Holyrood Inquiry
This submission looks at how the new approach to governance means whistleblowing acts as an early warning system that both deters and detects potential wrongdoing. Understood and applied in this way, whistleblowing increases the accountability of organisations, promotes the responsibility of individuals and helps ensure fiscal probity. We believe that had whistleblowing been seen in this manner, a good many concerns about the Holyrood project would have been raised and addressed earlier.
Our approach
Public Concern at Work is an independent charity and legal advice centre. Popularly known as the whistleblowing charity, we have four key activities:
- providing free confidential advice to people concerned about wrongdoing in the workplace but who are unsure whether or how to raise the matter;
- providing training and consultancy to employers, unions and professional bodies on workplace cultures and communication and on compliance and governance;
- contributing to public policy on these issues; and
- seeking to create a culture where people feel there is a safe alternative to silence.
Our pre-eminent aim is that employees’ concerns about potential wrongdoing be raised internally with those accountable for the organisation. In this way, the public interest is furthered as those in charge are given the opportunity to investigate any serious concern. If this is not possible, then we believe that there should be safe external routes to act as a safety valve for employees to raise a concern. Equally, we believe that that this means the organisation is likely to deal with any concerns raised with it properly, on the assumption that it may be expected to account at a later date for its’ response. In this way, whistleblowing ensures accountability and makes it work in practice.
Within two years of our launch, this approach to whistleblowing had been endorsed by the Committee on Standards in Public Life and by the Audit Commission. A summary of the Committee’s recommendations setting out how public bodies can gain the benefits of whistleblowing can be found at the back of the enclosed publication Whistleblowing: Introductory Booklet. In its White Paper The Governance of Public Bodies, the Government described us as ‘the leading organisation in this field’.
In 1997, the new Labour Government asked us to assist it and Richard Shepherd MP in formulating, consulting on and promoting the Bill which became the Public Interest Disclosure Act (PIDA). While technically a piece of employment law, this legislation was and remains supported by the CBI, IoD and TUC. For our work on PIDA, Lord Nolan commended us in Parliament ‘for so skilfully achieving the essential but delicate balance between the public interest and the interests of employers’1. The Government has restated its support for PIDA in this Parliament and amended both the Employment Act and the Police Reform Act in consequence.
Now ten years old, we have advised on over 4,000 concerns about danger or illegality in the workplace, with our helpline achieving recommendation rates of 90%. The second largest source (after the internet) of referrals to our helpline is employers’ whistleblowing policies. These employers include government departments, local authorities, the NHS and leading public limited companies. One half of our expenditure is met by the fees we earn from our training and consultancy work for employers, while the other half comes from voluntary donations.
Our Work in Scotland
In recognition of Scotland’s different culture and institutions, and to raise the profile of whistleblowing in Scotland, Public Concern at Work set up a pilot office in 2001. Due to the clear need we found, a small office was opened at the beginning of 2002 by Scottish Office Minister George Foulkes. The Community Fund Scotland provided a two year grant to meet the salary costs of our part-time Scottish Director. Since our launch, we have provided consultancy and/or training services to the Bank of Scotland, Caledonian MacBrayne, East Lothian District Council, Employers in Voluntary Housing, National Australia Group, Royal Bank of Scotland and UNISON.
Through our work and calls to our helpline, we have found a general lack of awareness of whistleblowing amongst organisations and individuals in Scotland. Where the term is recognised, it is largely equated with anonymous and/or malicious disclosures to regulators or the media. This misunderstanding means that many Scottish organisations are missing out on the real benefits of whistleblowing and consequently may be suffering the costs (both financial and reputational) of otherwise preventable wrongdoing.
A major part of this misunderstanding is the equation of whistleblowing with being a “clype”. The fear of being labeled in this way, or of appearing disloyal to colleagues, acts as a major disincentive to a responsible employee who may otherwise want to warn his or her employer about a serious risk. In such a culture, employees may only feel confident to raise their concerns after disaster has struck - when the information a whistleblower provides may only help apportion blame. We believe that the Holyrood project is a case in point; it seems inconceivable to us that no staff involved in the project were not concerned and did not consider raising these concerns. If your evidence has found that staff did not warn people in time, our experience would lead us to believe that this is because of serious prejudice in Scotland against responsible whistleblowing and widespread failure to understand its role in ensuring good governance. Whistleblowing can and should play a more proactive and preemptive role in Scotland as an early warning system.
The Value of Whistleblowing
Every business and public body faces the risk that something it does will go seriously wrong. The first people to know about a risk to an organisation or its stakeholders will usually be those who work in the organisation. Yet, while employees are the people best placed to raise the concern and so enable the risk to be removed or reduced, they are also the people who have the most to lose if they do. Unless organisations foster a culture that declares and demonstrates to staff that it is safe and accepted to raise a genuine concern about wrongdoing, employees will assume that they face victimisation - losing their job or damaging their career. The consequence is that most employees will stay silent where there is a threat - even a grave one - to the interests of others, be they colleagues, tax-payers, local communities or their employer. This silence can mean that those in charge of organisations place their trust in the systems that they oversee rather than the people who operate them. This denies them a fail-safe opportunity to deal with a serious problem before it causes real damage. The enclosed document Whistleblowing: Introductory Booklet sets out the benefits of whistleblowing for employers in more detail.
Individual employees who genuinely suspect there is illegality or malpractice in the workplace can face an acute dilemma. They can stay silent and look the other way; raise the matter with their employer; or take their concerns outside the organisation. We believe that if someone working on a large-scale construction project thinks that something is going wrong, be it unsafe building practices, financial malpractice or anti-competitive practices during tendering, they should have a safe alternative to silence. The concerned employee should be given the confidence to raise the concern with their employer, but if this is not possible or practical they should be able to raise their concern with a regulator or the body commissioning the work. A clear signal from their employer that they welcome concerns and will act upon them, will go a long way to reassuring a concerned employee that they can raise their concerns safely and that any significant problem will be addressed effectively.
