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Before Clause 1
Additional Pension
Lords amendment: No. 1, to insert the following new clause--
Mr. Rooker:
I beg to move, That this House disagrees with the Lords in the said amendment.
Mr. Deputy Speaker:
With this, it will be convenient to take the Government amendment in lieu thereof, amendment (a) to the amendment in lieu thereof, and the consequential Government amendment.
Mr. Rooker:
This part of the Bill deals with inherited SERPS and the mis-selling by the previous Government of the changes to the scheme that were legislated for many years ago.
In 1986 the previous Government made substantial changes to the state earnings-related pension scheme and gave a considerable period of notice before the change was to be made--it is due in April next year. That notice was intended to allow people who might be affected plenty of time to alter their financial arrangements. The then Government promised wide publicity, but it was never delivered.
As in other cases, Ministers in the present Government are not allowed to see the papers of the previous Government, but I would give my right arm--metaphorically and politically--to see those papers, because they must have had some discussions about deliberately--
Mr. Rooker:
I have not made the allegation yet, but I shall give way.
Mr. Pickles:
Perhaps I can anticipate the Minister. Why was the Benefits Agency still giving out duff information on 14 April this year?
Mr. Rooker:
I shall come to that. I am simply saying that there must have been a policy of not carrying through the promised publicity campaign. On 25 February 1986, the then Minister of State, Department of Social Security, our former colleague Tony Newton, now in the other place, said:
(".--(1) The Secretary to State shall by regulations make provision for one or more of the following--
(a) to substitute, in any provision of the Contributions and Benefits Act which relates to additional pension for widows or widowers, for any sum payable by way of such pension as is derived from the contributions of a deceased spouse, such higher sum as may be prescribed;
(b) to substitute, in any such provision, for any prescribed reference to the year 2000, a reference to such later year as may be prescribed;
(c) to establish a scheme to compensate persons who are widowed after 5th April 2000 and who suffered loss as a result of any action or failure to act in reliance on incorrect information received from a Government department with respect to the reduction in the additional pension payable to them as a result of the enactment of the former section 19 of the Social Security Act 1986.
(2) If regulations under subsection (1) are not in force on 5th April 2000, then until such time as such regulations are in force, the provisions of the Contributions and Benefits Act to which paragraph (a) of that subsection apply shall continue to have effect as in force on that date.
(3) No regulations shall be made under subsection (1) unless a draft of the regulations has been laid before, and approved by a resolution of, each House of Parliament.")
"We have every intention of mounting a major publicity campaign to herald the pension changes contained in the present Bill, should it become an Act, as we expect that it will."--[Official Report, Standing Committee B, 25 February 1986; c. 451.]
Two days later, on 27 February 1986, the then Parliamentary Under-Secretary of State for Social Security, our colleague the right hon. Member for Huntingdon (Mr. Major), said:
3 Nov 1999 : Column 365
"The provision diminishing the amount of SERPS which may be inherited from the year 2000 by a surviving spouse to half of the deceased's entitlement instead of, as at present, the whole sum, corrects what has widely been felt as an over-generous provision indeed. I point out to the hon. Lady that because of the projected position that exists until the year 2000, people will have plenty of time and ample warning. There will be no sudden, overnight, dramatic change in their position and they will have plenty of time in which to seek to make major alternative provision for survivors if they wish."--[Official Report, Standing Committee B, 27 February 1986; c. 463.]
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The previous Government were legislating well in advance, in 1986. Similarly, changes to the retirement age for men and women over 10 years will be phased in from 2010 to 2020. It was right to give plenty of warning, but people have to be told.
7.45 pm
We cannot hide behind the fact that we live in a parliamentary democracy and say that no decisions here are made behind closed doors and people should take account of what happens in Parliament. The press stopped reporting what happens here years ago. There was no great beanfeast over the change. It is regretted that no publicity campaign ever took place, to the extent that, as the hon. Member for Brentwood and Ongar (Mr. Pickles) rightly said, earlier this year the Benefits Agency was still giving out incorrect information. The Government have a responsibility to put right the difficulties. We are responsible for only part of the delay. We could have done it in the first year, but we did not. We could have done it in the second year, but we did not. We are certainly dealing with it before our third anniversary.
Mr. Paul Burstow (Sutton and Cheam):
Have the Government commissioned an audit to ascertain whether there are any other changes to regulations or legislation that have not been publicised which could cause similar problems?
Mr. Rooker:
I understand that Ministers did that long before I arrived at the Department. It is a frequent problem. At the Ministry of Agriculture, Fisheries and Food I found little matters hidden away that had been decided a long time ago but which suddenly came up and bit my ankles without warning. We are not aware of anything else in the Department remotely on the scale of this problem. I shall make clear the amounts of money involved.
I admit that wrong information was still being given out at the beginning of this year, but as soon as we knew, we took immediate steps to ensure that Benefits Agency staff were able to provide correct advice. We have made a full check on the accuracy of all our leaflets. When I go to benefit offices--I have not done so as often as I would like in the past few weeks, but I have been to a few, not all in my region--I make a point of looking at the leaflets on display to ensure that information on the age change for retirement, particularly as it affects women, is on display.
The Government have been pressed at every stage of the Bill to resolve the issue from next year. Preventing the problem in April 2000 requires a change in primary legislation. This is our opportunity. Individuals who have acted to their detriment as a result of bad advice would have a reasonable case for redress in the courts. Some hon. Members have complained to the Parliamentary Commissioner about the issue. I have answered many letters from Members of Parliament about it during my three months at the Department. I do not remember anyone raising the case with me as a constituency Member, so I have not had to write a letter to myself--but that day may come.
Large numbers of people who could be affected are already pensioners. We do not want to leave them with the worry of seeking legal redress. That would not be
good government anyway. A range of solutions have been suggested during the passage of the Bill. The scale ofthe likely cost is well known. We have answered parliamentary questions on that. One option put to us was to delay the whole thing for 10 years. That would cost about £5.5 billion, plus about £1 billion a year for some time following that, because it would not get us out of the whole difficulty. That burden would be borne by today's contributors because of the nature of SERPS.
We have explored all the options thoroughly. During my 13 weeks at the Department I have been involved in more meetings and discussions on this issue than on any other single subject. That is partly because of the timetable that we are up against. We have tried to find a precise solution to put in the Bill. We have not been able to do that, for reasons that I shall explain. That is why we have the amendment.
We do not intend to overturn the policy by changing legislation retrospectively. Before anyone reminds me, I know that we opposed the change at the time, but it is not sensible to get into that debate. Millions of people out there are worried about changes in SERPS and what is coming next April, and we need to reassure them.
The change will bring the state provision clearly into line with private pension schemes. In the Green Paper last year, we made clear that we wanted to reverse the current position, in which 60 per cent. of spending on pensions is state expenditure and 40 per cent. is private. It is our long-term policy to reverse that over 50 years. We cannot do that by sitting back and waiting for things to happen.
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