HC Deb 29 November 2000 vol 357 cc966-78 3.32 pm
The Secretary of State for Social Security (Mr. Alistair Darling)

With permission, Mr. Speaker, I would like to make a statement on inherited SERPS.

In my statement to the House of 15 March this year, I explained how millions of people were given wrong, misleading or incomplete information about rule changes introduced by the previous Government in 1986, which were due to come into effect earlier this year. As I told the House then, 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.

In March, I announced that we would defer any changes in the inheritance rules by two and a half years, until 6 October 2002. That remains the position. I also said that I would consult the ombudsman, the National Audit Office and others about a protected rights scheme, designed to provide redress to people who were given wrong or incomplete information.

I received a range of helpful and constructive representations from Members of the House, Select Committees and others. I also received the advice of the Social Security Advisory Committee, whose report I am publishing today—copies will be available in the Library and the Vote Office. As I have said before, the solution to this problem has to be both fair and workable. And as the ombudsman has said, it must provide a global remedy. I am determined to make sure that we do that.

Over the past few months, I have become increasingly convinced that a protected rights scheme would not work in the way intended and, therefore, would not provide a fair and just solution to this problem. It would not be fair because we could not be sure that it would reach all those affected, particularly the very elderly and vulnerable, and it would be very difficult to safeguard the scheme against fraud and abuse. Its operation would inevitably cause injustice, and on that basis, I do not intend to pursue it.

There were two key problems with the decisions taken 14 years ago by the last Conservative Government. First, they decided to implement the changes without any transitional arrangements. And worse, they continued for years to give out wrong, misleading and incomplete information about what they planned to do. We have already deferred the change in the inheritance rules until 6 October 2002, so no one at all will be affected by the policy change before that date.

The proposals I am making today are designed to give full protection to every pensioner; to give younger people adequate notice of the change to SERPS rules; and to provide transitional arrangements for those approaching retirement age. First, men and women who are already over the state pension age cannot do anything to restore their position. I have therefore decided that all men and women who are over state pension age on 5 October 2002 will be exempt from the changes. That means that every pensioner will keep his or her existing entitlement.

Secondly, proper notice has to be given to those who are planning for their retirement. So I am proposing that the new rules will apply only to men and women who are now 10 years or more away from their state pension age. Thirdly, those people who are approaching state pension

age will have less time to plan for their retirement. So we will phase in the changes for those who are within 10 years of their state pension age. For example, people who reach state pension age between October 2002 and 2004 will be able to pass on 90 per cent. of their SERPS, and those who reach pension age between 2004 and 2006 will pass on up to 80 per cent. and so on.

We intend to bring forward regulations in the new year to implement those changes. We will consult on the draft regulations in the usual way. We will also write to all those people who have contacted us already, to set out the position. There are, of course, a very small number of people who have evidence that they were clearly misinformed by the Department—for example, they have a letter from the Benefits Agency containing the wrong information. That small group will have access to the usual departmental procedures that deal with cases of maladministration, to the extent that the proposals that I am announcing today will not fully compensate them already.

I have already taken steps to prevent this problem from happening again. As I told the House in March, I am reorganising the Department of Social Security so that it can better serve its key customer groups. I am bringing together policy and operational responsibility into a single organisation dedicated to pensioners. As part of that process, we have already tightened up the procedures for checking leaflets and guidance.

I want to ensure that, in future, people are told about changes in pension policy, so that they can plan for their retirement in full knowledge of their position. That is why, next year, we will begin to send out combined pension statements, giving people more comprehensive information on their entitlements.

The proposals that I am making today will clear up the mess that we inherited. Everybody who has reached state pension age in October 2002 will be unaffected by the new rules. My announcement today will remove any worry for pensioners about providing for their spouse. We are giving those men and women who are more than 10 years away from state pension age the proper notice to which they are entitled. We will phase in the changes for those within 10 years of their state pension age.

Owing to the timing of the changes, the costs will be comparable to the protected rights scheme over the next 3 years. The reforms that I have announced today will cost an extra £1.5 billion over 10 years and an extra £4 billion over 50 years.

