HC Deb 03 November 1999 vol 337 cc363-75

(".—(1) The Secretary to State shall by regulations make provision for one or more of the following—

  1. (a) to substitute, in any provision of the Contributions and Benefits Act which relates to additional pension for widows or widowers, for any sum payable by way of such pension as is derived from the contributions of a deceased spouse, such higher sum as may be prescribed;
  2. (b) to substitute, in any such provision, for any prescribed reference to the year 2000, a reference to such later year as may be prescribed;
  3. (c) to establish a scheme to compensate persons who are widowed after 5th April 2000 and who suffered loss as a result of any action or failure to act in reliance on incorrect information received from a Government department with respect to the reduction in the additional pension payable to them as a result of the enactment of the former section 19 of the Social Security Act 1986.

(2) If regulations under subsection (1) are not in force on 5th April 2000, then until such time as such regulations are in force, the provisions of the Contributions and Benefits Act to which paragraph (a) of that subsection apply shall continue to have effect as in force on that date.

(3) No regulations shall be made under subsection (1) unless a draft of the regulations has been laid before, and approved by a resolution of, each House of Parliament.")

Mr. Rooker

I beg to move, That this House disagrees with the Lords in the said amendment.

Mr. Deputy Speaker

With this, it will be convenient to take the Government amendment in lieu thereof, amendment (a) to the amendment in lieu thereof, and the consequential Government amendment.

Mr. Rooker

This part of the Bill deals with inherited SERPS and the mis-selling by the previous Government of the changes to the scheme that were legislated for many years ago.

In 1986 the previous Government made substantial changes to the state earnings-related pension scheme and gave a considerable period of notice before the change was to be made—it is due in April next year. That notice was intended to allow people who might be affected plenty of time to alter their financial arrangements. The then Government promised wide publicity, but it was never delivered.

As in other cases, Ministers in the present Government are not allowed to see the papers of the previous Government, but I would give my right arm—metaphorically and politically—to see those papers, because they must have had some discussions about deliberately—

Mr. Pickles

rose—

Mr. Rooker

I have not made the allegation yet, but I shall give way.

Mr. Pickles

Perhaps I can anticipate the Minister. Why was the Benefits Agency still giving out duff information on 14 April this year?

Mr. Rooker

I shall come to that. I am simply saying that there must have been a policy of not carrying through the promised publicity campaign. On 25 February 1986, the then Minister of State, Department of Social Security, our former colleague Tony Newton, now in the other place, said: We have every intention of mounting a major publicity campaign to herald the pension changes contained in the present Bill, should it become an Act, as we expect that it will."—[Official Report, Standing Committee B, 25 February 1986; c. 451.] Two days later, on 27 February 1986, the then Parliamentary Under-Secretary of State for Social Security, our colleague the right hon. Member for Huntingdon (Mr. Major), said: The provision diminishing the amount of SERPS which may be inherited from the year 2000 by a surviving spouse to half of the deceased's entitlement instead of, as at present, the whole sum, corrects what has widely been felt as an over-generous provision indeed. I point out to the hon. Lady that because of the projected position that exists until the year 2000, people will have plenty of time and ample warning. There will be no sudden, overnight, dramatic change in their position and they will have plenty of time in which to seek to make major alternative provision for survivors if they wish."—[Official Report, Standing Committee B, 27 February 1986; c. 463.] The previous Government were legislating well in advance, in 1986. Similarly, changes to the retirement age for men and women over 10 years will be phased in from 2010 to 2020. It was right to give plenty of warning, but people have to be told.

7.45 pm

We cannot hide behind the fact that we live in a parliamentary democracy and say that no decisions here are made behind closed doors and people should take account of what happens in Parliament. The press stopped reporting what happens here years ago. There was no great beanfeast over the change. It is regretted that no publicity campaign ever took place, to the extent that, as the hon. Member for Brentwood and Ongar (Mr. Pickles) rightly said, earlier this year the Benefits Agency was still giving out incorrect information. The Government have a responsibility to put right the difficulties. We are responsible for only part of the delay. We could have done it in the first year, but we did not. We could have done it in the second year, but we did not. We are certainly dealing with it before our third anniversary.

