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Standing Committee Debates
Pensions Bill

Pensions Bill

Column Number: 651

Standing Committee B

Tuesday 20 April 2004


[Mr. Win Griffiths in the Chair]

Pensions Bill

Clause 172

Annual reports to Secretary of State

Question proposed [this day], That the clause stand part of the Bill.

2.30 pm

Question again proposed.

Question put and agreed to.

Clause 172 ordered to stand part of the Bill.

Clause 173

Reference of reviewable matter to

the PPF Ombudsman

Mr. George Osborne: I beg to move amendment No. 518, in

    clause 173, page 110, line 34, at end insert

    'taking into account but not being limited to remedies available by way of legal action in the civil courts'.

I welcome you to the Chair, Mr. Griffiths. If I am a bit sluggish this afternoon, it is because I have been to the North West Fine Foods fair. I am not sure whether there are other north-western MPs in the Room—by the look of it, there are not—but we were all there enjoying the local produce at lunch.

Amendment No. 518 is small in terms of the number of words that it would insert in clause 173, but it is trying to open a much bigger issue. We could have tried to table amendments to the powers of the pensions ombudsman, but in an attempt to provoke the same debate we tabled amendments on the changes to the powers of the PPF ombudsman. The amendment would insert a provision that the ombudsman should take

    ''into account but not''


    ''limited to remedies available by way of legal action in the civil courts.''

We were talking this morning about the Swedish origins of ombudsmen, and why they were originally set up. Public sector ombudsmen—they are not called ombudspeople—almost by definition, deal with issues that are not capable of being remedied by legal action. That is something with which we constituency Members of Parliament are familiar, because we are asked, for example, to refer cases to the parliamentary ombudsman. The legislation that sets up public sector ombudsmen generally provides that they should not accept a complaint for investigation if it is about a matter for which a remedy is available by way of legal proceedings.

Generally, public sector ombudsmen have discretion to override that restriction if they think

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the circumstances demand. We are familiar with that in our constituency surgeries. We have to be clear that people have exhausted the legal remedies, and are not at the same time pursuing a legal recourse, before we refer them to an ombudsman. Unless the discretion to override the restriction has been exercised, public sector ombudsmen confine themselves to cases in which the action that is complained of is not unlawful, but nevertheless allegedly causes injustice as a result of maladministration.

When ombudsmen were originally set up, or when the concept was introduced in this country, it was done in an attempt to give the citizen a fairly straightforward, simple means of attempting to redress a grievance without necessarily having to go to court or prove that something unlawful had happened.

The jurisdiction of the pensions ombudsman includes the power for him to investigate complaints of injustice caused by maladministration. However, unlike other public sector ombudsmen, far from discouraging his involvement with complaints that could be subject to legal proceedings, his jurisdiction expressly confers on him the ability to determine disputes of law and fact. His determinations are subject to a right of appeal to the High Court on a point of law.

We raised this issue because in a number of judgments in the High Court, judges have expressed unhappiness that the ombudsman is providing remedies although the Court thinks that no unlawful act has taken place. The view of the pensions ombudsman is that that is precisely what we as parliamentarians, and our predecessors, intended when we established ombudsmen to deal with disputes about the management or administration of pension schemes. However, the courts have started to kick up, and complain that the ombudsman is trespassing into their territory.

In addition to being unhappy if the pensions ombudsman comes up with a different remedy, and in different circumstances, to what the courts would provide, judges, in various judgments, have also stated that the amount of financial compensation that the pensions ombudsman has power to award to redress injustice caused by maladministration should be limited. Judges have suggested that such awards should be between £200 and £1,000. However, the pensions ombudsman, for one, considers that the amount of any award should reflect the injustice that has been caused and not be subject to an arbitrary limit imposed without statutory authorisation.