This problem should have been sorted out 14 years ago. What happened in the years after 1986 was a series of colossal blunders. That was inexcusable and caused untold distress to millions of people. The then Conservative Government have to take full responsibility for what has happened. We are now taking the responsibility for sorting it out. I commend this statement to the House.

Mr. David Willetts (Havant)

Let me begin by making it absolutely clear that we accept that it took far too long to give people the advice that they needed on changes to SERPS for widows. We accept the criticism of maladministration in the reports by the National Audit Office, the Government ombudsman, the Public Accounts Committee and, most recently, by the Public Administration Committee. Yes, we very much regret the maladministration that occurred. However, we must now question the Secretary of State on the extraordinary about-turn that he has announced. Nine months ago, he announced to the House a scheme that we warned at the time was unworkable. His about-turn is confirmation that his complicated scheme was indeed unworkable. Today's statement is not a triumph for the Secretary—[interruption.]

Mr. Speaker

Order. The Minister was heard in silence. The hon. Gentleman should not be shouted at.

Mr. Willetts

The statement today is a triumph and I pay tribute in particular to the Public Administration Committee and its Chairman, the hon. Member for Cannock Chase (Tony Wright), because it was his report above all that made it clear that the Government's previous proposals were unworkable.

Along with his statement, the right hon. Gentleman has produced a report from the Social Security Advisory Committee on how the compensation scheme should work for what he calls a small number of cases in which there is clear evidence of maladministration. Of course, those are the cases that were to be the central feature of the scheme announced in March. Will the right hon. Gentleman stand by the assurances that we have had from Ministers about the way in which compensation will operate in such cases? His colleague, the Minister in another place, said:

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.]

Does that assurance apply to the scheme that the SSAC has announced today?

On the costs of the proposal, the right hon. Gentleman referred to £1.5 billion. I want to be absolutely clear what he is talking about. We were told that the previous compensation scheme would cost£8.2 billion. Presumably his extra costs are on top of that, so are we talking of a scheme that will cost £12.2 billion? We would be grateful for his confirmation of that figure.

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. Does the Secretary of State agree with the judgment of his permanent secretary that that was indeed a mistake?

Mr. Darling

I acknowledge that the hon. Member for Havant (Mr. Willetts) has pleaded guilty on behalf of the Conservative party to gross negligence for a long period after the rules were passed. He then went on to ask how much the scheme would cost. I will explain. The total cost, over a 50-year period, is about £12 billion. That is the price that the country has to pay for the mess that the Tories left us. The figures that I gave him were that the extra, over and above the inherited SERPS scheme, for the scheme that I have announced today will be £1.5 billion over 10 years and £4 billion over the 50 years. The total cost is therefore£8 billion over a 10-year period and £12 billion over the 50-year period. That is how much we have to pay to put things right.

I apologise to the hon. Gentleman. I thought that I had sent him a copy of my statement, but his response suggests that he did not receive it. He seems to be under the impression that we are discussing a proposal made by the advisory committee. That is not the case. We suggest that, to put matters right, we must ensure that all existing pensioners— all the people over the state pension age as of 2002—should exempted from the scheme, because they can do nothing about their arrangements.

We are also doing what the previous Government should have done. We are introducing transitional arrangements for people nearing retirement and making sure that the scheme affects only people who have long enough to start to make the appropriate arrangements. We are doing now what the Conservative Government should have done 14 years ago, and which they did not do. That is an indictment of the previous Government. This issue and the mis-selling of pensions show that they had scant regard for pensioners. They spent little time listening to what pensioners wanted.

Mr. Frank Field (Birkenhead)

I very much welcome my right hon. Friend's statement. People will not be slow to contrast the clearness of his statement with the misinformation that was given by the Opposition.

May I concentrate my remarks on the people who are 10 years from retirement? Does my right hon. Friend recall that, in the House not two weeks ago, my right hon. Friend the Minister of State, Department of Social Security, who is responsible for pensions, said that all people had to do was tell the Department that they had not been informed of the change and that taxpayers would meet the Bill? Is it not true that, despite the generosity and creativeness of today's statement, some people who are 10 years from retirement are in a worse position today than they were a couple of weeks ago? What would it have cost to pay the SERPS entitlement fully to those 10 years from retirement? In effect, that would have created a clean slate, because everyone would have known that they would have to cover the period from 10 years hence, but no one within 10 years of retirement would have suffered.