Mr. Paul Burstow (Sutton and Cheam)

Have the Government commissioned an audit to ascertain whether there are any other changes to regulations or legislation that have not been publicised which could cause similar problems?

Mr. Rooker

I understand that Ministers did that long before I arrived at the Department. It is a frequent problem. At the Ministry of Agriculture, Fisheries and Food I found little matters hidden away that had been decided a long time ago but which suddenly came up and bit my ankles without warning. We are not aware of anything else in the Department remotely on the scale of this problem. I shall make clear the amounts of money involved.

I admit that wrong information was still being given out at the beginning of this year, but as soon as we knew, we took immediate steps to ensure that Benefits Agency staff were able to provide correct advice. We have made a full check on the accuracy of all our leaflets. When I go to benefit offices—I have not done so as often as I would like in the past few weeks, but I have been to a few, not all in my region—I make a point of looking at the leaflets on display to ensure that information on the age change for retirement, particularly as it affects women, is on display.

The Government have been pressed at every stage of the Bill to resolve the issue from next year. Preventing the problem in April 2000 requires a change in primary legislation. This is our opportunity. Individuals who have acted to their detriment as a result of bad advice would have a reasonable case for redress in the courts. Some hon. Members have complained to the Parliamentary Commissioner about the issue. I have answered many letters from Members of Parliament about it during my three months at the Department. I do not remember anyone raising the case with me as a constituency Member, so I have not had to write a letter to myself—but that day may come.

Large numbers of people who could be affected are already pensioners. We do not want to leave them with the worry of seeking legal redress. That would not be good government anyway. A range of solutions have been suggested during the passage of the Bill. The scale of the likely cost is well known. We have answered parliamentary questions on that. One option put to us was to delay the whole thing for 10 years. That would cost about £5.5 billion, plus about £1 billion a year for some time following that, because it would not get us out of the whole difficulty. That burden would be borne by today's contributors because of the nature of SERPS.

We have explored all the options thoroughly. During my 13 weeks at the Department I have been involved in more meetings and discussions on this issue than on any other single subject. That is partly because of the timetable that we are up against. We have tried to find a precise solution to put in the Bill. We have not been able to do that, for reasons that I shall explain. That is why we have the amendment.

We do not intend to overturn the policy by changing legislation retrospectively. Before anyone reminds me, I know that we opposed the change at the time, but it is not sensible to get into that debate. Millions of people out there are worried about changes in SERPS and what is coming next April, and we need to reassure them.

The change will bring the state provision clearly into line with private pension schemes. In the Green Paper last year, we made clear that we wanted to reverse the current position, in which 60 per cent. of spending on pensions is state expenditure and 40 per cent. is private. It is our long-term policy to reverse that over 50 years. We cannot do that by sitting back and waiting for things to happen.

The policy simplifies one element of people's decision about which pension option to choose. However, dealing with the mess we have been landed with is not straightforward, and we do not want to announce a decision until we are absolutely sure. We will make an announcement as soon as possible. I cannot say when, but by implication, before next April would be our intention.

The amendment says that if we have not come up with a solution of either a delay or a protected rights scheme, the trigger is in the Bill to stop the change occurring next April, so that the situation will not arise.

Mr. Pickles

The Minister is being most reasonable, and I am not saying this to be difficult. However, the Minister's noble Friend Baroness Hollis said that the Government would make an announcement before the end of deliberations. Also—and with great respect—I must remind the Minister that he said two weeks ago that the Government would come to a decision within three weeks. He is now saying that this has slipped, perhaps until April. Could he tell us why?

Mr. Rooker

In effect, we are making an announcement with the publication of the amendment. That is not the solution, but it gives us two options. We have not yet come to a conclusion. I realise that the hon. Gentleman is quoting Baroness Hollis, and we are amending Lord Rix's amendment. I pay tribute to Lord Rix for his work and his contribution to the debates in the other place. We owe him our thanks for providing us with a legislative way forward—albeit one that does not provide a solution.

