HC Deb 15 March 2000 vol 346 cc307-21 3.59 pm
The Secretary of State for Social Security (Mr. Alistair Darling)

With permission, Madam Speaker, I would like to make a statement on entitlement to inherited state earnings-related pensions.

Fourteen years ago, the previous Conservative Government made a series of pensions policy changes, which they took through Parliament. One of those changes meant that, from this April, a husband or wife could inherit a maximum of one half of their spouse's SERPS entitlement.

The Department of Social Security published the correct information for about a year after the policy change. Pensions professionals also knew about the change. However, it is clear that, from early 1987 until 1996, DSS information leaflets were issued that did not refer to it. Furthermore, it is clear that wrong information was given to a number of people by some Benefits Agency staff during that period, and for some time thereafter. There is no doubt that, as a result, some people were misled, and so could have lost out.

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. The previous Government should have sorted the matter out years ago.

Three reports are being published today. The first is the ombudsman's investigation of four sample complaints. The second is the Comptroller and Auditor General's report on what happened and on the action needed to prevent a repetition. The third is from the National Audit Office, which, at my request, also carried out a joint review, with internal audit, of the DSS management during the relevant period. Together, the reports provide a damning indictment of what happened over those years. All the reports will be available in the Library and Vote Office.

I intend to accept all the recommendations made by the NAO and the ombudsman. I can tell the House that I propose to go further in two respects. I shall, of course, respond to additional recommendations that might arise from any subsequent Public Accounts Committee or Select Committee investigation.

Before I turn to the steps I am taking to ensure that the problem does not happen again, I shall set out my proposals to provide redress for those who lost out.

First, certain groups cannot be affected in any way. They include people who would have retired before SERPS was introduced, single and divorced people; and those who have already been widowed.

Secondly, the policy change due to come into force this April will not come in until 6 October 2002—in two and half years' time. Because of that, anyone who is widowed before October 2002 will not be affected; their spouses will still be entitled to inherited SERPS under the current rules.

Thirdly, 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.

Ministers have approached the matter in the following way. As a matter of principle, we believe that when someone loses out because they were given the wrong information by a Department, they are entitled to redress. In applying that principle, Ministers considered two options: first, deferral for up to 14 years; and secondly, a protected rights scheme.

We want to ensure that everyone who has been misled and has lost out gets redress. Deferral alone does not solve that problem. For example, let us consider a 65-year old today who was previously given the wrong information. If he dies, at, say, 80, his widow would still have lost out, but that is not what he was told would happen. We believe that she must have access to redress, but deferral will not provide a solution for that couple. Of course, someone who received the correct information, and spent money buying alternative arrangements, would feel aggrieved if it now turns out that he need not have done so.

However, a protected rights scheme does provide redress. None of those—including people already retired—who were misinformed, and who might have acted differently had they had the correct information need lose out. Therefore, I am setting up an inherited SERPS scheme, which will allow individuals to apply to have their current rights to inheritance of SERPS preserved. To be eligible to apply, applicants must be married; they must have paid national insurance contributions since 1978; and they must have been misinformed after 1986.

The NAO report identifies a number of criteria considered essential to the success of the scheme. I agree with those recommendations. The scheme will be well publicised. We will consult widely, and, crucially, we will not proceed with processing applications from the public until we are satisfied that they can be dealt with effectively.

Postponing implementation of the policy for everyone will also allow time for claims to the scheme to be made and processed. Because I do not consider that the Benefits Agency has the capacity to deal with that work, we will set up a separate unit specially for the purpose.

We will consult the appropriate interested bodies on the delivery of the scheme, including the ombudsman and the National Audit Office. We are also writing to a number of interested organisations today. In working out the details of the scheme, there is an obligation on the Government to ensure that we have a system to get money to those who have lost out, just as there is an obligation on individuals to tell us the truth.

I shall put before the House the full details of the inherited SERPS scheme, including what information we will require from those wishing to claim and the procedures that will be followed to scrutinise those claims. The NAO and the ombudsman will be fully involved in developing those procedures.

I am setting up a helpline for anyone who is concerned. Newspaper advertisements over the next few days will publicise its number: 0845 600 6116. It opens tomorrow at 7 am. I am also writing to all right hon. and hon. Members today, setting out our proposals.

