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Mr. Darling: I acknowledge that the hon. Member for Havant (Mr. Willetts) has pleaded guilty on behalf of the
Conservative party to gross negligence for a long period after the rules were passed. He then went on to ask how much the scheme would cost. I will explain. The total cost, over a 50-year period, is about £12 billion. That is the price that the country has to pay for the mess that the Tories left us. The figures that I gave him were that the extra, over and above the inherited SERPS scheme, for the scheme that I have announced today will be £1.5 billion over 10 years and £4 billion over the 50 years. The total cost is therefore £8 billion over a 10-year period and £12 billion over the 50-year period. That is how much we have to pay to put things right.I apologise to the hon. Gentleman. I thought that I had sent him a copy of my statement, but his response suggests that he did not receive it. He seems to be under the impression that we are discussing a proposal made by the advisory committee. That is not the case. We suggest that, to put matters right, we must ensure that all existing pensioners--that is, all the people over the state pension age as of 2002--should be exempted from the scheme, because they can do nothing about their arrangements.
We are also doing what the previous Government should have done. We are introducing transitional arrangements for people nearing retirement and making sure that the scheme affects only people who have long enough to start to make the appropriate arrangements. We are doing now what the Conservative Government should have done 14 years ago, and which they did not do. That is an indictment of the previous Government. This issue and the mis-selling of pensions show that they had scant regard for pensioners. They spent little time listening to what pensioners wanted.
Mr. Frank Field (Birkenhead): I very much welcome my right hon. Friend's statement. People will not be slow to contrast the clearness of his statement with the misinformation that was given by the Opposition.
May I concentrate my remarks on the people who are 10 years from retirement? Does my right hon. Friend recall that, in the House not two weeks ago, my right hon. Friend the Minister of State, Department of Social Security, who is responsible for pensions, said that all people had to do was tell the Department that they had not been informed of the change and that taxpayers would meet the Bill? Is it not true that, despite the generosity and creativeness of today's statement, some people who are 10 years from retirement are in a worse position today than they were a couple of weeks ago? What would it have cost to pay the SERPS entitlement fully to those 10 years from retirement? In effect, that would have created a clean slate, because everyone would have known that they would have to cover the period from 10 years hence, but no one within 10 years of retirement would have suffered.
Mr. Darling: My right hon. Friend has raised a point that enables me to return to one that I perhaps did not cover fully enough when I replied to the hon. Member for Havant. I refer to the scheme that the Department has run for many years in respect of maladministration. My announcement today means that most people who have been in touch with the Department will be exempted. The House may be interested to know that, of the 20,000-odd people who got in touch with the Department after my announcement in March, 70 per cent. were over the age
of 65. Their position is now taken care of. In fact, only 3 per cent. were under the age of 50, and they are clearly more than 10 years away from retirement.My right hon. Friend is interested in the transitional arrangements, and we are making sure that the policy is introduced gradually for people with 10 years or less to retirement. Those who are very close to retirement will receive 90 per cent. of their entitlement and those further away from retirement will receive a lesser entitlement that goes down to 50 per cent. That is a lot better than the original proposal for inherited SERPS. Under that, although it was for the Department to disprove claims, it was clear to me that there was a potential for maladministration and injustice. It was very difficult to prove exactly what had happened and who had said what to anybody else. However, we maintain the scheme to which the hon. Member for Havant referred. When someone has manifestly been misled--for example, a person may have a letter from the Benefits Agency that tells him he would have an entitlement when he does not--he will be entitled to redress in the normal way.
I say to my right hon. Friend that the scheme that we now propose is much fairer. First, all pensioners are exempted and, secondly, we get away from the obvious difficulties that one faces when someone could have come to the Department saying that he remembers seeing a leaflet in the dentist. Even though he does not exactly remember where or when, he may still have asked for compensation. That would not have been a proper way of dealing with the problem. The scheme that we are introducing today is fairer, it is just and, above all, it is workable.
Mr. Steve Webb (Northavon): When I issued a statement to the press this morning stating that
- The only decent thing to do would be for the Government to cancel the cut to widows pensions for those who've already reached pension age,
We unreservedly and enthusiastically welcome the Secretary of State's announcement. We are prepared to ignore the fact that in April, when we tabled an amendment to the Child Support, Pensions and Social Security Bill proposing an almost identical scheme, we were told that the cost would be enormous and that the proposal was not practical. The Secretary of State should have announced such a scheme a while ago, but we unreservedly welcome the fact that he announced it today.
I shall ask one question of detail. The Secretary of State has set up a tapering system for those close to pension age. On what basis has that phasing been calculated? Has it been calculated on the basis that people a couple of years from pension age could save a certain amount to top up their pension, so the percentage that they can pass on has been reduced accordingly? Does such a calculation underlie the tapering system?
That is a point of detail. I stress that the statement is enormously welcome and we welcome it unreservedly.
Mr. Darling: I must not be churlish, and I am grateful to the hon. Gentleman for his welcome for our proposals. His press release has escaped me so far, so I can honestly
say that no matter what he thinks, it did not have too much influence on what I had already decided. Nevertheless, I am grateful to him.The hon. Gentleman asked about the sliding scale. There are two points to be made. First, I am writing today to all Members of the House setting out the scheme in a little more detail, including the sliding scale. It does not have an actuarial basis. It is a genuine attempt to ensure that as people approach retirement, they have enough time to make provision, so that we avoid one of the problems of the Conservative scheme, if I can call it that--the cliff edge effect: someone who died on 31 March was all right, but someone who died the next day was not. [Laughter.] I am sure that the House gets the drift. It depends, I suppose, on what view one takes of the afterlife. Perhaps I should more correctly say that I was referring to the position of the widow.
I am grateful to the hon. Member for Northavon (Mr. Webb) for his remarks, and also for the fact that he has abandoned a position that I understood the Liberals to support--a straight 10-year deferral, which of course does not fit the bill. [Interruption.] That was their position.
Tony Wright (Cannock Chase): Even if my right hon. Friend missed the Liberal Democrat press release this morning, I am glad that he did not miss the report issued by the Select Committee on Public Administration a few days ago. This is an extraordinary story. It is a complete political failure and administrative shambles, and to put it right the Government must now put more money into the pot. It is a dreadful failure on the part of the previous Government.
What my right hon. Friend announced today is an act of justice. All SERPS pensioners will be grateful for it. I thank him for it. Although there is general agreement with the essence of his announcement, hon. Members are asking specific questions. He was going to consult on the details of the previous scheme. Will he consult on the details of the scheme that he announced today?
Mr. Darling: On the last point, the regulations that will enable us to operate the scheme will be sent to the Social Security Advisory Committee and to others for comment. I do not want to mislead people. The Government have decided that this is the course of action that they will follow. The detail is clearly important, but given the time that has elapsed since the problem first arose, and the fact that people need to make arrangements now, I want to get the regulations through the House as quickly as possible, so that the matter is dealt with once and for all.
There are two other points. I did, indeed, see the Select Committee report last week. I am sorry that I could not tell the Committee last week what I announced today. The decision had already been made but it was not possible to announce it.
Finally, I agree with my hon. Friend that when people look back, they will wonder how it was that, for almost 10 years after the law had been changed, the Tories did not tell people what had happened. Perhaps we should not be surprised, in view of the other things that they did
while in office. It is an indictment of that Government that they caused so much misery and that it will cost quite a bit to sort the matter out.
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