The amendment provides the power to introduce regulations and will allow the Government to do one or more of the following: to vary the percentage rate of inherited SERPS for some or all of the widows and widowers; to postpone the change to 50 per cent. to a specified later date, and I have given an example of the cost if that were to be in 10 years' time; or to run a protected rights scheme. If none of those powers is exercised, the clause will ensure that the 100 per cent. inheritance of SERPS continues to apply after April 2000 until regulations are in force.

It would be untenable to leave people in a situation where regulations could come in overnight, without warning, and we will give a reasonable warning of changes. It would not be in the spirit of good government to say, "In six months' time, there will be new rules." Whatever we do will have to be phased in. If it is a protected rights scheme, it will take a lot of careful planning to ensure that the millions of potential beneficiaries can be dealt with individually, as citizens. We cannot do this on the back of an envelope.

We have lost a decade or more since the legislation was put on the statute book, but it will not be that long again if the amendment and the Bill are passed tonight. The regulations will be subject to the affirmative procedure, and both Houses will have ample opportunity to debate the changes. That may be on the Floor, in Committee or even in the new Chamber.

As Ministers, we will not shy away from explaining the way forward that we choose, as potentially 30 million people—those who have paid national insurance, existing pensioners and people who will not retire for 10 years or so—are involved. Not all of them will be able to claim that they were mis-sold pensions, but that is not the issue. We are dealing with our fellow citizens, and we must be as open as possible.

Mr. Burstow

The Minister is being constructive, and it would be helpful if he could give the House more details. Does he envisage making an announcement before or after the work of the ombudsman?

Mr. Rooker

I cannot give an answer to that. The matter was referred to the Parliamentary Commissioner by right hon. and hon. Members, and we are co-operating. The amendment contains a lot of detail and once we have decided, we will come back and report to the House.

Mr. Jim Cousins (Newcastle upon Tyne, Central)

My hon. Friend is being frank and fair, and all of us accept the Government's real difficulties. Could he indicate whether in whatever scheme he comes up with any route that will require claims for compensation to be made on an individual basis will be as limited as possible?

Mr. Rooker

I am not sure that I caught the thrust of my hon. Friend's question. If we have a protected rights scheme, we will want to ensure that everyone with a rightful claim is able to make it. There will be issues about eligibility, but millions of people who are currently still working might have a say, as might current pensioners.

The handling of this matter in the past was unfortunate and I appreciate the distress that has been caused. I appreciate also the massive media attention, which has come a bit late in the day. If the media had reported the changes over the years, we would not be in this position today. [Interruption.] That is a legitimate point.

We do not require our proceedings to be reported. We know that, years ago, the press and media generally—the BBC included—decided to stop reporting proceedings in this House. Most of those involved—who were probably contracted out, in well-heeled occupational schemes, which is fine—were not bothered about SERPS and national insurance. "That's for the workers," they said. "We are not reporting that."

I am aware, too, that the Liberal Democrats tabled amendments to our new proposal to provide for a 10-year delay. I have set out the cost of that, and such a delay would not catch everyone who may be involved. It catches a large number, of course, but one might need to go beyond 10 years. That is why it has been difficult to arrive at a decision. Whatever we do will have a possible cost of billions of pounds—money that is not planned for in terms of public expenditure, and which must be found by today's taxpayers and today's national insurance contributors.

I therefore hope that the House will give fair wind to the Government amendment in lieu of the Lords amendment.

8 pm

Mr. Pickles

The Minister made a reasoned speech and we will certainly support the Government's amendment in lieu. I recognise the problems involved in finding an ideal solution. The Liberal Democrats' amendment (a) to the Government's amendment in lieu has the potential to cause injustice and fail to catch all the people we would want to catch, and I hope that they will not press it to a vote, because we should give the Government a chance to come up with a final solution, to use the Minister's phrase.

There was a small element of partisanship in what the Minister said. It is about time that someone, from whichever Dispatch Box, said sorry. Some people should accept responsibility for what happened, because there has been considerable injustice. I said in Committee that I accept my share of responsibility.

It matters not a jot that I was chairman of Bradford education committee at the time when the measure went through. We are all responsible, because we clearly came to a view in 1986 that would have a fundamental effect on people's eventual pension, and nothing happened. It is too easy to shrug off that responsibility. Ultimately, such decisions are for the Chamber. It is our job to ensure that Departments do not simply ignore the legislation that we pass.

