HL Deb 27 June 2000 vol 614 cc768-852

3.12 p.m.

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

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.— (Baroness Hollis of Heigham.)

On Question, Motion agreed to.

Clause 38 [Preservation of rights in respect of additional pensions]:

Lord Rix moved Amendment No. 74: Page 33, line 22, after ("provide,") insert ("subject to subsection (4C) below,").

The noble Lord said: My Lords, I understand that psychologists explain both ancient and modern Sisyphean insistence on pushing boulders up mountains, only to see them roll down again, by a deeply-rooted conviction that a little ground is gained each time and the labour has not been therefore wholly in vain. Like my noble friend Lady Greengross, who is to follow me, whose labours I support, I am pushing once more in the hope of again gaining a little ground with Amendments Nos. 74 and 76. I note that the noble Lord, Lord Higgins, is more ambitious and is offering the prospect of solving all our problems by a substantial reversal of the onus of proof.

There are essentially three views on the SERPS saga, assuming agreement that all has not been as it should have been. View one is that the halving of SERPS inheritance was simply wrong and should be cancelled in its entirety. That is a tenable view, but I think that the battle has been lost. View two is that in failing to advertise the change, and indeed in positively denying the change, the department lost the right to save on pension inheritance for the whole period of duff information and all the people who are potentially affected by that duff information. That view is also valid, although I fear it, too, represents a lost battle.

The third view is that at least we should give special treatment within a compensation scheme to those who have been particularly disadvantaged, preferably on the face of the Bill, but in regulations and through ministerial undertakings about the scope of those regulations, if this is the best we can do. It is this third view that I am continuing to pursue today. If the Minister is turning her face against the face of the Bill—I coin a phrase, as it were—and if we could see the regulations in draft during the summer as part of the consultation process, it would assure us that these regulations will allay fears about the way in which claims would be handled.

I have, very modestly, targeted just two groups to add to those who have given incorrect or incomplete information either by letter or by telephone. I confess that I would have liked to include a further group; namely, those who had retired before the department became a little more forthcoming with the facts. I sense that I am on a loosing wicket with this one, too; but, rather like the England Test team, at least I can blame the wicket rather than the batsman. Nevertheless, I hope those other batsmen who have already retired are given a second innings when the rules of the game are being rewritten.

My surviving two groups are those who relied on departmental leaflets which were clearly misleading, and those who, whatever they may or may not have relied on, are now, by virtue of disability, unable to defend their own interests in pursuing a compensation claim. My noble friend Lady Greengross is targeting a third group of people who asked questions and might reasonably have expected to receive the right answers, whereas what they actually received was misleading or incomplete.

I hope very much that the Minister will be able to offer today the assurances we are both seeking about justice being done. Were she minded to underpin justice by accepting the amendment of the noble Lord, Lord Higgins, so be it. I beg to move.

Lord Higgins

My Lords, I must begin by congratulating the noble Lord, Lord Rix, on the way in which over a considerable period of time he has pursued this issue. As a result of that there has been a greater clarification of the present position. This matter first came to light some considerable time ago. Indeed, we debated it at length in the course of the debates on the Welfare Reform and Pensions Bill in October 1999. Subsequently there have been statements by the Government, notably on 15th March of this year, saying what the Government intend to do about it.

However, I am concerned about the timing and the way in which this matter has developed. It has been a considerable time since the matter first came to light. In the course of the debates last year we were told that there was to be an ombudsman's report. That report was in due course produced. But it took one year to produce it when the ombudsman merely examined six illustrative cases. That was a very long time indeed to deal with six illustrative cases. It is also true, as pointed out on previous occasions, that the ombudsman's report was far from clear on precisely what its recommendations were, although the Government have said that they accept them.

That is really the basis of my amendment. I comment only briefly on Amendment No. 76 standing in the name of the noble Lord, Lord Rix. Paragraph (b) of the amendment deals with people who, have a serious mental disability and as a result they are incapable of establishing a claim and they are likely to remain incapable throughout the duration of the scheme". Whatever else may happen, I certainly hope that when the Government come to produce their final scheme they will include provision for that category of person and others who may, in one way or another, be either physically or mentally incapable of dealing with the matter.

The earlier part of the noble Lord's amendment states that: A person shall he deemed to have received incomplete or incorrect information and to have relied on it if— (a) they read one of the relevant Benefits Agency leaflets and took the incorrect or incomplete information contained in it into account", when deciding what to do. Essentially, people who wish to receive compensation under the Government's proposals now face two hurdles, or at least that appears to be the case until eventually we discover what are the precise proposals. The first hurdle is that the person making the claim needs to demonstrate that he or she was misled or received incomplete information. The second hurdle is to prove that, as a result, he or she sustained a loss in one way or another.