I have set out my proposals to put matters right for those people affected, but I also want to prevent this problem from happening again. The crux of the problem was that there was no clear line of accountability in the Department for ensuring that the policy changes were properly implemented or that information provided to the public was accurate and complete. That is symptomatic of a wider problem that I had already identified in the Department: it was not focused on the people whom it was meant to serve, who in this case were the pensioners of today and tomorrow.

I have already begun the process of change by focusing the Department on its key client groups: children, people of working age and pensioners. We need to give a better, dedicated service to pensioners. I am already setting up a modern service with better communications, so that pensioners can get information and advice on pensions and benefits available to them.

Today, I can announce the next step. I am bringing together policy and operational responsibility for pensions under a single organisation, distinct from the Benefits Agency. The new organisation will be solely focused on the needs of pensioners and pensions policy. It will deal with everything from policy development to front-line service delivery, and from changes in the law to changes in leaflets.

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. I believe that all our leaflets should be subject to external independent audit. That should include consultation with others to ensure that all DSS leaflets are written in plain English. I have therefore asked the Social Security Advisory Committee, which is an independent statutory body, to do that.

This failure was deplorable. It should not have happened and it will cost a minimum of £2.5 billion to put right. How much more than that depends on the number of successful claims. We are deferring the change for two and a half years. We are making sure that people do not lose out because they got the wrong information. We are making root-and-branch reforms of the DSS, and, in future, DSS leaflets will be subject to external audit, so that people can rely on clear and accurate information.

The previous Conservative Government have to take responsibility for that mess, and I will take responsibility for clearing it up. I commend the statement to the House.

Mr. David Willetts (Havant)

I thank the Secretary of State for his statement. I begin by making it clear that I make no attempt to evade responsibility. Everyone involved must take his or her share of responsibility. We accept the ombudsman's finding that there was maladministration. It took far too long to start giving people the advice that they are entitled to expect on the changes to SERPS provisions for widows. As a result of that failure to give the right advice, many people have not made the alternative arrangements that they otherwise would have made.

We regret what happened, and much of it happened on our watch. It should not have happened. There were some attempts to give the correct advice. I have the "Benefits Information" guide of May 1995, which makes the position clear. However, there are worrying cases of people still receiving the wrong advice as late as 1999. Indeed, the National Audit Office report, which makes damning reading, expresses concern that from November 1999 to 10 January 2000 contradictory lines were taken in official correspondence and in other sources of information about the legal position after 5 April 2000.

The NAO report—

Mr. Dale Campbell-Savours (Workington)

Oh!

Mr. Willetts

This is a very important point about the advice that was given. I want the Secretary of State to promise that somewhere, someone in some benefit office is still not giving out-of-date information to people who are asking about their SERPS position.

The NAO report goes on to discuss the 3,500 written queries to Ministers where the Department should have provided an update on the situation of those who had expressed their concerns. It states: We understand that this was considered but that a decision was made not to go ahead on the grounds that an announcement was expected before Christmas. Was it the Secretary of State who decided not to respond to the 3,500 questions? Was it his colleague, the Minister of State? Was the decision made by officials? What is the Secretary of State's answer to that specific charge in the NAO report?

We accept that there is a serious problem of maladministration. However, will the Secretary of State accept—[Interruption.] As I have said, we very much regret that. I am asking the right hon. Gentleman to accept something in return, which is the policy that the Labour party opposed when it was in opposition and the Conservative Government's original policy, by which the Government now stand. Will he confirm that the Government have no plans to change the 50 per cent. formula for widows' entitlement to SERPS, which was introduced in the 1986 legislation? Indeed, will he confirm that they carry that formula through into the state second pension in legislation that is now before the House? Will he confirm also that the only change to widows' SERPS entitlements introduced by the Government has been a further cut in those entitlements as part of the Government's wider cuts in widows' benefits?