The Minister was very fair in saying that the Government now accept what they opposed in opposition. It is right to get the provisions into line with occupational pensions. We cannot go back to the position that provisionally exists now. We should ensure that the scheme is generally accepted. It is right to allow considerable time for people to make appropriate decisions according to their needs.

Unfortunately, we completely wasted 16 years. There was no publicity campaign. The present Leader of the House said at the time: If the Government are going to release ample publicity warning people that their pensions and the widows' pensions will be halved, not only will we welcome it, but we shall help the Minister to distribute it."—[Official Report, Standing Committee B, 27 February 1986; c. 471.] That is all very fine, although no one would have expected Labour Opposition Members, or indeed Ministers, to go out on the streets to hand out leaflets; one might reasonably have expected the Department to do it, though.

We have done people a great injustice. People wrote to and telephoned the Benefits Agency and its predecessor for advice and made investment decisions on the basis of the wrong advice that they were given. In Committee, we considered the way in which people contacted the agency. There is a record of the letters but not of the telephone calls. The Minister's predecessor made considerable progress on the quality of proof that people acted on wrong information. What is the Government's current thinking on that?

I learned in Committee that on the very day in January on which a memo was sent out to instruct Benefits Agency officers how to deal with the problem, the agency issued a letter giving an incorrect figure to a member of the public. In that memo, which the Minister supplied to me, no reference was made to sending out corrections to incorrect information. I hope that he will bear that in mind before he talks about mis-selling in future.

I am glad that the Minister has done an audit, but there is still a muddle. It has been suggested that the first indication of when changes were made was in February 1996, but my hon. Friend the Member for Havant (Mr. Willetts) has discovered that that is not so. Some people collect first editions of interesting works and he collects Benefits Agency guides from previous years. That probably says something about my boss.

The agency's information guide of May 1995, on page 221, says: Changes to SERPS … Widows and widowers over 65 will be able to inherit up to half their partner's SERPS pension, instead of the full amount. This particular change will not happen until the year 2000. That was on the desk of everybody who worked for the agency.

Mr. Howard Flight (Arundel and South Downs)

Will my hon. Friend comment on the contrast between those in the private sector who failed to know and implement the rules correctly and who are being fined and often driven out of business, and those in the public sector who have done the same thing and for whom there seems to be no penalty whatever?

Mr. Pickles

That is a valid point. My hon. Friend was the first to elicit the original date, in a question to the Financial Secretary to the Treasury, and here we have something dated a year earlier. The guide was on every desk in the Benefits Agency in 1995, yet agency staff paid not a jot or tittle of attention to it, even when it was all over the newspapers. That is deeply worrying.

I hope that the Minister will come up with a solution. He was not quite right to say that the Government amendment in lieu honours the promise made by Lady Hollis, because it is essentially Lord Rix's amendment with a few bells on. I am willing to give the Minister the benefit of the doubt, to give him time and to promise him our co-operation, but I hope that we will have a known and agreed solution to this very difficult problem before April 2000.

Mr. Burstow

I echo the final point made by the hon. Member for Brentwood and Ongar (Mr. Pickles). We must find the right solution to the issue of misinformation on inheritance rights in respect of SERPS, even if that takes a bit of time, and I warmly welcome the Minister's constructive approach in explaining what the Government are doing to try to resolve a problem that they inherited and that they wish they could halve now, rather than facing the possibility of people's entitlements being halved.

When the other place debated the failure to publicise the 1986 changes that halved widows' entitlement to inherit SERPS pensions after April next year, Earl Russell made a telling point. He said that the issue was not necessarily a question of a failing of a political party—although I can understand why the Minister would wish to suggest that—but of the failure of government as an organisation to deliver. We will not know if that carries political overtones for many years to come, until the papers are revealed and some interested journalist digs out the necessary details of incompetence or whatever it was.

It is important to deal with the practicalities of how we move on from the current position. There has been a fundamental breakdown in communications between the policy part of the Department of Social Security and its implementation part on this issue. That is why I asked the Minister in an intervention a few moments ago whether similar breakdowns have occurred in other aspects of legislation in the past or since 1986.

