HL Deb 04 May 1999 vol 600 cc543-6

2.45 p.m.

Baroness Castle of Blackburn asked Her Majesty's Government:

Whether and, if so, when an explanatory booklet was circulated by the Benefits Agency to contributors to SERPS, warning them of the effects on widows' pensions of Section 18 of the Social Security Act 1986.

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

My Lords, Section 18 of the Social Security Act 1986 introduced changes to the way SERPS would be calculated for those retiring or widowed after April 1999. The main changes were the abolition of the "best 20 years" provision and the reduction in the accrual rate from 25 per cent to 20 per cent. DSS leaflet NP46, previously NP32, A guide to Retirement Pensions, has given details of these changes since April 1987 and leaflet NP45, previously NP36, A guide to Widows' Benefits, since April 1996.

Baroness Castle of Blackburn

I think I find the Minister's Answer slightly evasive. I believe she is aware that we are all extremely anxious about the dilemma in which so many contributors to SERPS now find themselves with the halving of widow's entitlement through their SERPS pension. It is that upon which the Minister concentrated so excellently the last time this matter was discussed. Is it not true that her reply means that there has been no notification by this Government—we were not responsible for what happened in April 1996—and there have been no Benefits Agency communications to contributors warning them of the coming reduction in the widow's pension? As they were promised initially by John Major that they would have 14 years' notice to rectify this reduction by other means— and that notice now turns out to be a matter of months—will the Government not give their mind to how to rectify this scandal? If they do not express a willingness to revert to the original SERPS formula for widows, will they at least delay introduction of the change for a decade in order that some of the scandalous failure to give proper notice can be rectified?

Baroness Hollis of Heigham

My Lords, I am sorry if my noble friend thought I was being evasive. She asked a Question about Section 18 but the widows' benefit changes to which she refers come under Section 19. Knowing my noble friend's expertise in SERPS and social security Acts, I took the Question at face value. I agree with everything my noble friend said. In 1986 the previous government halved the potential entitlement to widows from 100 per cent to 50 per cent of SERPS. They took no action whatever to publicise the effects of the changes to their policies so that people could make decent alternative arrangements. A heavy responsibility lies with the Benches opposite. It is for us to seek, if we can, to rectify the failure of the previous government to publicise and inform. We are seeking to do that. We are taking legal advice. However, the proposal of my noble friend to delay introduction of the changes for a further 10 years would cost in the region of £5.5 billion. The Government are taking advice and exploring the avenues. As soon as I am able, I shall inform the House of the Government's proposals.

Lord Higgins

My Lords, is it not the case—as was clear when we previously had exchanges on this subject—that the correct information was not being given by the department under this Government as little as a few weeks ago? Having said that, can the noble Baroness confirm that the Minister of State said very clearly in another place that so far as concerns the lack of information on SERPS the Government are taking steps to ensure that no one suffers as a result of inadequate information? Can the Minister confirm that there is no possibility whatever of the Government reneging on that commitment?

Baroness Hollis of Heigham

My Lords, I had hoped that what I have just said would explain the situation to the House. We are taking legal advice about the implications of compensation on the one hand or a possible delay in the introduction of these proposals on the other in order to try to rectify the errors and mistakes made by the previous administration. My honourable friend in the other House has made the Government's position clear. I confirm that.

Lord Goodhart

My Lords, I welcome the statement in the other place. Will the Minister confirm that the compensation scheme which is to be provided will be full and generous and not be a mean scheme slipped out to the press on a Friday in August?

Baroness Hollis of Heigham

My Lords, I have not made any commitment that there will be a compensation scheme or any other form of recompense—a deferral or whatever. All these options are being explored by my right honourable friend the Secretary of State. Whatever way the Government may choose to go, the previous administration dumped us with a multi-billion pound problem, the bill for which is being picked up collectively, presumably, not only by the DSS but by widows and people currently in SERPS who have lost the opportunity, thanks to the previous administration's neglect, to build up alternative financial provision for the future.

Lord Rix

My Lords, will the Minister please explain how the change to spouses' benefits under SERPS which cuts back accrued rights is compatible with the United Kingdom's obligations under Article I of the First Protocol to the European Convention on Human Rights? Is it not a fact that Article I protects the proprietary rights of everyone against arbitrary and retrospective interference by the state?

Baroness Hollis of Heigham

My Lords, I am assured that the 1986 law is compatible with the European Convention. The problem is that the previous administration failed to inform the public about the implications of their policies so that people were unable to make decent alternative arrangements. That is where the problem lies. We are doing our best to rectify it.

Lord Davies of Coity

My Lords, is my noble friend the Minister aware of the words spoken by my right honourable friend Margaret Beckett in 1986 when responding to the Minister at the time, the right honourable John Major? She said: It is extraordinary that the Government should place people in such a position. I do not believe that the Government could not make the change transitional. They will be taking away the rights that have been earned. Once the change takes effect, the pension that has accrued will be halved. The whole pension will not be inheriiecl". —[Official Report, Commons Standing Committee B, 27/2/86; col.470.] In view of the principle that what applied then applies now, does my noble friend agree that the Government should either make changes so that the halving does not take place or, alternatively, introduce a transitional arrangement which displays a greater degree of justice and less discrimination?

Baroness Hollis of Heigham

My Lords, as I said, the Government are looking at all the options. But to defer, for example, the introduction of these changes by another 10 years would cost us—the Government and the DSS—£5.5 billion. It would cost that amount to rectify an error made by the previous administration. We are exploring the options but any move in that direction is extremely expensive.