Many Members on both sides of the House have been approached by constituents who phoned the Department of Social Security to check on their future SERPS entitlement and were given the wrong advice. They will surely expect to be covered by the right hon. Gentleman's scheme. That is the crucial issue, but he has ducked it today. I remind him of the assurances of his ministerial colleagues during the past few months, both in another place and in this place, about compensation. In another place, the Under-Secretary of State, Baroness Hollis of Heigham, said: There is a very real issue of proof … No record is kept of telephone calls, any more than a record is normally kept of conversations at the desk. Paper records are kept for about six months. But if someone asserted that he had received that misleading advice, I suspect it may well be the case that the Government would have to prove that he had not, rather than the contrary, because there would be no evidence to counterbalance it.—[Official Report, House of Lords, 6 July 1999; Vol. 603, c. 847.] The then Minister with responsibility for pensions, who is now the Financial Secretary to the Treasury, went even further when he said:

If, for example, people have received advice by telephone, we shall take that into account. If what the hon. Gentleman is putting to me is that people may have received advice—for example, over the telephone—on the basis of which they decided not to do something that they would otherwise have done, then they, too, will have a case for compensation.—[Official Report, 24 June 1999; Vol. 333, c. 1313.] I ask the Secretary of State to promise not to breach the undertakings which Ministers in his Department have already given to the House and to another place. If people say that they asked for advice and they then did nothing because of the advice that they received, does the right hon. Gentleman accept that as proof enough?

Ministers have admitted that the DSS will not have proof of the advice given because its records are destroyed after six months. Therefore, the Secretary of State's scheme, the details of which we await, must not ask pensioners to do the impossible.

The statement has been delayed from before Christmas—we know from the NAO when it was originally due to be made—because the Secretary of State has been fighting an unsuccessful battle with the Treasury on precisely that point. That is why it is so important that the right hon. Gentleman sticks to the promises that were made by his colleagues.

Does not the approach set out today contrast strikingly with that adopted by Ministers to private personal pensions? Private pension providers were presumed guilty unless they could prove that they were innocent; now, the Government intend to regulate themselves far more leniently than they have regulated others.

The DSS is acquiring an unenviable record for getting things wrong in the first place, which is bad enough, and then compounding the problem by making a mess of getting things right. We ask for a simple assurance from the Secretary of State that the widows and the people planning for their pension who have followed today's announcement will not be let down because of another DSS mess.

Mr. Darling

I am sorry that the Opposition spokesman has struck such a tone, because the matter is extremely serious. Many people in this country have been caused great distress by something which, as he acknowledges, happened largely during the period for which Conservative Ministers were responsible.

The hon. Gentleman made several points that I shall answer specifically. He referred to the mis-selling of personal private pensions, but I can tell the House what that problem has in common with the inherited SERPS problem: the Tories did nothing about either. Twenty Tory Ministers, including the Leader of the Opposition and the shadow Chancellor, served in the DSS during the period in which the problems originated, but they did nothing about them. We are now sorting things out and providing to those who lost out the same measure of redress as we ask the private sector to provide to those who were mis-sold pensions.

The hon. Gentleman asked about the changes being made through the state second pension. I will happily deal with that matter at great length when the Child Support, Pensions and Social Security Bill is reported to the House. Suffice it to say that, because of our reforms, the state second pension extends the rights that people get under SERPS.

The hon. Gentleman's central point is an important matter of concern to all hon. Members: the question of what standards are required and what the public require. Let me repeat that the guiding principle is that people who have lost out will get redress. We shall work out the details of the scheme in consultation with the NAO and the ombudsman; that scheme will be laid before the House so that all hon. Members will have an opportunity to comment on it.

We have a clear obligation to establish a system that provides redress, just as there is an obligation on individuals to tell us the truth about what happened. People will be required to give us information on how they were misled when they make a claim, and we shall, of course, ask them questions about that when we process the claim. However, if there is no documentary evidence, it will be for the Department to challenge or disprove the claim. I hope that that makes the position absolutely clear. We recognise the difficulties caused by the fact that many people will not have documentary evidence, and we are determined to be fair to the people who have lost out.

Finally, I made it clear in my statement that I accept full responsibility for anything that goes on during the course of this Government in the Department for which I am responsible. The mess was created by the Conservatives when they were in power, but I take full responsibility, down to the last word and detail of the scheme, for trying to sort out the mess for the benefit of many pensioners.