It is clear that, as a consequence of that fundamental breakdown, the relevant advice leaflets were not properly updated, despite the references that have been made to the handbook this evening. Many of the basic advice leaflets available in Benefits Agency offices were not updated for 10 years. Many hon. Members have received correspondence from constituents who feel aggrieved by the situation, and I have passed on several examples from my constituency. Incorrect advice was provided in correspondence, on the telephone and over the counter at Benefits Agency offices. As we have heard already, even in April this year after the issue was well publicised, the public were still being given incorrect information and being misinformed about their entitlement.

I pay tribute to the work that has been done by my hon. Friend the Member for Newbury (Mr. Rendel) to raise the profile of the issue and to reach a solution. Over the past year, he has written three times on the issue of compensation and he has been instrumental in approaching the Parliamentary Commissioner to begin the investigation into whether the Department of Social Security is guilty of maladministration. Together with a representative from The Sun—I cannot think of a more unusual alliance—my hon. Friend also presented a petition to No. 10 to highlight the concerns on the issue.

So far we have had many announcements that there will be an announcement. The Minister moved further tonight by adding some more bells and whistles to the amendment passed in the Lords, but we still do not have a definitive announcement. I speak for many of my constituents and others who feel that the sooner a concrete set of recommendations and proposals is in the public domain, so that everyone knows where they stand, the better.

When the scandal of private pension mis-selling came to light, the Government were right to insist that companies paid compensation and wrote to everyone who might be affected. That has not happened in this case and it is a shame that the Government did not apply to themselves the same rules that applied to the private sector. If they had, we would not be debating the issue again this evening. If action had already been taken, hundreds of people who have been, or who expect to be, affected by the changes would not be agonising about how they can afford to replace the income that their wives stand to lose.

In Committee, my hon. Friends tabled amendments that set out three options to try to address the issue. The first was that widows should continue to receive the full SERPS entitlement after April 2000. The second was that a gradual reduction should be phased in—for example, a 10 per cent. reduction could be made each year over five years, to try to ease the transition. The third option was a postponement to 2010.

Lords amendment No. 1 was tabled by Lord Rix to try to sort out the mess. It attempted to incorporate the various options that had been put forward in this House and in the other place. It was welcome news for many outside Parliament that the Government accepted the amendment as a first step, and tonight we have a longer and more detailed amendment from the Government that puts more flesh on the bones by spelling out the matters on which the Secretary of State may prescribe regulations for a compensation scheme. It was interesting to read the Government's amendment, because it gives much more detail about the process of a compensation scheme and I wonder whether we can take clues about the Government's thinking from the amendment. Have they decided that it is the way ahead? If the Minister could confirm that, it would be both helpful and informative.

8.15 pm

The Government have already said that any compensation scheme would need to take account of misleading written communications and also advice given by telephone. That was accepted in an exchange in the House on 24 June, during a Supply-day debate initiated by the Liberal Democrats. The Liberal Democrat amendment would provide a minimum period of 10 years for any delay in implementing the SERPS reduction. If the Government opt for the postponement option to solve the problem, 10 years would offer people a reasonable time—we have already debated the meaning of the word reasonable tonight—to make other arrangements.

The House originally intended, when it debated the issue in 1986, to give people 14 years' notice of the changes, but people will have had just four years' notice since the Benefits Agency woke up to the fact that it had failed to amend its leaflets. Therefore, it seems only fair to give people the 10 years' notice that they never had. The gross cost of a 10-year postponement, according to a recent written answer, would be £60 million in the first year, with a peak of £1.16 billion in 2010. The Minister also gave a net cost figure of some £5 billion.

Another written answer revealed that the projected surpluses on the national insurance fund for each of the next three years are between £1.4 billion and £1.6 billion. In other words, the money to pay for a postponement is available in the national insurance fund and, therefore, a postponement of 10 years is affordable. It has been speculated that the Government are considering a five-year postponement, but such a short delay would leave the Government open to further claims for compensation through the courts.

