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[The page and line numbers refer to HL Bill 54 as first printed for the Lords.]

17Clause 38, page 34, line 22, at end insert-
(""(4B) The regulations shall be based on the presumption that claimants have received incorrect or incomplete information unless the Secretary of State provides proof that the information the claimant received was correct and complete."")
The Commons disagreed to this amendment for the following reason:
17ABecause it would involve charges on public funds, and the Commons do not offer any further reason, trusting that this reason may be deemed sufficient.

Baroness Hollis of Heigham: My Lords, I beg to move that the House do not insist on their Amendment No. 17 to which the Commons have disagreed for their reason numbered 17A.

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Your Lordships will recall that the Government announced on 15th March this year that they would set up a scheme called the inherited SERPS scheme to provide redress to those individuals who were given incomplete or incorrect advice about widows' benefits in SERPS and had then relied on that advice. The amendment inserted in the Bill by your Lordships would extend the protection offered by the Government to people who took no action at all to obtain information. That could end up costing the same as reversing the policy altogether--some £23 billion by 2050. In other words, the original amendment makes the scheme pointless.

Not surprisingly, the other place rejected such a potentially large financial commitment. We have said that we are prepared to accept the responsibility that we inherited to put right the inherited SERPS mess. What we cannot agree to is to hand out huge amounts of taxpayers' money to people who were never misinformed and who might well have assumed that, as with occupational pension schemes, widows would receive only half of their benefit.

Since this House debated the matter, we have been working up the detail of the scheme--I pay tribute to Age Concern as represented by the noble Baroness, Lady Greengross--and we have been consulting widely. As a result, we have already clarified in the Bill the eligibility criteria for the inherited SERPS scheme.

The original legislation provides that the scheme may deal with claims made by people who, having received incomplete or incorrect information about the SERPS reduction, either failed to take any steps that they would have taken or took any steps that they would not have taken had they received correct information. The ombudsman pointed out that, 15 years down the road, it would be difficult for many people to demonstrate that they would have taken a particular course of action, or not, had they been correctly advised. The Bill will now ensure that the scheme can provide redress for people who, because they relied on the wrong information, were denied the opportunity to consider taking relevant steps to protect the position of their spouses.

As a further step, the Social Security Advisory Committee issued a consultation paper on 14th July. We shall look very carefully at the responses, which are due in by 25th August. When Parliament comes back in the autumn we should have some draft regulations on which the Social Security and Public Administration Select Committees can comment. We want to be certain that the regulations which govern the scheme will enable those who were misled by incorrect or incomplete information to be protected, but we cannot include those who were never misinformed--certainly not at a cost of £23 billion. I therefore ask noble Lords not to insist that their amendment forms part of the Bill.

Moved, That the House do not insist on their Amendment No. 17 to which the Commons have disagreed for the reason numbered 17A.--(Baroness Hollis of Heigham.)

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3.15 p.m.

Lord Higgins: My Lords, we have debated this matter on a large number of occasions. Certainly, the cost to which the Minister referred is extremely important. No doubt that matter has influenced those in another place. I was slightly surprised by one comment of the Minister at the beginning of her remarks. She suggested that if the amendment was accepted the scheme, which throughout these proceedings we have welcomed, would potentially have no effect and the cost would be the same as if there were no scheme.

This amendment switches the burden of proof, which the Ombudsman has said should happen and the Government have accepted. However, that covers only the first of two hurdles to be cleared by an individual who makes a claim. First, the person must show that (in the words of the amendment) he "received incorrect or incomplete information". If that is taken as read the individual must still be able to demonstrate that he has suffered financially as a result of failing to take action because of that incorrect or incomplete information.

Consequently, it does not seem to me--no doubt the Minister will explain it if I have misunderstood the position--that acceptance of the fact that people have cleared the first hurdle necessarily means that they will clear both, which must happen for the scheme to incur any cost. Effectively, the amendment seeks to implement the recommendation of the Ombudsman which the Government say they accept. I do not believe that it does any more than that. If that results in other people clearing the second hurdle public expenditure will be incurred.