Mr. Frank Field (Birkenhead)

I thank my right hon. Friend for his statement. Does he agree that it is important that we make a distinction between the gang opposite and their incompetence and the way in which we shall respond to their incompetence? Does he accept that, because there is such chaos in the Department that he must now set up a separate unit to deal with the issue, nobody outside will accept the word of the Department or that unit against the word of our constituents who say that they asked for advice, that they were given bad advice and that they acted accordingly?

Mr. Darling

No, I do not agree with my right hon. Friend on that point. The basic problem with the Department of Social Security over the years is that it did not have a clear enough focus on its client groups—children, people of working age and pensioners. The Benefits Agency in particular, which is the organisation under discussion, has a wide focus because of the varied needs of all the types of people who come through its doors.

In a new organisation created to deal solely with pensions and pensioners, the staff will be totally focused on pensioners' needs. As my right hon. Friend knows, we have some excellent staff in the Department of Social Security, who sometimes have to work with policies introduced by politicians which are not easy to implement. Nothing in my remarks was intended as criticism of the general quality of our staff.

We must make sure that we have a scheme in place that is workable and fair, and that provides redress for the people who lost out. We also need to make sure that the DSS and its agencies are reorganised to be better focused on the people whom they are meant to serve. That is what I am determined to see through.

Mr. Steve Webb (Northavon)

I am afraid that the Government's response is wholly inadequate, not because of what it does for the people who were actively misled, but because of what it does not do for the far larger number of people who were simply never told.

Does the Secretary of State accept that the pensioners who ring the Department and write letters are atypical, and that most pensioners do not ring up and do not go to get leaflets—they just carry on. They assume that if their rights are to be slashed, someone will tell them.

Can the Secretary of State say whether he told pensioners that their rights would be slashed in good time for them to do something about it? If he and his predecessors did not do that, how can he justify going ahead with the cuts now—the Tory cuts that he would have opposed?

The delay until October 2002 is a fig leaf. Can the Secretary of State confirm that his own statement proves that the deferral to 2002 is an irrelevance to most pensioners? For a younger pensioner, as long as her husband lives for two years now, the deferral is irrelevant. Can the right hon. Gentleman confirm that people who have reached pension age, provided that their husbands survive a few more years, will face the full cut and may never have been told about it?

Given the healthy state of the national insurance fund and a £3 billion surplus of revenue over expenditure next year alone, could not the right hon. Gentleman have persuaded his former friends in the Treasury to allocate that to Britain's widows? Is it not time that the Secretary of State and his colleagues stopped being the Treasury's poodles and started standing up for pensioners?

Mr. Darling

The hon. Gentleman has an exceedingly short memory. With regard to the national insurance surplus, he spent that two debates ago. I forget what he spent it on—some other pension provision—so, if he had had his way, the national insurance surplus would have been spent already. It is not available a second time round.

I said that the hon. Gentleman had a short memory. Only yesterday, he tabled an early-day motion calling on us to provide compensation for those pensioners. We are providing a scheme for redress for pensioners. Only 24 hours later, he has forgotten that that is what he asked for.

Let us go back to first principles. The principle must be that if the Government give people the wrong information, they must face the consequences and provide them with redress. That is precisely what we are doing. We are doing so whether people are still working or have already retired. If they received the wrong information, they will all be eligible to receive redress.

The hon. Gentleman must remember that there are many people now working and many who have retired who did know about the changes and made alternative provision, for which they had to pay. He would say that they need not have spent all that money. If he is saying that he is in favour of deferral, he must bear in mind the fact that I said in my statement—the hon. Gentleman nods. That is today's policy, so I shall deal with it. Now he shakes his head. That policy lasted five seconds.

Through deferral, the problem is merely postponed. That means that the widow of a man who dies in 10 or 14 years would still lose out. Unlike the Liberals, who do not have to face any of these problems—it is all pretty theoretical, as far as they are concerned—we are facing up to a real problem that we inherited. Far too many people received the wrong advice, and we are giving them redress.

The hon. Gentleman asked why we had deferred the policy to 2002. That is to ensure that we can get the scheme under way and provide redress for the pensioners about whom we should all be concerned.