Mr. Darling

My right hon. Friend has raised a point that enables me to return to one that I perhaps did not cover fully enough when I replied to the hon. Member for Havant. I refer to the scheme that the Department has run for many years in respect of maladministration. My announcement today means that most people who have been in touch with the Department will be exempted. The House may be interested to know that, of the 20,000-odd people who got in touch with the Department after my announcement in March, 70 per cent. were over the age of 65. Their position is now taken care of. In fact, only 3 per cent. were under the age of 50, and they are clearly more than 10 years away from retirement.

My right hon. Friend is interested in the transitional arrangements, and we are making sure that the policy is introduced gradually for people with 10 years or less to retirement. Those who are very close to retirement will receive 90 per cent. of their entitlement and those further away from retirement will receive a lesser entitlement that goes down to 50 per cent. That is a lot better than the original proposal for inherited SERPS. Under that, although it was for the Department to disprove claims, it was clear to me that there was a potential for maladministration and injustice. It was very difficult to prove exactly what had happened and who had said what to anybody else. However, we maintain the scheme to which the hon. Member for Havant referred. When someone has manifestly been misled—for example, a person may have a letter from the Benefits Agency that tells him he would have an entitlement when he does not—he will be entitled to redress in the normal way.

I say to my right hon. Friend that the scheme that we now propose is much fairer. First, all pensioners are exempted and, secondly, we get away from the obvious difficulties that one faces when someone could have come to the Department saying that he remembers seeing a leaflet in the dentist. Even though he does not exactly remember where or when, he may still have asked for compensation. That would not have been a proper way of dealing with the problem. The scheme that we are introducing today is fairer, it is just and, above all, it is workable.

Mr. Steve Webb (Northavon)

When I issued a statement to the press this morning stating that The only decent thing to do would be for the Government to cancel the cut to widows pensions for those who've already reached pension age, little did I expect that, within three hours, the Secretary of State would be in the House doing so. That represents an extremely welcome precedent, and I hope that it will happen again.

We unreservedly and enthusiastically welcome the Secretary of State's announcement. We are prepared to ignore the fact that in April, when we tabled an amendment to the Child Support, Pensions and Social Security Bill proposing an almost identical scheme, we were told that the cost would be enormous and that the proposal was not practical. The Secretary of State should have announced such a scheme a while ago, but we unreservedly welcome the fact that he announced it today.

I shall ask one question of detail. The Secretary of State has set up a tapering system for those close to pension age. On what basis has that phasing been calculated? Has it been calculated on the basis that people a couple of years from pension age could save a certain amount to top up their pension, so the percentage that they can pass on has been reduced accordingly? Does such a calculation underlie the tapering system?

That is a point of detail. I stress that the statement is enormously welcome and we welcome it unreservedly.

Mr. Darling

I must not be churlish, and I am grateful to the hon. Gentleman for his welcome for our proposals. His press release has escaped me so far, so I can honestly

say that no matter what he thinks, it did not have too much influence on what I had already decided. Nevertheless, I am grateful to him.

The hon. Gentleman asked about the sliding scale. There are two points to be made. First, I am writing today to all Members of the House setting out the scheme in a little more detail, including the sliding scale. It does not have an actuarial basis. It is a genuine attempt to ensure that as people approach retirement, they have enough time to make provision, so that we avoid one of the problems of the Conservative scheme, if I can call it that—the cliff edge effect: someone who died on 31 March was all right, but someone who died the next day was not. [Laughter.] I am sure that the House gets the drift. It depends, I suppose, on what view one takes of the afterlife. Perhaps I should more correctly say that I was referring to the position of the widow.

I am grateful to the hon. Member for Northavon (Mr. Webb) for his remarks, and also for the fact that he has abandoned a position that I understood the Liberals to support—a straight 10-year deferral, which of course does not fit the bill. [Interruption.] That was their position.

