The Cost of Whistleblowing Failures

The cost of whistleblowing is too high. Whistleblowers as individuals can pay a high price in term of their careers, finances, physical and mental health and family lives for speaking out. When the concern itself is not listened to it can lead to immense costs to others: organisations can collapse and lives and livelihoods can be destroyed. There is extensive research documenting these issues, but very little mapping out the financial impact whistleblowing failures can have.   

With the support of the Joseph Rowntree Charitable Trust we have conducted a research project examining the cost to the taxpayer from whistleblowing failures across three of the UK’s biggest scandals: the Post Office Horizon IT scandal, the Countess of Chester Hospital/Lucy Letby scandal, and the collapse of construction company Carillion. In each case a lack of accountability and a failure to listen to whistleblowers have been officially acknowledged. 

In each case we have calculated the financial impact that has been levied on Central Government – and by default, the taxpayer – including the costs of public inquiries, police investigations, delays to essential building projects and compensation payments.

Calculating the Cost of a Scandal

With no prior costing methodology, we have used an original approach to assess the costs within a structured framework. Our model works on the basis that all whistleblowing scandals, including the three described here, share a basic timeline. Common to these timelines are certain costs which are invariably incurred. We identify that these costs fall into three broad categories:

• Unavoidable costs: These costs would have occurred whether the whistleblowing concerns had been received and acted upon or not.  
• Avoidable costs: Had the concerns raised by whistleblowers been acted upon these costs would have been avoided.   
• Fallout costs: These costs are the result of cost of bringing Acts into force, inquiries, legal fees, compensation payments, and CCRC costs.  

We have applied this unique financial model to three public scandals: the Post Office Horizon IT scandal, the Countess of Chester Hospital/Lucy Letby and the collapse of Carillion. 

Conclusions and recommendations for change 

We concluded from our research that taxpayers are often picking up the pieces from the scandal and paying avoidable costs even when the organisation at the heart of the scandal is a private sector company. Each case study showed a gap in accountability from the point whistleblowing concerns are raised in each scandal and then the response from employers and regulators in reacting to the issues being raised. As part of our Legal Reform Campaign to Fix Whistleblowing Law, we are calling for the following action:

• A duty on employers to investigate whistleblowing concerns: there is no legal duty on employers- outside the financial sector- to have a whistleblowing policy let alone investigate their concerns.   
• Ensure everyone in the workplace is protected: by expanding whistleblowing protection to include sub-postmasters, non-executive-directors, trustees and job applicants.
• Whistleblowing champions for all boards: all three scandals had an ineffective board more by safeguarding the reputation of the organisation over rectifying the problems highlighted by the whistleblowers. All boards should have a whistleblowing champion personally responsible for whistleblowing or speak up arrangements. 
• The Cabinet Office should take the policy lead on whistleblowing: to drive a more strategic and aligned approach which will benefit all departments, sectors and ultimately the public purse. 
• The importance of strong regulators: there needs to be a consistent approach to how regulators interact with whistleblowers and how they investigate whistleblowing concerns to build confidence and ensure that they act effectively. 
• Central Government is left to pick up the pieces: Parliament should establish a new committee to track and report on the implementation of recommendations that emerge from public inquiries.