In another place Mr Rooker quoted very large figures of the kind referred to today by the noble Baroness. The Minister of State said:

    "The lower estimate of doing so is £8 billion, but we have no idea of the number of claimants, and the upper estimate ... is £23 billion".--[Official Report, Commons, 24/7/00; col. 809.]

That cost is spread over a period and will not be incurred in one, two or even three years.

We all accept that this is probably the worst administrative financial disaster that has ever occurred, or certainly for many years. It appears that misleading leaflets were issued. It is common ground that if someone can show, on the basis of very relaxed standards of proof--I accept what the Government have said as to that--that he received misleading information, the position is covered. But many people believed that they would receive the full pension at the time they first heard anything about this matter. If in the mean time they received no information at all to say that the position had changed it is reasonable to suppose that they took a particular course of action which, had they known about the change, they would not have taken.

As far as concerns the cost estimate, I am not clear about the extent to which it turns on the point that I have just made; namely, whether the Government claim that the increase in cost covers those cases where people have received no information about the

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change--that is the higher figure--or it applies only to those individuals who can demonstrate that they were misinformed. Clearly, we need a breakdown of the estimate of £8 billion to £23 billion, which by any standards reflects a large margin of error. Some calculation of the cost must have been made; otherwise, the Government would simply say that they do not know.

If one looks at the recent spending review, that part which is devoted to the Department of Social Security--I pointed out earlier that the relevant section appears in a different place from that indicated in the contents page--refers only to the building of a new IT system and the ability of people involved in social security to telephone for answers to their problems and so on. However, in relation to this matter, which I presume is a development worth mentioning, I see no reference to the potential cost and what the Government are doing about it. Noble Lords will be assisted if the Minister can clarify the position before a final view is taken on this matter.

This matter has dragged on for nearly two years. In another place Mr Rooker said that the Government still had not managed to put any flesh on the bones of the scheme. It is true that further consultations have taken place, but this matter has been going on for a long while. It would be helpful to have an update. Perhaps the Minister can tell us when we are likely to have a scheme which is better formulated than the present one and we may reach the stage when people can expect to make applications.

Lord Goodhart: My Lords, I congratulate the Department of Social Security on producing a major Bill with fewer than 100 government amendments to it and a list of amendments in your Lordships' House which is considerably smaller than the Bill itself, contrary to what appears to be the usual experience. Given that the other place is relying on privilege in this matter, there is nothing that we can do. Therefore, I have nothing further to add to the observations of the noble Lord, Lord Higgins.

Baroness Greengross: My Lords, this is the last opportunity open to noble Lords to debate the inherited SERPS scandal--or severe problem--as part of this Bill. Just as it formed part of the Welfare Reform Act 1999, largely through the redoubtable efforts of my noble friend Lord Rix and, as the Minister kindly acknowledged, the work of Age Concern, I am certain that the matter will return next year when we debate the regulations. It is about that that I should like to speak for a moment.

I understand, but am obviously disappointed, that the Government could not at Report stage accept the amendment tabled by the noble Lord, Lord Higgins, nor my own. However, I was reassured that genuine consultation would occur between now and the introduction of the promised regulations.

I am already aware of the work begun by the Social Security Advisory Committee on 19th July. However, I still do not believe that matters are as clear as they should be. From briefings with Age Concern I am

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aware that many of those affected are not very happy with the prospect of the protected rights scheme. One wonders how many of those who are still unaware would be happy with it if they did know about it--probably not a great number. We now must work with the Minister to ensure that things turn out as well as possible for the people affected.

There is one thing to help us. Thanks to the noble Lord, Lord Rix, Section 52 of the Welfare Reform Act 1999 is now our fail-safe mechanism. That Act provides that if the Government do not produce regulations by October 2002 the cut in SERPS will not take place. Thus, I hope the Minister can meet the expectation she raised on Report to my concern and that of the noble Lord, Lord Rix, that the regulations will be genuinely consulted on, or, if we are unhappy with them, that this House and Members in another place will use their power to reject the regulations. For once the power only to accept or reject is useful to us, because rejecting could be seen by some as better than accepting in entirety.

Finally, I ask the Minister when we can expect the regulations to be debated by this House. Will it be during the next parliamentary Session?

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