Public Services Management: Giving due credit: How should we be compensated for poor services? Paul Gosling reports

Dissatisfied customers of Marks and Spencer's can get their money back. But what about the unhappy user of a public service? Now that councils, health authorities and the Government have recognised the public as customer, should we be entitled to cash refunds if they fail to deliver the services we believe we have paid for?

At British Rail the answer is yes. But BR's circumstances are different as we are buying an easily definable product - a ticket. Critics of the Passenger's Charter compensation scheme add that the system is too complicated, and the standards too lax, for the refunds to mean very much.

British Gas credits customers pounds 10 if an engineer fails to meet an agreed appointment, which recognises the inconvenience and possible loss of wages. Leicester City Council is considering crediting tenants pounds 2.50 on their rent account, if an appointment is missed.

Lewisham, south London, has run a cash-back scheme on its refuse collection service for three years. Any householder whose bin is not emptied is entitled to a pounds 1 refund. Since the offer was initiated there have been 9 million collections and just pounds 70 paid out in compensation. The council says this reflects the 97 per cent satisfaction rating for refuse collection in a survey.

Albert Bishop, refuse and cleaning manager of the direct service organisation (DSO) says the scheme allows them to monitor their performance effectively and gives customers the opportunity to complain out of normal office hours. 'Our 'it's a deal' is an extension of the Environmental Protection Act, giving guarantees of our service standards. It's not a gimmick, it allows people to use it and it provides feedback for us.'

Islington, north London, has chosen to use service guarantees. Customers of the council's swimming pools are guaranteed to find their pool open at the advertised times, at 27 degrees C, the water clean and the bottom of the pool visible at all times. Should the council fail to deliver, vouchers for free swims are issued.

Other authorities have considered similar approaches and rejected them. Braintree council, Essex has been recognised as this year's 'Council for Quality' by the Society of Local Authority Chief Executives, and puts this down to an effective complaints procedure. Robert Atkinson, assistant chief executive of Braintree, says research shows users want service improvements, not compensation. 'We have a charter which sets out what customers can expect. We have had a complaints system for six years and we've considered compensation. We've tested the market with a customer panel, and they thought it was an unhelpful gimmick, but what they wanted to know was that their complaint had been dealt with. We do give financial compensation if they've suffered hardship, or for a journey taken to rectify a problem. We might write off a bill if the customer suffered unduly from negligence.'

One of the Audit Commission's performance indicators for councils asks: 'Does the authority have a written policy on remedies?' But a spokesman for the Commission says this should not be inferred as a preference for financial recompense rather than sorting out the cause of the complaint. 'We are not making hard and fast rules about how one local authority responds rather than another, providing they deal with the problem effectively.'

The National Consumer Council (NCC) is reviewing the range of charters issued by the public services and is drawing up a charter check- list. It is also involved with the Audit Commission and leading charter councils in a 'Charter Summit' in Leicester on Wednesday. David Leabeater, the NCC's senior policy and development officer, says: 'There are 30-plus charters across the public services and they are growing in number - for example, there is a patient's charter for England, and with a cascading effect, numerous local ones. Voluntary charters in local government often predated the Government's initiative. We are applying three principles to these charters: that consumers should be consulted; that they should provide information and accountability; and that there should be a system of redress.

'The impression I get is that some of the documents provide a lot of detail on how to gain access (to complaints procedures). Others have considerably less information. Consumers should be consulted about the complaints procedure. Is it user-friendly? What do people want?'

Organisations that are subject to an ombudsman who may make ex gratia payments should recognise this within their own systems, suggests the NCC. 'The local government ombudsman considers the amount of hassle citizens are put to,' Mr Leabeater says. 'That suggests, if it's good enough for the ombudsman it should be something others should consider.'

The Local Government Management Board has published a guide to complaints services and recognises that the question of financial compensation is something that councils should consider. Lesley Race, who wrote the guide, says: 'There is a tension between service provision and giving money away. In many services it is difficult to identify who the customer is, for example in education. Compensation is not as well developed as the complaints system. A lot of complainants say they want to make sure the same thing does not happen to others. An apology goes a long way.'

Ms Race suggests that some instances are more obviously appropriate for financial compensation than others. 'If the person has had detriment caused to them, or they have to pay out money themselves. The ombudsman can request payment in circumstances such as this, or for distress or suffering caused.'

Many of the councils are concerned that compensation can simply be an added burden on councils, making them less able to provide services effectively. It is an unease that is shared by all political viewpoints. Labour-controlled Leicester council referred to the originator of the Citizen's Charter, Dr Madsen Pirie of the right-wing think-tank, the Adam Smith Institute.

In arguing for the adoption of charters Dr Pirie wrote: 'Any compensation must be structured so that it does not simply come as an added burden on taxpayers . . . The object is to improve the public services by equipping citizens with rights of redress, not to open state coffers to potentially unlimited demand.'

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