Scrooge lives on – Government must compensate

by Dr. Ros Altmann

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Pensioners may be left destitute for yet another Christmas even after official report shows way for immediate rescue

The Prime Minister and Chancellor are apparently preventing the DWP from rescuing the pensioners whose company schemes collapsed since 1997.  Peter Hain and Mike O'Brien have made clear that they want this scandal to be sorted before Christmas.  The victims were promised that the latest of a long line of reports on their situation would be published by the end of November.  The report is ready, but the DWP has not published it.  It seems Numbers 10 and 11 will not let them offer the victims the fair settlement that the Review has found to be easily affordable.  How can any responsible politician be so heartless as to refuse to end the suffering of these innocent victims, who have had every single independent verdict in their favour and have waited so many years for a proper rescue.  The Parliamentary Ombudsman, Public Administration Select Committee, UK High Court Judicial Review and European Court of Justice have all laid the  blame for this situation on the Government and said that the Financial Assistance Scheme (the scheme set up in 2004 to rescue the victims) is inadequate.  In fact, thousands of those already past pension age are still waiting for payment.  This is the worst pension scandal the UK has ever seen – far worse than Maxwell – one that was created and prolonged by this Government.  It represents the most shameful, cruel betrayal of hard-working, decent citizens. 

After the instant rescue of Northern Rock savers, at a potential cost of billions of pounds to the taxpayer, the continued delay in settling the pension wind-ups scandal is totally inexcusable.  Peter Hain has told one of his constituents, a former member of the Dexion pension scheme, that the DWP Review has found there is certainly sufficient money to offer all the victims at least as much as is paid by the Pension Protection Fund 'at little or no extra cost to the taxpayer'.  He also suggested that the pension campaigners should keep up their pressure on the Treasury and Prime Minister, because the DWP Ministers want to settle this situation immediately.  Peter Hain and Mike O'Brien want to behave decently and it beggars belief that their Cabinet colleagues are preventing them from doing so.

Many of the victims are desperately ill, saved for decades in employer schemes which the Government assured them were safe and protected by the law.  They need their pensions now, many are past retirement age and either still working despite failing health, or have become too unwell to keep working.  Having waited for years for justice, having been promised that the DWP official review would be published by end-November and would explain how the Financial Assistance Scheme could be improved to finally pay proper pension restoration to all the victims of company pension scheme failures, there is still no end in sight.

The public rely on Government information and they are entitled to be reassured that leaflets are accurate and comprehensive. 

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.

Political responsibility must lie with the Government in office at the time.  I accept responsibility for anything that happens during the term of this Labour Government, including the time I have been Secretary of State.
We shall also provide redress for those people who were wrongly informed and who, had they known the true position, might have made different arrangements.
We also have a responsibility to provide clear information to the public. We have already tightened up the procedures for checking leaflets and guidance, but we need to do more. The public rely on Government information and they are entitled to be reassured that leaflets are accurate and comprehensive.
Mr. Darling: We do need to take steps to make sure that information that is given to the public and any policy changes are communicated effectively and in a way that people can understand. We are doing that and have now got the necessary investment to replace antiquated IT systems so as to produce the service that people want. It is important that Governments should be honest about what they do and, if they make changes to pensions, they should tell the public. Whatever else they do, they should not put people in a position in which they do not have adequate pension cover.
March 2002:  DWP legal advice confirmed earlier advice which said ‘where we choose to give information, it is incumbent on us to ensure it is accurate, complete and can be relied on’

18 March 2002:  Malcolm Wicks to Colin Pickthall MPs question on how Government would stop wind-ups and increase member protection, Wicks said ‘the legislation that is in place is to ensure that the pension rights that individuals have already built up in schemes are protected’.

October 2002:  DWP evidence to Parliamentary Select committee ‘The Department is actively promoting a pension education publicity campaign that is supported by a range of simple, impartial guides.’

15 March 2000
Inherited SERPS
3.59 pm

The giving of wrong information by a Department is inexcusable. There is a clear responsibility to ensure that the information that Departments provide is accurate and complete. In this case, it was not. Furthermore, even the serious implications of giving the wrong information were not appreciated by the Department. That should never have happened.
We also have a responsibility to provide clear information to the public. We have already tightened up the procedures for checking leaflets and guidance, but we need to do more. The public rely on Government information and they are entitled to be reassured that leaflets are accurate and comprehensive.
29 Nov 2000 : Column 966

Inherited SERPS
3.32 pm

The Secretary of State for Social Security (Mr. Alistair Darling): …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.
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--
in other words, after the problem had been apparent for more than a year--

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.
Mr. Darling: We do need to take steps to make sure that information that is given to the public and any policy changes are communicated effectively and in a way that people can understand. We are doing that and have now got the necessary investment to replace antiquated IT systems so as to produce the service that people want. It is important that Governments should be honest about what they do and, if they make changes to pensions, they should tell the public. Whatever else they do, they should not put people in a position in which they do not have adequate pension cover. If we had not made changes when we came to office, nearly a third of working people heading for retirement would be dependent on benefit.
As a result of changes we made in the long term and the short term, we are tackling pensioner poverty and ensuring that more pensioners will be able to retire on a decent income. My announcement today means that at long last there is justice for the millions of pensioners who lost out very badly under the Tories.

Political responsibility must lie with the Government in office at the time. I accept responsibility for anything that happens during the term of this Labour Government, including the time I have been Secretary of State. However, I also accept responsibility for putting the situation right. The situation was a scandal--it has cost billions of pounds and millions of pensioners could have lost out. We are putting it right and are determined to ensure that it does not happen again. The previous Government could never have done that--they would not face up to the problems they caused, they deliberately failed, year after year, to tell people what was happening and they did absolutely nothing about the situation.
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