Our amendment seeks to rule out any postponement for less than 10 years, because that would assist the Government by reducing the likely numbers of compensation claims and the consequential administration costs of any compensation scheme that would still be necessary, and would perhaps give greater certainty to those many people who are concerned about their SERPS entitlement in the future. The clock is ticking and we have only six months until the April deadline when the changes would have been introduced. The Government amendment puts that on hold until they can come up with a scheme, but it is never satisfactory to leave something in limbo and that is especially true of people's pension provision. I hope that the Government will give people information at the earliest opportunity so that their minds can be put at rest.

Mr. Eddie O'Hara (Knowsley, South)

It is refreshing to have such an honest and forthright Minister fronting such a difficult debate. My hon. Friend has been straight with the House and we should give him credit for that. It is also refreshing to have a Government who are prepared to hold up their hands and accept responsibility, even though the mistake was made by their predecessors. There are two types of responsibility—responsibility for the mistake, and responsibility to the people affected by it. The Government accept that it has the latter type of responsibility.

It is absolutely necessary to introduce some corrective measure to overcome the fiasco facing us in connection with SERPS. SERPS is not quite the same as the national insurance contributions scheme. Because it is an insurance against possible illness or incapacity that can occur at any time, payments into the NIC scheme can be redeemed at any time. People who are lucky do not need them, and I have always been very fortunate in that I have never had to redeem much of my national insurance contributions.

SERPS is more akin to an annuity or an endowment. Under that scheme, extra payments are made that are intended to be redeemed on retirement or at the death of a spouse. Alternative annuity and endowment schemes are available in the market, of which the people affected by the proposal might have preferred to take advantage.

The enormous amount of work that has gone into the new clause seems to point the way towards a possible compensation scheme. My hon. Friend the Minister honestly believes that a compensation scheme is better than deferment, mainly on grounds of cost. He gave the gross figures to prove it, although out of those gross figures can be taken tax payments incurred as people's income rises above tax thresholds, and also the benefits that people forfeit as their income rises as a result of SERPS.

My hon. Friend also said that a scheme of deferment, although it would catch a lot of people, would not be perfect and would therefore not be fair. However, would a scheme of compensation be perfect or fair? I suggest that it would not, and that it would be expensive. No figures have been given, but I would guess that administering a scheme such as that foreshadowed in the new clause would be horrendously expensive.

A scheme of compensation would open up a can of worms. People who received incorrect advice would have to be distinguished from people who did not seek advice in the first place. People who did not seek advice may have thought that they already knew the rules: they may have seen how the system worked for their brothers and sisters and for the friends with whom they have grown old, and decided that they did not need to seek advice. Would it be fair to distinguish between those who did not seek advice and those who did not think that they needed it?

A problem remains even when people seek advice. The question would arise whether that advice was given in writing, or by telephone. How does one prove that advice was given by telephone? A telephone call cannot be photocopied or put in an envelope. The problems would be horrendous.

Anyone with a good lawyer and accountant would be able to cope with such a compensation scheme, but we must be realistic: we are talking about people who do not employ lawyers and accountants. My hon. Friend himself said that we are talking about the millions, rather than the privileged few. They will not be able to find their way around a scheme that demands that they be well versed in matters of finance.

It would be impossible for a scheme of compensation to operate fairly and adequately. If one can say that about a scheme of deferment, one can say it with knobs on about a scheme of compensation. It would also be horrendously expensive to operate, with most of the money going on administration instead of to claimants. The advantages of a scheme of compensation, in terms of cost to the Treasury, could only accrue as a result of massive lack of take-up. If ever a scheme were designed for massive non-take-up it would be a scheme of compensation for a mess such as the one that the Government have inherited.

Mr. David Rendel (Newbury)

Does the hon. Gentleman agree that, given what happened with the mis-selling of private pensions, the introduction of a compensation scheme such as has been described would leave the Government morally bound to write to everyone who could possibly be affected to advise them that they might be eligible for compensation? In that case, the Government might not be able to restrict the numbers of people who took it up.

Mr. O'Hara

That is a helpful remark, but I would not go so far: my hope is that I will convince my hon. Friend to consider introducing a scheme that might be fairer to the people involved.

In conclusion, I do not believe that a scheme of compensation can be fair. It can only make sense to the bean counters of the Treasury. Deferment may not be perfect, but it would be far better. I suggest that any costs incurred in a deferment would compare favourably with the costs of a scheme of compensation, in terms both of the total amount and of how well the money would be spent.