Several hon. Members

rose—

Madam Speaker

Order. I should now like short questions. Several hon. Members want to ask questions, and I want to safeguard the business of the House for the rest of the day. I should also like brisk answers from the Secretary of State.

Mr. David Winnick (Walsall, North)

If we were considering local government maladministration, a surcharge would have been imposed on those responsible for the problems. Those responsible for the problems that we are considering are getting away scot free.

I welcome the postponement in implementing the policy to 2002. Putting aside the way in which the hon. Member for Northavon (Mr. Webb) made his point, would it be possible for the policy to be reconsidered? Many of us believe that the Tories were wrong to do what they did in the first place.

Mr. Darling

The policy change was announced 14 years ago. It is not possible to turn the clock back to the world of 1986. Many people have made provision in good faith as a result of the law since 1986. If any Government turn the clock back, they will create a new group of losers. Most people would find that unacceptable.

Sir Norman Fowler (Sutton Coldfield)

I thank the Secretary of State for his courtesy in informing me about the statement in advance. I have had the opportunity of reading only the Parliamentary Commissioner's report. I support the Secretary of State's statement, and I take responsibility for my period of office from 1981–87.

On the parliamentary process, will the Secretary of State confirm that the changes were set out in a Government White Paper in December 1985, that they were outlined in a statement that I made to the House on 16 December 1985, and that they were fully debated in lengthy Committee proceedings in 1986? In accepting responsibility, will the Secretary of State confirm that the parliamentary process was openly followed?

Will the Secretary of State also confirm that, while the Government are deferring the change that I proposed in 1986, they are continuing with the basic policy that I introduced then? My hon. Friend the Member for Havant (Mr. Willetts) pressed the Secretary of State to confirm that.

Mr. Darling

I am grateful to the right hon. Gentleman for his first comment. I wrote to all my predecessors, including the former Prime Minister, who was also a Minister in the former Department of Health and Social Security, because I believed that it was right to do so.

The right hon. Gentleman would not have seen the National Audit Office report or the ombudsman's report because their publication is not a matter for me. The reports are rightly made directly to the House.

There was a lot of publicity about the changes when they were made. The first leaflet that the Department of Health and Social Security produced was right. I tried to explain to the hon. Member for Northavon (Mr. Webb) that many people knew about the changes and planned accordingly. Paragraph 1.12 of the National Audit Office report states that pension professionals, who advise people, also knew about the changes. That is our problem. Some people knew about them and acted accordingly, but others who picked up leaflets published by the DHSS and the BA did not know.

I am addressing the fundamental problem in the Department that was not tackled during the Conservative years: making sure that the correct information is issued and that our staff know the policy.

Mr. Terry Rooney (Bradford, North)

I welcome my right hon. Friend's statement. Given NIRS2 and other problems, are there any more ticking time bombs, which cost billions of pounds, left by the previous Administration? How long does my right hon. Friend envisage that it will take to settle claims once they are made? I welcome the new pensions department. Can we at last get rid of the question on the income support claim form for pensioners that asks whether they are pregnant?

Mr. Darling

On the latter point, I certainly hope so. Indeed, the steps that I have announced this afternoon whereby all DSS leaflets will be externally audited will improve matters. There are two reasons for that: they need to be right and they need to be readable. I suppose that it is conceivable—to coin a phrase—that a pensioner could be pregnant, but probably unlikely. However, I shall certainly consider that.

My hon. Friend asks whether there are any more ticking time bombs. When the problem came to light—I was first made aware of it at the end of 1998—I asked the Department to read all the leaflets that are now being produced to ensure that they are accurate and up to date. I am as satisfied as I can be that that is the case, but I do not suppose that I am any different from any of my predecessors as Secretary of State for Social Security in that I spend rather more of my day than I would like dealing with time bombs that may not be ticking, but look like they might tick in future.

Mr. Willetts

Stakeholders.

Mr. Darling

I was thinking of some of the other problems that we inherited—NIRS2, the benefit payment card and the mis-selling of SERPS. I have a long list of messes to clear up as a result of the Tory Government.

