Thank you. When you brought your supplementary budget to us, we were talking about an increase of £35,000, I think, for the national insurance uplift. Obviously, in the last month, we've heard that that levy is being reduced. So, could you talk us through what your thought processes are now about possibly returning some of that funding, because you won't have used it? I think you've used that baseline as your new baseline for next year. Can you talk us through that process, as well, and whether or not you would look to readjust?

Obviously, when we submitted this at the end of September, that decision and announcement hadn't been made. But that decision and that impact from the beginning of November will return, I think, £38,000, in terms of moneys that we wouldn't need because we don't have to pay that higher level of NI. So, we would anticipate adjusting our submission, our budget estimate, before you finalise the position to reflect that as well.

We obviously look at all the directly funded bodies. They come here and make their pitch, the same as you have. We recently have been talking to others as well, and there's a 4.1 per cent pay increase in one of those budgets. How would we justify giving you 11 per cent when we are reluctantly increasing other budgets by much less than that, and one of the other directly funded bodies less even than 4.1 per cent?

I think there's a difference in pay. Across the directly funded bodies, there are different arrangements for pay. I won't go into those; you will have heard them. Obviously, we've said the pay of our staff is linked to the local government pay settlement, so that is likely to be higher certainly than at least one of those bodies, if not both. So, that reflects where we think that might end up. That's a key issue there.

I do understand, as I said earlier, that it's not the best of years to be here to do this, but I think one of the things we're facing is that delivery to the public. We are facing increased caseloads that we can't control, and we want to be able to deal with people's issues when they come to us and to be able to address those. So, there's a direct link to our budget, to the amount of support and service we'll be able to provide to members of the public. Perhaps that's different for other organisations.

If we, for example, hypothetically—I haven't discussed this with my colleagues—were to say, 'Well, what's plan B if we find that we wouldn't be able to agree what you've asked for?' Could you talk us through what the consequences of that are and what the thought process is? I'm sure you won't have come here without a plan B, so could you talk us through that?

As I said earlier in response to Peter, there are two parts of this budget estimate. The first is 5.7 per cent, which is about the cost of pay and the other costs we're facing because of inflation. So, anything below 5.7 is a cut in real terms in our budget, so we'd have to find the difference. Ultimately, as I explained, we would have to look at staffing. We'll continue with our property project, and that's an important one to deliver efficiencies, but I think it's inevitable we would have to look at staffing, and that would have a knock-on impact onto service levels and the number of complaints that we would be able to deal with in a year.

And then would it be shelving any improvements to websites and systems? Are there any knock-on costs that would happen? You were talking about renegotiating your contracts and that sort of thing. I'm just trying to get to an understanding. Depending on our decision, in real terms, what would it actually mean?

I understand. The second part of this then is around the investment for the new plan. So, if that investment isn't there, I'll need to go back and look at the plan. We'd have to rein back on our ambition and what we were able to do and it would be much closer to business as usual.

And the impact then on the Welsh public?

They're all connected. I've got an impact on my staff because of case loads and workload pressures. The impact on the public would be that we wouldn't be able to take forward, for instance, how we want to improve accessibility, making ourselves more efficient through that website. That wouldn't be able to happen. We'd have to do the best we can with the website that we've got, and we know that's not really fit for purpose at the moment. There's the case load management system—again, it just doesn't help our efficiency. The staff are saying it slows them up. So, that feeds into the difficulties around case load management and staff as well. We want to be as efficient as we can and have the right tools in place to help our staff do the job efficiently. If we're not able to get to that space, then it is back to service levels, and the number of people we're able to help in a year will sadly reduce.

And with regard to office costs—I know Chris is leading on that work—how receptive has the landlord been? Have you had initial conversations with the landlord?

Absolutely. I think the landlord is receptive. We have had initial conversations. I think what is clear, without repeating what I said earlier, is that the landlord expects us to find alternative tenants to make the process work, but, subject to that, is ready to reach an agreement. 

If you wanted to break that contract and just get out without somebody else, what are the implications for that?

I haven't got the figures in front of me, Chair, but the terms of the lease would be that we paid the outstanding rent at the point at which we leave—the rent for the remainder of the lease would be due. So, it's not a particularly attractive proposition, and that's why we're trying to find alternative tenants.

Fair enough. If you were prioritising your wish list of investment, what would you prioritise? 

The website and the staffing.

Okay. And the pressures if—. 

Well, the pressures are all real. We could look to offset some of our savings from property in future years, but we don't know how quickly that will come through. If I've got to fund the cost of the pay increase, then I'll have to reduce staffing.

If we were to agree 11 per cent this year, we would struggle probably to give even an increase at all next year. Would that be something that could work?

I think it could, yes, because we've got that property project. The onus on us is to generate savings from that to help with future years.

To front-load it, effectively.

Yes. It also gives us time to plan into that. It gives us 12 months to plan into that.

I don't know if anybody else has got any further questions.

Why are your pressures greater than that of the local authority you've just left and the health boards?

They're not. I can't argue that, can I? I can't argue that. They're not. And that's why I said you have the real difficult task, and so does Welsh Government. My responsibility as ombudsman is to sit here and tell you what I am facing in my organisation and what I think we need to do, and so that's what I've done.

Thank you very much. 

And I suppose you don't have reserves either, which local authorities would have.

And health boards wouldn't.

They wouldn't. Yes, exactly.

I'm not able to overspend either.

You are, but you come back to us for a supplementary budget, don't you, if you're in danger of overspending.

Yes, and I wouldn't want to be doing that.

But you have that protection, and other parts of the public sector, like Natural Resources Wales, neither have reserves or the ability to overspend.

Yes. It's difficult.

Thank you very much. We understand the pressures and we do appreciate the work that your office does. We understand, but we're in a very difficult position—

I understand that.

—and we have to look at things in the round. Thank you very much. We will have a transcript of this sent over to you just to check for accuracy.