Tony Wright (Cannock Chase)

Even if my right hon. Friend missed the Liberal Democrat press release this morning, I am glad that he did not miss the report issued by the Select Committee on Public Administration a few days ago. This is an extraordinary story. It is a complete political failure and administrative shambles, and to put it right the Government must now put more money into the pot. It is a dreadful failure on the part of the previous Government.

What my right hon. Friend announced today is an act of justice. All SERPS pensioners will be grateful for it. I thank him for it. Although there is general agreement with the essence of his announcement, hon. Members are asking specific questions. He was going to consult on the details of the previous scheme. Will he consult on the details of the scheme that he announced today?

Mr. Darling

On the last point, the regulations that will enable us to operate the scheme will be sent to the Social Security Advisory Committee and to others for comment. I do not want to mislead people. The Government have decided that this is the course of action that they will follow. The detail is clearly important, but given the time that has elapsed since the problem first arose, and the fact that people need to make arrangements now, I want to get the regulations through the House as quickly as possible, so that the matter is dealt with once and for all.

There are two other points. I did, indeed, see the Select Committee report last week. I am sorry that I could not tell the Committee last week what I announced today. The decision had already been made but it was not possible to announce it.

Finally, I agree with my hon. Friend that when people look back, they will wonder how it was that, for almost 10 years after the law had been changed, the Tories did not tell people what had happened. Perhaps we should not be surprised, in view of the other things that they did while in office. It is an indictment of that Government that they caused so much misery and that it will cost quite a bit to sort the matter out.

Sir Norman Fowler (Sutton Coldfield)

I welcome the proposals, which are fair and sensible.

There are two issues to consider—implementation and policy. On implementation, I share political responsibility with all other Ministers since 1987. However, does the right hon. Gentleman recognise that I published a White Paper in 1985–86 setting out the change to SERPS; I made a statement in the House; I introduced the Second Reading of the relevant Bill, which also had a Committee stage; and I published under my own signature a leaflet on the changes to SERPS that was distributed around the country? In no way can it be said that the legislation and proposals were slipped through.

On policy, will the right hon. Gentleman confirm that he has now accepted our policy on SERPS and widows? There can be no doubt about that. Will he also confirm that had we listened to the advice of the Labour Opposition in the mid-1980s, who fought our proposals in every respect and all the way, no savings would have come out of this policy over the next 10, 20 or 30 years?

Mr. Darling

I appreciate that the right hon. Gentleman feels obliged to try to clear his name, but let me make one point about his reign at the Department of Social Security. The Department gave the correct information for one year after the law was changed when he was Secretary of State. The problem is that although he announced widespread publicity, it never happened and the wrong information was given after 1987.

I am grateful to the right hon. Gentleman for welcoming our proposals. It is a shame that the hon. Member for Havant could not do the same. However, that is not surprising: the right hon. Gentleman had the common sense to welcome the pension credit, which I announced two weeks ago, but the hon. Member for Havant has again shown how out of touch he is with the reality of pensions today.

Mr. Dennis Skinner (Bolsover)

Does my right hon. Friend agree that the electors knew something on 1 May when they got rid of that crowd opposite? Is he aware that in addition to the £12 billion that the Tories have cost the British people, they piled on another £5 billion with BSE and left us with a £28 billion deficit that we had to clear? All that adds up, and this Tory party has the cheek to take £4 million in Short money from the taxpayer—

Mr. Speaker

Order. The hon. Gentleman is a bit wide of the statement.

Mr. Skinner

Will my right hon. Friend take it into account that during the next six, nine or however many months it is to general election, we should lay the blame squarely and fairly where it should be—with that lot opposite? Most of them have been to public schools and are supposed to be clever, while we members of the ordinary, common, down-to-earth working class party, have had to bail them out.

Mr. Darling

I have never been described that way before, but the general thrust of my hon. Friend's remarks is right. The public have a right to know what Governments are doing to their pensions, and next year we are introducing an individual pension statement that will go to people so that they can see how much they will have to retire on. Had such a statement existed 14 years ago, the Tory Government would have had to tell people that they were halving SERPS entitlement.

