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Personal Statement
3.31 pm
Mr. Tony Benn (Chesterfield): As tomorrow is the 50th anniversary of my first election to the House of Commons, may I take this opportunity of expressing my sincere thanks to many Members past and present, from both sides of the House, for the many kindnesses shown to me and my family, especially during the past few days following the death of my wife, Caroline?
Those of us who work here will know of the strong bond of friendship and warmth between Members and the staff who work with us in the building. I am proud to have been a member of that wider parliamentary family--first as the representative of Bristol, South-East and now of Chesterfield--from whom I have learned and gained a very great deal during my half century in this place.
Mr. Speaker: I am sure that the House would want me to offer our congratulations to the right hon. Gentleman on his long service to the House, and to express to him and to his family our sympathy in their recent loss of Caroline.
Inherited SERPS
3.32 pm
The Secretary of State for Social Security (Mr. Alistair Darling): With permission, Mr. Speaker, I would like to make a statement on inherited SERPS.
In my statement to the House of 15 March this year, I explained how millions of people were given wrong, misleading or incomplete information about rule changes introduced by the previous Government in 1986, which were due to come into effect earlier this year. As I told the House then, as a matter of principle, when someone loses out because they were given the wrong information by a Department, they are entitled to expect the Government to put it right.
In March, I announced that we would defer any changes in the inheritance rules by two and a half years, until 6 October 2002. That remains the position. I also said that I would consult the ombudsman, the National Audit Office and others about a protected rights scheme, designed to provide redress to people who were given wrong or incomplete information.
I received a range of helpful and constructive representations from Members of the House, Select Committees and others. I also received the advice of the Social Security Advisory Committee, whose report I am publishing today--copies will be available in the Library and the Vote Office. As I have said before, the solution to this problem has to be both fair and workable. And as the ombudsman has said, it must provide a global remedy. I am determined to make sure that we do that.
Over the past few months, I have become increasingly convinced that a protected rights scheme would not work in the way intended and, therefore, would not provide a fair and just solution to this problem. It would not be fair because we could not be sure that it would reach all those affected, particularly the very elderly and vulnerable, and it would be very difficult to safeguard the scheme against fraud and abuse. Its operation would inevitably cause injustice, and on that basis, I do not intend to pursue it.
There were two key problems with the decisions taken 14 years ago by the last Conservative Government. First, they decided to implement the changes without any transitional arrangements. And worse, they continued for years to give out wrong, misleading and incomplete information about what they planned to do. We have already deferred the change in the inheritance rules until 6 October 2002, so no one at all will be affected by the policy change before that date.
The proposals I am making today are designed to give full protection to every pensioner; to give younger people adequate notice of the change to SERPS rules; and to provide transitional arrangements for those approaching retirement age. First, men and women who are already over the state pension age cannot do anything to restore their position. I have therefore decided that all men and women who are over state pension age on 5 October 2002 will be exempt from the changes. That means that every pensioner will keep his or her existing entitlement.
Secondly, proper notice has to be given to those who are planning for their retirement. So I am proposing that the new rules will apply only to men and women who are now 10 years or more away from their state pension age. Thirdly, those people who are approaching state pension
age will have less time to plan for their retirement. So we will phase in the changes for those who are within 10 years of their state pension age. For example, people who reach state pension age between October 2002 and 2004 will be able to pass on 90 per cent. of their SERPS, and those who reach pension age between 2004 and 2006 will pass on up to 80 per cent. and so on.We intend to bring forward regulations in the new year to implement those changes. We will consult on the draft regulations in the usual way. We will also write to all those people who have contacted us already, to set out the position. There are, of course, a very small number of people who have evidence that they were clearly misinformed by the Department--for example, they have a letter from the Benefits Agency containing the wrong information. That small group will have access to the usual departmental procedures that deal with cases of maladministration, to the extent that the proposals that I am announcing today will not fully compensate them already.