Estimates of the amounts involved in terms of costs vary considerably, but there is little doubt that this sad saga is probably the most expensive administrative mistake of all time. I believe that the estimates vary between £2.5 billion up to £5.9 billion between 2000 and 2050. Of course, those costs will be spread over some 50 years. Nonetheless, this will be a major item of expenditure. We do not know how, in practice, the Government's proposals are going to work. We are still remarkably in the dark on this.

In his opening remarks, the noble Lord, Lord Rix, said that my proposal covered the whole problem. However, it covers only half of the problem. My amendment states that, regulations shall be based on the presumption that claimants have received incorrect or incomplete information unless the Secretary of State provides proof that the information the claimant received was correct and complete". My amendment, unlike that in the name of the noble Lord, Lord Rix, does not deal with the second leg of the argument; namely, whether people did or did not incur losses as a result of having been misled.

That brings me to the report of the ombudsman. I shall need to quote from it at some length at the point at which he discusses what happens when a department makes an administrative error. The ombudsman wrote to me in response to my inquiry, following an exchange on the Floor of the House in which the Minister said that if I wanted to know the opinion of the ombudsman, then I should write to ask him. I did so. This is part of his reply: It is reasonable in such circumstances to ask someone who claims to have been misled and to have suffered an injustice to prove his or her case. That is the normal requirement before the Department of Social Security will consider compensating someone who claims to have been misled or misdirected by the Department and as a consequence to have acted, or failed to act, in a way that has been to his or her disadvantage". The ombudsman goes on to say: In the case of SERPS, the Department's leaflets were not accurate; and incomplete and misleading advice was given by staff of the Department and the Benefits Agency. The department has acknowledged that". In the course of his investigations, he concludes: I suggested to the Department that the onus of proof was therefore reversed. It was for the Department to prove that someone would not have acted differently if they had not been misinformed. It seemed to me that the normal rules of the Department's non-statutory scheme of financial redress for maladministration would be inappropriate. The presumption had to be that anyone who could reasonably claim to have been misled and in consequence to have acted, or failed to act, to their detriment had a prima facie claim for redress". My amendment therefore states that it is accepted by the Government and by Parliament that people were misled. The reason for that is twofold: either they received the leaflet, in which case there cannot be the slightest doubt that people were misled—especially when taking into account the report from the ombudsman; or alternatively, for one reason or another they did not receive the leaflet and, as a result, they will have assumed that the original situation remained the same—that their widows would have been entitled to the full amount of SERPS. For those reasons, all my amendment—which is modest—seeks to do is to ensure that the Government's position is set out very clearly on the face of the Bill. It is extremely important that that should be done at this stage.

In his report the ombudsman stated that the department, will also need to take account of the fact that most of those misled by DSS or BA are likely as a result to have decided no action on their part was needed, because they had been led to believe that a surviving spouse was secure in an entitlement to full inheritable SERPS". Thus, if my amendment is accepted, the overall effect would be to ensure that the individuals concerned will be told in the leaflets to be issued in due course by the department that they do not have to prove, unless the department can prove to the contrary, that they were misled. However, they will still have to prove that they suffered loss as a result. In that regard perhaps my amendment is a little more rigorous than that tabled by the noble Lord, Lord Rix.

At the beginning of my remarks I stated that I was worried about the length of time it has taken to reach a resolution on this issue. We still do not know precisely what are the Government's proposals. In his report, the ombudsman pointed out that he, too, did not know the details and therefore he was unable to comment at this stage. One might think that he could perhaps have reported a little more broadly. In any event, given that this matter has been under consideration quite literally for years, we cannot simply leave it until the regulations are published. We need to reach a point where, at least as regards the first hurdle, we know exactly where we stand. I hope that that point can be clarified this afternoon.

Surely the department has by now some idea of what is to be contained in the regulations. Perhaps, as she has done so often and so courteously in the past, the Minister could provide us with them at this stage so that they could be debated during the course of the passage of this Bill. If we wait then we shall not be able to discuss them and to put down amendments to the Bill which could cover any points that we did not like, given that the regulations themselves will not be subject to amendment. It will be too late for this House to take a view on what should be done. We shall remain in ignorance of the exact details here.

At least as far as concerns the first hurdle, I hope that, when the House considers Amendment No. 75, it will take the view that this point should be clarified beyond any doubt whatever.

Baroness Greengross

My Lords, on previous occasions I have expressed grave reservations about whether a protected rights scheme is the best way to address the awful problem of inherited SERPS. However, today I shall limit my comments to the amendments before the House, which look at who should be covered by the scheme.