It is also an advantage that the Tories are now committed to a policy of encouraging the under-30s to opt out of the basic state pension. It is interesting that in response to a parliamentary question tabled not by a Labour Member but by a Tory, the Government Actuary revealed that it will cost 16-year-olds £10 a week just to buy back the basic state pension that the Tories want to take off them. They will know all about that in the future.

Rev. Martin Smyth (Belfast, South)

On behalf of my colleagues and others, I welcome the statement. I also welcome the apology by Conservative Front Benchers and trust that Governments might be prepared to acknowledge that they make mistakes. Any human who has never made a mistake has made very little else.

I recognise that the Government are bringing together policy and organisational responsibility into a single organisation dedicated to pensioners. How will that work out in relation to the policy announced by the right hon. Gentleman in his statement? He said: next year, we will begin to send out combined pension statements, giving people more comprehensive information on their entitlements. When will that start—when people are 45, 50, or just coming up to pensionable age? Any redress would take some time and problems might arise if the statements were running late.

Mr. Darling

The two matters to which the hon. Gentleman refers are separate. We are bringing together the organisation and the policing-making functions of the Department of Social Security in relation to pensions, and we are doing the same thing for those of working age and children. That means that one person has end to end responsibility and we avoid the problem that was endemic in the old DSS, which had something of a Byzantine structure, where it was not clear who was responsible for what. In that way, we can ensure that, when we issue leaflets in future, or where policy is to change, the information is delivered on the ground and everyone knows about it.

The hon. Gentleman asked about the pension statement. They will start to be issued next year and they will be issued on a regular basis. Eventually, I should like people to receive them every year. That will tell them how much basic state pension they can expect, how much they will receive from their occupational or stakeholder pension, and give an indication, if they saved a little more, of how much more that would be reflected in additional pension. The idea is to ensure that people, particularly younger people who do not always think about their pensions, will have their minds focused on the fact that, if they want a decent and good income in retirement, they need to save for it. In addition, as I said earlier, if any future Conservative Government comes along and starts trying to take pensions off people, or to privatise the pension system, the public will know all about it.

Mr. David Winnick (Walsall, North)

Would not the most dignified way for the Opposition Front-Bench spokesman to have responded to the Government's welcome announcement have been for him simply to apologise unreservedly for all the anxiety that the Conservative Government caused so many people in Britain—and then to sit down?

Mr. Darling

I am sure that the hon. Member for Havant will work on his dignified responses. There have not been many so far.

Mr. David Rendel (Newbury)

As the person who first raised the matter with the National Audit Office, I, too, unreservedly welcome the Secretary of State's change of mind today. The second scheme that he has just announced is, without question, much better than his previous scheme and meets most, if not all, of the recommendations of the Public Administration Committee at its recent hearing. As a result of his statement, SERPS contributions that have already been made by people, whether in work or retired, now have a much higher value than they had only an hour ago. Is not some further recompense therefore also due from the Government to those who contracted out of SERPS and took out private pensions?

Mr. Darling

No, I do not think so. The measures that I have announced today will put right the injustice that occurred all those years ago, and that will be seen by most people as the right thing to do, as the hon. Gentleman also recognised. I do not propose to go further than that.

Dr. Lynne Jones (Birmingham, Selly Oak)

I congratulate my right hon. Friend on his statement today. Did he notice that the former Secretary of State, the right hon. Member for Hitchin and Harpenden (Mr. Lilley), who was in his place until a few moments ago, has chosen not to respond to the statement? My right hon. Friend talks about statements being issued to pensioners, which I welcome, but will they give pensioners an indication of their likely pension when they retire, whether or not the state pension is linked to earnings or to income?

Mr. Darling

The intention is that the statements will be issued to people of working age because it is they who need to know on how much they are likely to retire. The statement will give an indication of the value of the basic state pension. For example, had the statements been in widespread use now, they would announce that pensions are going up quite dramatically next year and would also set out the effect of the pension credit. The object of the pension statement is to help people of working age form a view about how much they need to save to enjoy the standard of living to which they wish to be entitled when they retire.

