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5.30 pm
My hon. Friends tell me that their constituents have telephoned them and said, "It looks as though I won't be covered by the scheme." The people whom the scheme is aimed at have read the advertisements and been misled. They have been confused because the advertisement was wrongly worded. I wonder whether the Minister, when he responds to the debate, will comment on its wording. I do not know whether his officials have briefed him on that.
Mr. Rooker:
No, I shall not comment on the advertisement. When the House has approved a scheme, having held debates on the regulations, there will be a full and fairly massive propaganda campaign, using television,
Mr. Webb:
The Minister cannot have it both ways. He is spending public money on placing advertisements that are designed to illuminate but which confuse. They were not accurate about the scheme as described by the Secretary of State a few days earlier. I find that very worrying, and I hope that the Minister will ask some questions in his Department about why that form of words was used and whether he should issue some clarification.
We are dealing with people who have already been misled by the Department. Years have gone by, and they have now found out that they were misled. They have now read an advertisement that is also misleading, and they are starting to give up. That is not what we want.
In new clause 7 we propose simply that those who have already reached state pension age by the time the original cut was due to come in should be protected from the cut, for two principal reasons. First, it is unreasonable to expect those who have only just found out about what happened, and who have already reached pension age, to save for their pension. It is too late for that.
A charity dealing with older people says that every year new people come to it for help, having only just heard for the first time about the change as a result of the advertisements and the discussion of the subject in the press. Many people still do not even know about the change, although there has been a great deal of coverage, particularly in the specialist press. It is unreasonable to expect them to make alternative arrangements now. That is why we want to protect them.
The second issue, which has not been addressed much in the debate, is the validity of the original policy. Was it right of the House, in 1986, to decide to halve widows' pension entitlements? New clause 7 gives us an opportunity to reverse that decision for those who have already reached state pension age for whom there is no other alternative. We know that widows make up one of the poorest groups of pensioners. Later we shall discuss the position of older pensioners, most of whom are women, many of whom are widows, who already have relatively dire pension positions.
This afternoon at Social Security questions, the Government--I believe that it was the Minister--attacked what the Conservatives did to the state earnings-related pension scheme; one of their biggest cuts, if he does not accept new clause 7, he is about to implement. How can he have it both ways? He wants to attack the Conservatives for the cuts that they made in SERPS but to implement those cuts, and not reverse any of them, even when he has the chance to do so.
The Minister raised the question of the cost of what we are proposing. The Government have introduced a bizarre new doctrine: they add up all the costs of the compensation over 50 years. They have got into enough trouble by adding up the figures for national health service spending and education spending over three years and double and triple counting, but trying to make out that the
compensation package is generous by working out what it would cost over 50 years is incredible. If the Government make an increase in the winter fuel payment which is to be paid for each of the next 50 years, they do not claim 50 years' worth of expenditure. If they put 75p on the basic state pension, they do not multiply the figure by 50 to say how much it has cost.
I asked for a breakdown of the extraordinarily large figures being claimed for the cost of the scheme. The cost of deferral--which relates to new clause 38--never rises above £270 million a year, yet it has been costed at £2.5 billion: nearly 10 times as much. The compensation scheme has been costed at £5.7 billion if there is a take-up of 30 per cent., yet its cost never rises above £600 million in any of the next 20 years. Although the Minister says that our scheme is extraordinarily expensive, it is only by adding together the figures for 50 years that he can come up with his figure.
As I said in an intervention, our estimate of the cost of our scheme in lieu of the Government's scheme is £7.1 billion. The Government's central costing is £2.5 billion for deferral and just over £5 billion for people who claim compensation, so the total is about £8 billion. We are not inventing enormous items of Government spending. We have come up with a scheme which, on the Government's figures, does not cost as much as the one they have themselves proposed. The Minister said that there would probably need to be some form of tapered provision for those aged 63 or 64, so I suspect that our scheme would cost something similar to the Government's proposal.
The big advantage of our proposal is that it is clear and simple. Under the Government's proposal, pensioners will try to claim that they were misled and the Government will have to investigate those claims and attempt to disprove them. We have no idea how they will disprove the claims because they have no records with which to do so. That scheme will, as ever, miss out the inarticulate and the ill-informed, but will reward the corrupt because, if anyone says that he was misled, that claim cannot be disproved. Their system is costly, bureaucratic and complex and it creates a further worry for all the people who have been affected by the reduction in SERPS. They will not know until next year whether they will be protected.
Mr. David Heath (Somerton and Frome):
My hon. Friend will recall that I asked the Secretary of State about receiving information at second hand and not directly from the Department. However, I did not receive a satisfactory answer. New clause 38 refers to
Mr. Webb:
My hon. Friend raises an important point, and I hope that the Minister will clarify the position. Clearly an adviser will act on the basis of the leaflets and the guidance given him by the Department. If that
Our constituents have been asking us for months and years what will happen. They want to know so that they have can have peace of mind in their old age about the provisions for widows or widowers. We still do not know what will happen and the scheme is so vague that it will be another year before we find out. We want certainty; older people deserve that if nothing else. That is why exempting those who have already reached state pension age is a neat, clean way of approaching the issue. People who did not follow the small print of the Social Security Act 1986--can we blame them?--and who have reached pension age have probably found out only now about the cut in their entitlements. They deserve to be looked after with a clean and simple solution.
We accept new clause 38, because deferral is welcome. However, additional measures, as reflected in new clause 7, would also be welcome. Given the opportunity, we shall seek to test the opinion of the House on the additional measures.
Mrs. Jacqui Lait (Beckenham):
I shall be brief, because most points have already been made. However, it is important to clarify even further the degree of evidence and proof that the Government will seek to build into the regulations and their compensation scheme. Although we have accepted responsibility for the part that we have played in the problem, we stick by the policy--as do the Government--of the reduction in the rebates. We shall not, therefore, support the new clause tabled by the Liberal Democrats.
The key to the matter is what degree of evidence of whether people have been misled the Government can accept. For example, one could argue that people who have done nothing to find out about the cut have been misled. Will that be acceptable to the DSS, and will it be covered in regulations? Any sensible person planning for their retirement would, if they had known about the cut, have taken action, and the mere fact that they have not done so indicates that they have been misled.
I welcome the change in the wording of new clause 38 from "would have" to "might have". However, even if the Government are prepared, in regulations, to alter the burden of proof, we need more clarification about what exactly they will do. It is clear that since the first announcements, the debate about recompense has moved on, and I suspect that that is why confusion is developing and the Government's statements are getting softer and softer and are increasingly trying to be helpful to people who feel that they are affected.
receiving incorrect or incomplete information,
but does not qualify that statement by mentioning the source of the information. Does that not suggest to my hon. Friend that someone who was misled by a professional adviser or another person, but who acted under the belief that he was taking the right steps, would be covered?
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