Mr. David Davis (Haltemprice and Howden)

I welcome the Secretary of State's deferment of the change in the SERPS scheme and his undertaking to enact the National Audit Office recommendations and any subsequent Public Accounts Committee recommendations, but he will be aware that the ombudsman and the NAO expressed reservations in their reports about the second stage—the protected rights compensation. Can he answer three points? Can he confirm that the costing for his proposed scheme assumes only one third take-up among SERPS holders, which is an important measure? Will he give an undertaking that not only will the scheme be laid before the House, but that we shall have a debate on the Floor of the House—not in a Statutory Instrument Committee—after the ombudsman has commented on it? After the scheme has been operating for a year, but before the two and a half years are up, can we have a review, perhaps by the NAO? We must look to see whether justice has been done to all those people who have been misled over the years.

Mr. Darling

The right hon. Gentleman raises three points. The NAO and the ombudsman properly said that the redress provided is a matter for Parliament, not them. They have both said that they would like to comment on it and I made it very clear in my statement that I want them to do so. I shall listen to any recommendations that they want to make because it is important to take on board what the Department's external auditor—which is what the NAO is—and the ombudsman have to say.

On costings, I said earlier that the minimum cost is £2.5 billion. It could be more, depending on the number of people who tell us that they were misled. We shall not know the position for some time, but my guess is that, during the year, especially with the helpline opening, we shall get a better feel for exactly how many people were misled. The scheme has to be confirmed by the House so that it is debatable. That is a matter for the usual channels.

Finally, we would clearly want to review the scheme continuously. I shall reflect on what the right hon. Gentleman has said and I am not giving him any undertakings. I hope that we are all trying to do the best that we can for those people, and Members—Front-Bench or otherwise—should try to make sure that we have a scheme that works and put right what went very wrong for a large number of people.

Mr. Barry Gardiner (Brent, North)

The Secretary of State will be aware that the NAO report states: even though the absence was noted— that is the absence of the information— when a draft was circulated within the then Department of Health and Social Security in 1987, when a leaflet was being prepared. Obviously, that statement was made on the basis of evidence. What is the evidence that that absence was noted? Does it take the form of a memo? If so, from and to whom was it sent? Does it take the form of minutes of meeting? If so, who was present at that meeting, who drafted the minutes and to whom were they circulated? It is fundamental that we find out who knew that the draft leaflet did not contain the appropriate information.

Mr. Darling

Perhaps I should explain to the House and my hon. Friend that the NAO was asked to consider these matters because it can read all relevant papers, including those given to Ministers in the previous Government, and the advice. He will know that, by convention and quite rightly, I cannot see the advice given to Conservative Ministers, but the NAO and the ombudsman did see it. However, they do not say that such and such information was in a minute sent to the Secretary of State.

I do not know where the information came from, because the NAO produced the report, but I can say that the NAO and the ombudsman reached similar conclusions. They did not believe that any deliberate attempt had been made to stop the information from being made public; they concluded that, because of the byzantine structure of the Department at the time—we are now putting that right—too many people had an interest in preparing the leaflets, and no one person was there to take responsibility for ensuring that they were correct and up to date.

I am now remedying the problem. Three weeks ago, I announced major management changes in the Department to streamline it and make it more effective, and today I am going a step further with the new pensions organisation. As for who wrote what and when, we asked the NAO to investigate because it is external to the Department and acts without fear or favour. I am happy to accept its recommendations, but I cannot see all the papers that may have been circulated in 1987.

Miss Julie Kirkbride (Bromsgrove)

I, too, thank the Secretary of State for making it clear which pensioners will have preserved rights. Many of my constituents are concerned about the matter.

It is obvious that those who have written documentary evidence that they were misled about their entitlement will have a bang-to-rights case. However, is the right hon. Gentleman saying that merely stating that they had discussed the matter with a benefits officer, or had discussed it on the telephone—presumably the DSS could not disprove that, as it does not keep records for very long—would entitle my constituents to preserved rights?

Mr. Darling

As I said a moment ago, we shall present to the House proposals giving details of the procedures that people will have to follow, and the scrutiny that the Department will conduct to ensure that claims are well founded. All that will be clearly set out, so that people will know exactly where they stand.

Mr. Mark Todd (South Derbyshire)

The scheme that my right hon. Friend has described may well deal with those who have been misinformed, but I am less sure that it deals with those who have not been informed of the changes made in 1986. At any point, were those who might have been affected posted clear information by the previous Government explaining the implications of the change?