Mr. John McFall (Dumbarton)

As a member of the Public Administration Committee, I congratulate my right hon. Friend the Secretary of State on his profound statement today. I wish to comment on the sheer unalloyed cheek of the shadow Secretary of State. We have now had a disastrous hat-trick of BSE, rail privatisation and SERPS. The question on our lips is: why should the Government pick up the £12 billion bill that is the result of the previous Government's incompetence and a problem that has lasted since 1986? I remind the Secretary of State that, in evidence to the PAC, two former permanent secretaries, Sir Christopher France and

Dame Ann Bowtell, said that the Department was a shambles. The former Secretary of State, the right hon. Member for Hitchin and Harpenden (Mr. Lilley), told the PAC that it was not until 1988 that he found out about a problem that had lasted for 12 years.

Will my right hon. Friend the Secretary of State reassure me that information will go down to local offices, where the problem arose in the first instance, and that people on the ground will get their due rewards as a result of today's statement?

Mr. Darling

The tragedy is that the cost of picking up the pieces left by the Tories falls on us. It does not fall on the Government or the country, but on individuals who pay contributions in their taxes. People are paying dearly for the 18 years in which the Tories were in power, and we had to clear up the mess that the Conservatives left.

My hon. Friend also asked about the Department. When I became Secretary of State, I was struck by the fact that the DSS was in grave need of an overhaul, basically because its organisation had not changed for 20 or 30 years. Its Byzantine structure made it difficult to organise things, and the relationship between the Department and its agencies needed to be changed. We are putting those changes in place and I hope that we are now getting a tighter organisation.

It was also necessary to replace information technology systems so that front-line staff could be kept up to date on policy and know what it is. Once again, however, the problem is lack of investment, which has been a common theme. At Prime Minister's Question Time, one Member after another complained about the lack of investment under the Tories in the rail system and other services. We have now made money available to replace the Department's IT system. The Conservatives would put all that at risk with their £16 billion pledge to cut public expenditure.

Mr. Derek Twigg (Halton)

I congratulate my right hon. Friend the Secretary of State and the Minister of State, my right hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), on today's statement and on the work that they and others have done to bring it about.

Today's Opposition statement was probably one of the most disgraceful that I have heard in my time in Parliament. The Opposition did not apologise and say, "Sorry, we have some regrets." Instead, they seemed to regret the fact that they had been found out. Does my right hon. Friend the Secretary of State agree that there was pensions mis-selling under the Tories? He has now sorted out the debacle that they caused back in 1986. There is now more investment for pensions and the mis-selling of pensions has been sorted out. The dividing lines are clear: the Tories do not care about pensions, but the Labour party does.

Mr. Darling

My hon. Friend is right. The matter is not just about the mis-selling of pensions or the inherited SERPS scandal, because the Tories have learned nothing yet. Their proposals to begin privatising the basic state pension will mean that many people under 30, who should not go into funded pensions, will be mis-sold pensions. We would have to pay the cost of that. Indeed, we know that it will cost between £5 billion and £14 billion to begin the process of privatisation. In addition, the Conservative party must explain to 16-year-olds why they would have to pay £10 a week just to buy back the pensions that it would take away.

Mr. David Taylor (North-West Leicestershire)

I do not know if there is a doctor in the House who can tell us whether, physiologically, if one has two brains, then one has no sense of shame. My right hon. Friend's planned root and branch reform of the Department is welcome. However, does it include forms, websites, and training manuals so that when legislation changes in future, we can check whether the information that the Department provides is accurate, comprehensive, free of gobbledegook and written in plain English? Will that be audited externally and independently?

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.

Mr. Christopher Chope (Christchurch)

The Secretary of State obviously enjoyed making some party political comments this afternoon. Does he accept the verdict of the Public Administration Committee, which said that his own Government were responsible for perpetuating the matter and for making an already unsatisfactory situation worse by neglecting issues between 1997 and 1999? Would not his failure to admit that show that the Government are keen to pass responsibility on to everyone else? Their basic approach is to say, "Not me, guv."