Role of Whistleblowing Policies
A whistleblowing policy is a statement of an employer’s commitment to good governance and a guide for employees on how to raise a concern responsibly. It can help create an environment in which employees understand their responsibilities and management can demonstrate their accountability. Without such a safe alternative to silence, a concerned employee may feel their only other option is to remain silent or anonymously leak information outside the organisation, for instance, to the media.
As to public sector contracts, we recommend all bodies should have effective whistleblowing policies as this would help them to find out something is going wrong early enough to take the necessary corrective action. For employees of contractors on public construction projects, such policies could include an avenue for raising concerns with the contracting agency or another public sector regulator as a safe alternative to silence. Alternatively, employees of contractors could have access to the whistleblowing policy of the contracting public body. The latter option is recommended by the Committee on Standards in Public Life (a copy of the relevant recommendation is enclosed). Demonstrating a commitment to good governance and providing safe alternatives for the responsible employee, will reduce the risk of inappropriate or anonymous external disclosures. It is important to note that an employee of a contractor making a disclosure to the public body responsible for a construction contract is already protected under PIDA (section 43C).
Responsible whistleblowing is not a means by which a disgruntled employee can wreak revenge by giving away trade secrets or hold their employer to ransom. A whistleblowing policy encourages employees to raise concerns responsibly whilst making it clear that those who abuse the scheme by maliciously making untrue allegations will risk their jobs.
Following its public consultation on whistleblowing, the Financial Services Authority (FSA) found that:
A whistleblowing policy will improve the trust and confidence among workers by creating what one respondent called a “culture of honesty and openness” by encouraging workers to report internally. This was seen as “good for the morale of workers”, giving them confidence to come forward with concerns. Senior managers will be the first to know of any issues that they may need to address. These can be dealt with internally. This also means that the costs of investigating any problems, such as fraud, are reduced as problems can be caught quickly. The management time and resources saved mean that whistleblowing procedures are a cost-effective early warning system for firms. One respondent highlighted that firms with procedures perceive that they create a better working environment, while also reducing risk, so giving them a competitive advantage.2
Respondents to the FSA consultation reported that the costs of implementing and reassessing a whistleblowing policy were minimal3.
Deterrence and Detection
Acting as an early warning system, whistleblowing can detect wrongdoing and allow corrective action to be taken before a problem becomes a crisis. However, the greater benefit, in our view, of whistleblowing is its deterrent effect. Someone tempted to commit any malpractice or take an unnecessary risk will be less likely to do so if they believe that their conduct could be challenged by others.
The detection and deterrence effects of whistleblowing mean that good governance and compliance with the law can more readily be achieved without the need for prescriptive regulation and the costs it often entails. This is particularly relevant to the relationship between a public body and contractor, where the information flow between the two parties can be crucial to an effective and well-managed relationship and controls tend to identify problems after the event.
By both deterring and detecting potential malpractice, we believe promoting whistleblowing will increase public confidence in public bodies and in high profile public works in Scotland. If the Inquiry sees sense in this, we ask that it recommend that the Scottish Executive give a clear, continuous and public commitment to whistleblowing.
Best Practice
In adopting this new approach to governance, Scottish employers can draw and build on the experience of major employers in the private sector that have already addressed whistleblowing in their workplaces. Many of these, including Argos, the Co-Op, and Abbey, promote our helpline to their staff to provide reassurance that concerns can be safely raised and will be properly addressed.
Regulators and professional institutes have also produced best practice guidance to encourage their sectors or companies they regulate to promote whistleblowing as a key risk management tool. The Institute of Chartered Accountants in England and Wales’ (ICAEW) recently published guidelines to help listed companies take advantage of the new whistleblowing obligation in the revised Combined Code of Corporate Governance (this is enclosed).
Audit Scotland
Audit Scotland is leading the way in Scotland and has, in conjunction with Public Concern at Work Scotland, produced two leaflets.
One explains to staff what they should do if they suspect fraud or corruption and how to seek advice from Public Concern at Work if they are unsure whether or how to raise a concern.
The other is aimed at managers and explains how they can get whistleblowing to work for their organisations. These leaflets are enclosed for your information.
We hope other Scottish public bodies will take note of Audit Scotland’s approach and develop similar strategies to promote responsible whistleblowing.
Summary and suggestions
Responsible whistleblowing is an early warning system that both deters and detects possible wrongdoing before damage is done. If Scottish public bodies were to embrace whistleblowing and take steps to promote it, it would send a clear signal to the public that Scottish institutions are committed to probity, openness, and good governance. Further, it would facilitate self-regulation on the part of contracting bodies and contractors. This will increase public’s trust and confidence in Scottish institutions and the work they undertake.
If the evidence received by the Inquiry suggests that employees involved in the Holyrood project were aware of potential wrongdoing and yet did not raise their concerns, we suggest that the Inquiry could recommend that Scottish public sector bodies adopt and promote whistleblowing policies. This would mean that in future their employees will have the means and confidence to raise their concerns. Further, that the Inquiry could recommend that these policies be made available to the employees of contractors so that these employees may raise concerns about potential problems affecting any public project on which their employer is engaged. If this approach to good governance and accountability were adopted, the responsible bodies may gain the opportunity to prevent a future Holyrood-like scandal.
- Hansard HL, 5 June 1998, col. 614.
- Whistleblowing, the FSA & the financial services industry, Financial Services Authority, April 2002, para. 8.24, pg. 26.
- Ibid., para. 8.25.