Mr. Darling

I do not think that any Government have written routinely to all citizens telling them about changes they have made to any law, let alone this one. When my hon. Friend thinks about it, he will realise that that would be a massive undertaking.

Let me return my hon. Friend to first principles. In the Government or the private sector, when someone does something as a result of which someone else loses out because they could not make arrangements, redress must be provided, and that is what we are doing. We are providing redress on the ground that some people went to the Department and were given the wrong information. That is the principle, but my hon. Friend suggests that we should go beyond it. I am saying that, when the Government give wrong information, they clearly have a responsibility to provide redress.

Mr. David Rendel (Newbury)

May I draw the Secretary of State's attention to two comments in the NAO report—which I am happy to have helped to instigate by requesting such material from the Chairman of the Public Accounts Committee? First, the figures for the preserved rights scheme suggest that, even if only a third of claims are met, the total cost may be £8.2 billion. The report says that that implies a great risk, in that, if all the claims are met, the cost could be more than £20 billion.

Secondly—this, surely, is a critical aspect of the preserved rights scheme—how will the Secretary of State ensure that everyone who might be eligible applies? Will he write to everyone who might be eligible, just as he demanded that people should be written to when the private pension mis-selling scandal arose? Will he also confirm that there will be no time limit? Will someone who is widowed in 2005, and has not at that point had the rights preserved, still have a chance to do so?

Mr. Darling

If the hon. Gentleman has read the reports from the NAO and the ombudsman, he will have seen that both ask that we spend some time doing a number of things to ensure that the scheme works. One is to discuss the publicity with them. The Government are determined to ensure that the scheme gets the widest possible publicity, including advertising. We will consult the NAO, the ombudsman and other interested bodies to find out what else we need to do.

The second thing comes back to a familiar theme. It is important to remember what the principle is: where the Department has given the wrong information, we provide people with redress. It follows, therefore, that we need to do everything that we possibly can to draw that to the public's attention.

Mr. Keith Darvill (Upminster)

I thank my right hon. Friend for his statement. It is clearly another mess created by the Conservative party, which the Government are sorting out.

May I ask one or two practical questions? Do those constituents of ours who have already written to complain need to submit a formal application? Is there a time by which those applications need to be submitted? Indeed, will there be a limitation period for submitting applications for claims by constituents generally?

Mr. Darling

About 3,000 people have written to the Department or contacted it. We have a note of their names and addresses. We will write to them in the next few days. It will be made clear to them and, indeed, to the population at large that, once the scheme is ready to receive claims, there will be further advertising telling people where to write, what information to include and how we intend to process it. Included in that will be the dates by which we want to get the applications in.

Mr. Paul Burstow (Sutton and Cheam)

Can the Secretary of State confirm that those people who did not know that the Government had made changes in 1986 and who at no point during the past 14 years knew that the changes had been made will effectively be excluded from the preserved rights scheme? By dint of not knowing, they did not pick up the telephone, look at the leaflet or write a letter. Many people outside the House will find it hard to understand why they are being excluded from his scheme.

Mr. Darling

If the hon. Gentleman thinks about it, the logic of what he has said is that, if anyone anywhere were to say that they did not know about any change in the law, they could say to the Government, "You had better scrap the law." Even for the Liberal Democrats, that is pushing matters. We are saying that, where people were given the wrong information and, because of that, lost the opportunity to do something differently, we will provide them with redress. That is the right thing to do in principle. It is what we would require of the private sector. It is the right thing for the public sector to do.

Angela Smith (Basildon)

I welcome my right hon. Friend's statement, which obviously concentrated on the practical and financial aspects, but does he accept that, when people retire, or make provision for their spouse after their death, one of the things that they need most in life is security and certainty? The catalogue of Conservative horrors has created greater fear, worry and uncertainty for many people. Many who come to our surgeries are very upset and worried. Does he share my frustration that, although we have heard the Conservative party say that it accepts responsibility, it has at no stage said sorry?