Mr. Desmond Swayne (New Forest, West)

On a point of order, Mr. Deputy Speaker. The focus so far has been almost exclusively on amendment No. 1. Would I be in order if I moved the debate on to amendment No. 33?

Mr. Deputy Speaker

We are not dealing with that amendment at the moment.

Mr. Rooker

I was under the impression that we were still dealing with amendment No. 1. The debate involves a big issue but is narrow in that sense.

I am grateful to all the hon. Members who have contributed. There is a general understanding of how difficult it is to achieve a solution to this problem, and I understand how important it is to resolve the matter as quickly as possible.

Naturally, I have a preferred approach to this matter, which I have discussed with colleagues in the Government. However, I hope that I have not given the House a clue about my preferred approach: my intention is to support the Government's solution, given that one day my right hon. Friend the Secretary of State and I might have to present it to the House in detail.

A balance has to be struck in these matters. My hon. Friend the Member for Knowsley, South (Mr. O'Hara) summed up exactly the problems that could be encountered with a compensation scheme. He asked whether all the people involved would be caught, or whether too much public money would be spent on lawyers and accountants and administration, rather than being used for the greatest good. On the other hand, of course, there would be similar pitfalls with a scheme of deferment.

The Government have considered various options with the intention of trying to get a protected rights scheme—my legal advice is that that term is preferable to what my hon. Friend the Member for Knowsley, South called a compensation scheme—up and running by April next year. It was simply not possible to do that. We cannot afford to have a scheme that does not work when millions of people are involved.

8.30 pm

The hon. Member for Brentwood and Ongar (Mr. Pickles) asked about the Benefits Agency guide. It is not training material, and it would not be used to advise staff. The hon. Member for Sutton and Cheam (Mr. Burstow) highlighted the key point that misinformation was provided to the public for 10 years. I do not equivocate about that.

When I spoke about £5.5 billion, I was using shorthand; the figure for 10 years would be £5.5 billion with some add-ons, and the figure is not net but cumulative over the first 10 years. The figures bandied about for a protected rights scheme are much more diffuse, and that is one reason why reaching a conclusion is difficult. We are not short-changing people. That would be totally wrong. We will identify a solution as soon as possible.

Points were made about the national insurance fund surplus, although, frankly, hon. Members who have spoken tonight have spent it about five times over. We cannot use a projected surplus for the current year or for any short-term period to make very long-term expenditure decisions. If the decision is delayed for 10 years, or if we create a protected rights scheme, there will be enormous consequences for years to come. The national insurance fund surplus could not be used in that way. That is not to say, however, that it will not be used. Current taxpayers will have to fund whatever decision we make. There is a hole in the finances from next year. The Treasury works years ahead and the legislative framework is there. Whatever solution we come up with will have to be paid for.

Mr. Pickles

rose—

Mr. Rooker

If the hon. Gentleman wants to ask what I think he wants to ask, I probably do not have the answer.

Mr. Pickles

It might not be that. I asked specifically about proof. The Minister's predecessor made some promises about compensation for those who had suffered a loss, and made some progress on what standard of proof would be expected. What is the state of the Minister's thinking on that?

As my question is clearly not the question he feared, would he also answer whatever it was he thought I was going to ask?

Mr. Rooker

That was not the question that I was expecting, so I shall not answer the hypothetical one.

I cannot go further on proof. If and when we produce regulations, we shall have to cover proof, but how can one prove that someone made a phone inquiry to the Benefits Agency eight or nine years ago? What record would there be? In addition, the massive interest of the mass media in these matters might lead the press to publish a quick checklist of what a claimant would have to say about what he had or had not done or asked when he made his phone call all those years ago. I am not saying that the mass media would encourage people to tell fibs, but one can work out what might happen. I cannot go further at present, but we will do so when regulations are introduced.

The House should give the message tonight that Parliament and the Government are working together to get things right. We apologise for leaving people in the situation in which they find themselves today.

Lords amendment disagreed to.

Government amendment in lieu of the Lords amendment and consequential Government amendment agreed to.

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