The Pension Schemes Act 1993, to which we shall be referring when we reach later amendments, provides that the pensions ombudsman may direct any person responsible for the management of the scheme to take such steps as he may specify. It might be thought that Parliament had clearly already spelt out in the Act and in the debates at the time that such a provision allows the ombudsman to provide the remedies, even if the courts, acting in accordance with precedents, do not, and to provide remedies for maladministration even if the action regarded as maladministration would not be regarded by the

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courts as unlawful. At least one judge has commented that if Parliament had intended such a result, the legislation would have spelt that out more clearly, and that it would therefore be helpful if Parliament underlined the judge's view.

In other words, the legal profession seems to be questioning the role of the pensions ombudsman and his legal powers. Because we were discussing a new ombudsman—although this would be doubly relevant if that were to be the same person—I thought that it was worth having a debate, and making it clear that both sides of the Committee do want the ombudsman to have powers independent of the court, and to be able to investigate cases of maladministration even if nothing unlawful has happened, and to trespass somewhat into the area of the court's jurisdiction. If judges want us to spell that out for them, let us do that, so that there can be no dispute in court about the fact that we, as parliamentarians, intend to provide remedies for citizens through the ombudsman process. That is what my amendment would do. I do not pretend that it is perfect or that it would necessarily achieve what I hoped that it would, although it was drafted with the help of some advice from the industry.

I want us, as a Committee, to make it clear that we expect the ombudsman to provide an alternative route for people and to deal with maladministration. Moreover, there should not be arbitrary limits on the sort of remedy that he can provide. For example, they should not be limited to fines ranging from £200 to £1,000, as one judge recommended. We often find in Parliament that what we had hoped with good intentions to achieve is undermined or reinterpreted by the courts, which say that we did not spell out what we were trying to achieve clearly enough at the time. The point of the amendment is to make matters clear, and I shall be interested to hear the Minister's response to it.

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond): I received a letter on such matters from the Occupational Pensioners Alliance on 26 March 2004, as did the hon. Member for Tatton (Mr. Osborne), and he has read into the record many of the important points that it made. The alliance is arguing for a tidying-up exercise to ensure consistency in the way in which the ombudsman and the courts operate in such matters.

Clause 173(5)(a) may allow regulations to be made enabling the pension protection fund ombudsman to direct the board to pay compensation in relation to a reviewable matter. Therefore, when, for example, PPF compensation has been underpaid, regulations may provide that the PPF ombudsman could direct the board to reimburse the amount underpaid, and may also include a requirement to pay interest.

Subsection (5), to which the amendment relates, refers back to the general regulation-making provision under clause 173(1), which requires regulations to make provision for the PPF ombudsman to refer a reviewable matter back to the PPF board with directions to carry out his decision. The amendment tabled by the hon. Member for Tatton would require

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the PPF ombudsman to take into account remedies provided by legal action in the civil courts.

The intention, which seems straightforward and sensible, is that compensation payments would be in line with the remedies that could be achieved through the civil courts. Although I appreciate the intention behind that approach, matters that can be referred to the PPF ombudsman do not include private law disputes. The only role for the courts is in relation to judicial review or on appeal on a point of law from the PPF ombudsman. The intention is to ensure that there is an adequate statutory remedy for any infringement of rights. The regulation-making powers under clause 173 will provide the sort of remedies for which the Occupational Pensioners Alliance and the hon. Member for Tatton argue. With that reassurance, I hope that the hon. Gentleman will feel able to withdraw the amendment.

Mr. Osborne: I accept that we are talking about the PPF ombudsman, but I was trying to create a slightly broader debate involving the pensions ombudsman. I wanted the Under-Secretary to spell out that the Committee, in approving the ombudsman, is making it clear to the courts that we see a distinct role for ombudsmen in such circumstances. We will talk about amendments relating to the powers of the pensions ombudsman later. We do not expect the courts continually to try to limit ombudsmen's powers or to complain that ombudsmen are straying on to their territory. The ombudsman service—whether we are talking about the pensions ombudsman, the PPF ombudsman or those with whom we deal, such as the parliamentary ombudsman—is very useful to members of the public who do not want to get heavily drawn into litigation. The intention of the amendment was to make that clear. If the Minister assures me about that, I will be happy to withdraw my amendment.


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