Mr. Darling

On the latter point, that is something that most of us are well used to, so perhaps we are not as sensitive to it as others, but it is better to concentrate on what we will do to put matters right. I make just two points. First, we are making changes to SERPS and the state second pension that will mean that people who are on low pay—say, about £6,000 a year—will get about £54 a week through SERPS, instead of £14 a week, which is a big change.

Secondly, shortly—over the next few years—we will be able to provide everyone in this country with an annual pension statement, which will tell them exactly how much they are retiring on. That will be one of the single biggest ways in which to give people reassurance. They will be able to see in black and white what they are getting from the state, from their occupational or stakeholder pension. If any future Government come along who are like the last lot over there and start slashing things, privatising basic state pensions, or whatever the latest policy is, people will know about it very soon.

Mr. David Heath (Somerton and Frome)

Am I right in thinking that the right hon. Gentleman plans to do something about the sins of commission but not the sins of omission? He will do something about actively misleading, but not about failing to give proper advice. Will he now give an answer to the hon. Member for Bromsgrove (Miss Kirkbride)? Is it correct that that assertion, in the absence of any contrary proof from the Department, will be sufficient evidence for the scheme? What will be the position of someone who can prove that they were misled but second hand—in other words not directly from the Department but from some intermediary who has taken advice from the Department?

Mr. Darling

I have just told the House that the details of the scheme will be worked out after consultation and will come before the House. I have also made it clear that all claims will be scrutinised. As I said in my reply to the hon. Member for Havant (Mr. Willetts), the Department will have to challenge any information. If people think that they have a claim, they should come forward and we will look at it and scrutinise it in the normal way.

Mr. John Cryer (Hornchurch)

Does my right hon. Friend accept that, however outrageous the behaviour of the Conservative party when in government, it was entirely consistent with the culture of fraud and mis-selling in the pensions industry which I believe that the Conservatives deliberately engineered during the 1980s? Will my right hon. Friend consider that there will be some problems with pensioners proving that they were misinformed or misled? My right hon. Friend mentioned the guidelines. How soon will they be produced? What definitive criteria will they contain and to what extent will it be a question of individual social security officers adjudicating on individual cases?

Mr. Darling

On the latter point, I want to avoid creating a further problem by producing guidelines that are so general that we get into a host of other problems. The rules and regulations under which the inherited SERPS schemes will work will be as strict as possible so that all our staff know how they operate. I repeat that we want to discuss the guidelines with the NAO and the ombudsman, as they have requested, so that we get them right. Also, we are writing today to many organisations, such as Help the Aged and Age Concern, to ensure that the scheme is operated fairly so that we can put right the problems that so many people face. We will make every effort to ensure that the guidelines are right. Getting them right is rather more important than trying to rush forward with rules and regulations that do not work. I want to take time to get it right because that is precisely what the ombudsman and the NAO are asking us to do.

Kali Mountford (Colne Valley)

Does my right hon. Friend agree that acceptance and regret do not add up to sorry?

My right hon. Friend's announcement about the new organisation for pensioners is a significant move. Will that include all work for pensioners such as state pensions, SERPS, second state pensions and minimum income guarantee? How soon will it be set up and will it be able to liaise with other Departments and organisations such as the national health service and local government so that benefits work together properly for pensioners and so that security and service really start to mean something?

Mr. Darling

The pensions organisation will be responsible for pensions and pensions policy operations. It will also be responsible for the benefits that go to older people, including the minimum income guarantee. I will have something further to say about that in the not too distant future.

Mr. Eric Pickles (Brentwood and Ongar)

Does the Secretary of State realise that his reply to the hon. Member for Somerton and Frome (Mr. Heath) is inconsistent with his earlier statement that he will accept the ombudsman's report in full? He told the hon. Gentleman that applications would be challenged in the normal way. On page 13 of the ombudsman's report, paragraph 32 says that the normal burden of proof should be changed round and that the burden of proof must rest with the Department. Let me be clear: if an uncorroborated telephone call is made, will it be up to the Department to prove that it did not take place?

Mr. Darling

Let me repeat what I said when I answered the hon. Member for Havant and other hon. Members. We will set out in the regulations what information is required and what questions people will be asked when the claim is processed. I said that, where there is no documentary evidence, it will be for the Department to challenge or disprove the claim.