Mr. Darling

I am sorry if the hon. Gentleman is distressed when political points are made in the House of Commons. That is an inevitable consequence of political parties being here. I remember, before he lost his seat at the election before last, that he was one of the most strident advocates of Thatcherism at that time. I am sure that he voted with great enthusiasm for the measure to take money away from pensioners and not to tell them about it. I make no apology for the fact that the Government have looked at the problem, listened to people and, above all, put the situation right in a fair and workable way. The Tories could never have done that.

Mr. Mark Todd (South Derbyshire)

I congratulate my right hon. Friend the Secretary of State on two matters: first, on an excellent statement, which responded fully to concerns that had been expressed; and secondly, on the process he followed. He listened carefully to trenchant criticisms of the proposal in the first place—some of them were made on the day of his statement—learned from them and chose to change his mind. He is to be complimented on that. A key outcome of the approach will be the provision of better information for pensioners about any change in policy, which is a course that I urged at that time. Does he agree?

Mr. Darling

I do agree with my hon. Friend, but I add a further point. During the past few months, there has been a tendency, particularly among the Conservatives, to say that the whole matter was somehow the fault of civil servants. It is not, and it was not. 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.

Mr. Dale Campbell-Savours (Workington)

When councillors in the 1970s and 1980s were negligent, they were surcharged and forced, by law, to pay the debt from their own pockets. Some of them were bankrupted. In light of this costly inheritance—the report makes that clear—and the negligence of Conservative Ministers in the previous Government who are responsible for the debt that our taxpayers have to pay today, how about changing the law on surcharge? That would involve those Ministers paying out of their pockets, because they are responsible.

Mr. Darling

Perhaps we should send the bill to the treasurer of the Conservative party and ask him to pay it.

Dr. George Turner (North-West Norfolk)

I congratulate the Secretary of State on his announcement, which the 23,000 pensioners in Norfolk will applaud even if they will not personally benefit from it. Will he pass on to the Chancellor of the Exchequer our recognition of the fact that the economy that the Government are delivering allows us to make decisions, including this one, in an atmosphere in which public services are being improved, not cut? That has, I am sure, played an important part in the settlement's generosity.

My right hon. Friend knows from correspondence from my constituents that many pensioners are proud of their independence. They will welcome the fact that there will be a division in his Department to deal separately with issues affecting pensioners. Will separate letterheads be used? Independent pensioners feel that they worked all their life without having to take state aid, and they should recognise that they are entitled to a pension—they do not need to go with begging bowl in hand to claim it.

Mr. Darling

My hon. Friend makes a good point. Part of the problem for the Department of Social Security was that it did not have a clear focus on the people whom it was meant to serve. Our efforts to help people into work are different from the services that we are trying to provide for the elderly. The organisation for pensioners will be distinct in every sense from the working age and child elements. During the next few years, we will introduce improvements to ensure that pensioners receive their entitlements and gain the information that they need to enable them to make sensible planning decisions. That has not happened in the past.

My hon. Friend the Member for North-West Norfolk (Dr. Turner) made another good point. It is precisely because of prudent management of the economy and the stable conditions that have been achieved that we can sort out the current mess in a way that is satisfactory to the great majority of pensioners. The previous Government could not have done that, as they did not have the necessary means. We have those means and are able to take action within the prudent plans set out by my right hon. Friend the Chancellor of the Exchequer.

Mr. Robert McCartney (North Down)

I join hon. Members in welcoming the Secretary of State' s statement. He made much of the necessity for transparency and for making pensioners aware of their rights. However, were the Government behaving transparently when they abolished tax credits and, through the imposition of a stealth tax, provided much of the money that can be used for the purpose set out in the Secretary of State's welcome statement?

Mr. Darling

Those measures were debated in the Chamber at great length. If the hon. and learned Gentleman was not present, that is his responsibility and not mine. The Government's proposals have meant that the corporate tax regime is appropriate to the modern age. We have reduced corporation tax, which benefits the insurance companies that provide pensions. All our tax changes have contributed to the stable economic conditions that now prevail. As I said, those conditions have enabled us to sort out a colossally difficult problem within the prudent plans set out by my right hon. Friend the Chancellor of the Exchequer.