HL Deb 13 April 1999 vol 599 cc615-8

Lord Rix asked Her Majesty's Government:

Whether halving the widow's and widower's inheritance of SERPS from 6th April 2000 and withdrawing the widow's bereavement allowance on the same date, instead of extending it to widowers, is consistent with the Government's general policy towards widows and widowers.

The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham)

My Lords, our policy is to treat widows and widowers alike by concentrating help for them when they most need it; that is, at the time of bereavement itself and when they have dependent children to support. Similarly, widowers will also for the first time have equal access to SERPS. Existing widows will, of course, retain their current benefits.

Lord Rix

My Lords, I thank the Minister for her response. but she did not mention that the ombudsman will be investigating complaints about SERPS. The notice appeared on 29th March, earlier this year. Will she confirm that a day later the Minister of State in another place stated, We are taking steps to deal with the situation that we inherited and to ensure that no one suffers as a result of inadequate information"? Does that mean that, whatever the ombudsman's findings, compensation will be paid to those who had no idea that SERPS had been changed since 1986; those, like me, who had been given incorrect information by 'phone; and those who had been given incorrect information by letter up to 12th January this year? Would the Minister also like to comment on this year's Budget assurance that widows would be "more than compensated" for the loss of the widow's bereavement allowance, when in fact widows over 60 will receive no compensation at all?

Baroness Hollis of Heigham

My Lords, on the final point, the noble Lord is entirely correct. There was a mistake made in the press release and the Inland Revenue has subsequently apologised for it. Let me be frank with the House; a mistake was made which has been corrected by the Inland Revenue and it has apologised for it. There is a time gap, of course, of 12 months before some of the new procedures may be put in place. However, the substance of the noble Lord's Question concerns SERPS. I hope that I may have the indulgence of the House to give a slightly longer Answer than normal because it is a rather elaborate Question. It is an extraordinary situation.

Back in 1986 the then government chose to bring the 100 per cent. right of a widow to inherit a pension down to 50 per cent.; in other words, they sought to align it with occupational pensions. That happened 14 years ago. The Secretary of State at the time, the noble Lord. Lord Newton, gave a commitment that there would be full publicity. For reasons none of us understands nothing happened and for a further decade the old leaflets were reprinted.

The story gets worse. In 1994 when some of your Lordships, including the noble Lord, Lord Mackay, myself and other colleagues were debating the Pensions Bill, my noble friend Lady Gould proposed an amendment on behalf of Age Concern addressing this self-same issue. That set the alarm bells ringing in the Box; the officials noted it, but again nothing was done. The situation again failed to filter down to local offices for reasons that we do not understand. Finally. Age Concern picked up the issue this October and we are now seeking to address it. The noble Lord, Lord Rix, is correct; the ombudsman has four cases. The advantage that the ombudsman has over the present Administration is that he can examine previous policy papers which are" of course, closed to us. He may be able to dig out information that we cannot. As I say, we cannot understand why this has happened. Obviously we are taking legal advice on the issue of compensation because the sums involved and the numbers of people involved could be large indeed. If one compensated fully, one could be talking about £5.5 billion by 2010.

Lord Higgins

My Lords, as regards the mistake in the Budget, who was responsible and what action has been taken as a result? As regards the compensation proposals, are we to understand that the Government intend to compensate people who suffered loss as a result of being misinformed by the department both in writing and on the telephone? If that is the case, can we have an assurance that it will be included in the welfare and pensions Bill to enable us to look at what precisely the Government propose to do about this?

Baroness Hollis of Heigham

My Lords, I have already answered the first point made by the noble Lord and I do not think I need to return to it. As regards his second point—

Noble Lords


Baroness Hollis of Heigham

My Lords, HM Treasury made a mistake for which it has apologised. I have apologised again. If noble Lords wish me to apologise a third, fourth and a fifth time, I guess that I can. However, your Lordships might just think that was unnecessary. However, going to the substance of the Question, as I said, we are currently taking legal advice on issues including compensation. As that is currently being discussed with legal advisers your Lordships will understand that I cannot go into the details of it. However, obviously the issue must be sorted out by April of next year when the changes are due to take effect.

Baroness Turner of Camden

My Lords, is the Minister aware that the proposed discontinuation of the widow's benefits and the withdrawal of entitlement to SERPS are bound to cause immense resentment because both are contributory benefits? Is she further aware that the resentment is being expressed through a number of organisations concerned with widows? I state my interest as a trustee of the Widows' Advisory Trust.

Baroness Hollis of Heigham

My Lords, it is certainly true that the widow's benefit has been a contributory benefit. It was devised in Beveridge's time, when most married women did not work and most men did not have access to occupational pensions. It is now the case that almost half of all widows have access to an occupational pension and almost three-quarters of all married women work and therefore have an income of their own. The purpose of that contributory benefit was to help the needs of those who would have no income, but that is now met in other ways. We are therefore seeking to refocus the widow's benefit—and to extend it to widowers—at the point of greatest need; the point of immediate bereavement and, secondly, to those with dependent children. I am sure that had the existing demographic situation been in place back in the 1940s, the policies that we are now proposing would have been devised.

Earl Russell

My Lords, is the Minister aware that the giving out of mistaken information goes even later than the case of January quoted by the noble Lord, Lord Rix? My honourable friend, Mr. Rendel, has a case as recently as 3rd March of this year. Does the Minister agree that any claim for compensation must rest not only on actions taken as a result of misleading information, but on inaction as a result of misleading information?

Baroness Hollis of Heigham

My Lords, I am not in a position to agree with that statement. That is precisely one of the issues upon which we are seeking legal advice. Certainly I deplore the fact—as I am sure does every Member of the House—that since 1986 no action was taken at local office level to give people the appropriate information to which they were entitled. This is not a story of the past 18 months, but a story of the past 12 to 14 years. We should all accept responsibility for that.

Baroness Castle of Blackburn

I agree with the Minister that the main responsibility lies with the previous administration for halving not only the widow's entitlement but also the value of SERPS—but it is not surprising that they tried to keep it all dark—is it not a fact that the Government have accepted and taken up the policy that they inherited and have kept dark about it too? Is the Minister aware that many of us receive letters from those who are affected saying that they have had no notification from the Benefits Agency that the Government were not prepared to restore the situation to that which applied before the Thatcherites ruined it?

Baroness Hollis of Heigham

My Lords, I am not sure that the Labour Government ever expected to reverse the situation back to pre-1986. But I certainly accept that this Government must take some responsibility for failing to pick up earlier the fact that the information going out was misleading. We do not know why and we do not yet know, until we have had full legal advice, what the legal and therefore financial implications may be for all of us.

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