I have already taken steps to prevent this problem from happening again. As I told the House in March, I am reorganising the Department of Social Security so that it can better serve its key customer groups. I am bringing together policy and operational responsibility into a single organisation dedicated to pensioners. As part of that process, we have already tightened up the procedures for checking leaflets and guidance.
I want to ensure that, in future, people are told about changes in pension policy, so that they can plan for their retirement in full knowledge of their position. That is why, next year, we will begin to send out combined pension statements, giving people more comprehensive information on their entitlements.
The proposals that I am making today will clear up the mess that we inherited. Everybody who has reached state pension age in October 2002 will be unaffected by the new rules. My announcement today will remove any worry for pensioners about providing for their spouse. We are giving those men and women who are more than 10 years away from state pension age the proper notice to which they are entitled. We will phase in the changes for those within 10 years of their state pension age.
Owing to the timing of the changes, the costs will be comparable to the protected rights scheme over the next 3 years. The reforms that I have announced today will cost an extra £1.5 billion over 10 years and an extra £4 billion over 50 years.
This problem should have been sorted out 14 years ago. What happened in the years after 1986 was a series of colossal blunders. That was inexcusable and caused untold distress to millions of people. The then Conservative Government have to take full responsibility for what has happened. We are now taking the responsibility for sorting it out. I commend this statement to the House.
Mr. David Willetts (Havant): Let me begin by making it absolutely clear that we accept that it took far too long to give people the advice that they needed on changes to SERPS for widows. We accept the criticism of maladministration in the reports by the National Audit Office, the Government ombudsman, the Public Accounts Committee and, most recently, by the Public
Administration Committee. Yes, we very much regret the maladministration that occurred. However, we must now question the Secretary of State on the extraordinary about-turn that he has announced. Nine months ago, he announced to the House a scheme that we warned at the time was unworkable. His about-turn is confirmation that his complicated scheme was indeed unworkable. Today's statement is not a triumph for the Secretary--[Interruption.]
Mr. Speaker: Order. The Minister was heard in silence. The hon. Gentleman should not be shouted at.
Mr. Willetts: The statement today is a triumph and I pay tribute in particular to the Public Administration Committee and its Chairman, the hon. Member for Cannock Chase (Tony Wright), because it was his report above all that made it clear that the Government's previous proposals were unworkable.
Along with his statement, the right hon. Gentleman has produced a report from the Social Security Advisory Committee on how the compensation scheme should work for what he calls a small number of cases in which there is clear evidence of maladministration. Of course, those are the cases that were to be the central feature of the scheme announced in March. Will the right hon. Gentleman stand by the assurances that we have had from Ministers about the way in which compensation will operate in such cases? His colleague, the Minister in another place, said:
- if someone asserted that he had received that misleading advice, I suspect it may well be the case that the Government would have to prove that he had not, rather than the contrary, because there would be no evidence to counterbalance it.--[Official Report, House of Lords, 6 July 1999; Vol. 603, c. 847.]
On the costs of the proposal, the right hon. Gentleman referred to £1.5 billion. I want to be absolutely clear what he is talking about. We were told that the previous compensation scheme would cost £8.2 billion. Presumably his extra costs are on top of that, so are we talking of a scheme that will cost £12.2 billion? We would be grateful for his confirmation of that figure.
Finally, on the crucial point about the maladministration that occurred, we accept that it occurred and very much regret what happened. Much of it happened under our watch--but I would draw the attention of the Secretary of State to the devastating report of the Public Administration Committee, which referred not to maladministration but to something far more serious. It referred to "conscious ministerial decision". Paragraph 17 of the report refers to the then permanent secretary at the Department, Rachel Lomax, who referred to decisions by Ministers in 1999 in the following terms:
- Rachel Lomax told us that the failure fully to inform the public at this stage--
- was a conscious ministerial decision, because possible options were being considered for the Welfare Reform and Pensions Bill, but with hindsight this was a mistake.
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