I very much welcome the amendment tabled by my noble friend Lord Rix. It has my full support and I hope that it will receive the support of the Government. I also have a great deal of sympathy with the approach adopted by the noble Lord, Lord Higgins, in his amendment. His amendment accepts that there is an obligation, albeit a moral one, for people to be positively informed of changes.

Amendment No. 76A, standing in my name, is a modest attempt to explore the current view on the definition of "incomplete information". It attempts to highlight the position of some people who fall into the category of being, not misinformed, but only not informed. They have a particular reason to believe that they should have been told of any changes. This might include those who, prior to 1986, based their decisions to contribute to SERPS at least in part on information they had been given as regards the inheritance provisions. Those people may have sought information about their future pension rights, but may not have asked specifically about the situation as regards their spouses, because I think that they would have taken it for granted.

I wish to consider in particular those people who asked for a pension forecast in order to plan their retirement. They were given one, but one without any specific guidance as regards their spouses. A number of people who have contacted organisations such as Age Concern have found themselves in this position. They believe that the information they received was incomplete because, although they were given detailed information about their future pensions, no reference was made at the time to changes in the law. I appreciate that consultation is on-going and that there will be further opportunities to consider the regulations. However, I would very much welcome the Minister's assurance that in looking at the definition of "incorrect or incomplete information" careful consideration will be given to the issues I have outlined.

3.30 p.m.

Lord Goodhart

My Lords, on behalf of these Benches I support the spirit behind all these amendments. I pay particular tribute to the noble Lord, Lord Rix, who has fought the battle in this House extremely valiantly and with good effect. I hope that he will continue to have that effect. He is now supported on the Cross-Benches—he was not when the battle began some considerable time ago—by the noble Baroness, Lady Greengross. I also support the amendment spoken to by the noble Lord, Lord Higgins.

As the noble Lord pointed out, there has been a cock-up on a massive scale in which a great many people have suffered. It is not by any means easy to decide who has and who has not suffered. It is something about which we on these Benches have felt very strongly ever since the matter was first raised in Parliament, which I believe was towards the end of 1998 by my honourable friend Mr David Rendel in another place.

This is a case where justice has to be done to the many people who have suffered. I very much hope that the Minister will be able to reassure us that when the regulations are published, which cannot be too soon, they will take into account the points raised in these amendments and in the debates which have taken place on this and other occasions.

Lord Renton

My Lords, I agree with noble Lords and the noble Baroness, Lady Greengross, who have tabled amendments to Clause 38. There is no doubt that confusion could arise unless something is done. I say in passing that for reasons connected with the mentally handicapped, among others, the noble Lord, Lord Rix, and I have tried our best to help. But on this occasion I prefer Amendment No. 75 in the name of my noble friend Lord Higgins. I believe that this matter would be more forcefully and clearly dealt with if that were done in accordance with regulations to be drafted. For that reason, and if the matter comes to a Division, I would be obliged to support my noble friend.

Baroness Carnegy of Lour

My Lords, I was unable to be present when this matter was discussed in Committee. I had to catch an aeroplane. I have read the debate and I am filled with admiration for the clarity with which noble Lords on all sides of the House discussed the matter. The issues are perfectly plain as a result of that discussion, and that is very clever considering that it took place between 10.15 and 11 at night. That was wholly admirable. I pay tribute to noble Lords. My noble friend Lord Higgins, the noble Lord, Lord Rix, and the noble Baroness, Lady Greengross, have reiterated their concerns.

I speak in particular to Amendment No. 75 because it is all-embracing. It is a very important principle. The nub of the matter is that the ombudsman said that the burden of proof should be shifted and the onus should be on the department to prove that a person has not been misled, instead of a person having to prove that he had been. The Government have accepted that in a number of ways and they are on record as having done so.

The Government want to put that decision into action following consultation and by their own route through regulations. Although the noble Lord, Lord Goodhart, said from the Liberal Democrat Benches that he supported all the amendments, he seemed to believe that regulations would do. My noble friend makes the point that the principle should be enshrined on the face of the Bill. We have not seen the regulations and it does not appear that we shall until the Bill has become law. Unless something of that nature is put on the face of the Bill we cannot be sure that this clear principle will be included.

I hope that the House and the Minister will accept my noble friend's amendment. If she does not, she needs to give us a full assurance that a government amendment would make the point clear at Third Reading. I do not believe that the House should leave the matter to chance. Regulations are not a suitable method for implementing this matter in any case because the detail will count. Unless we are sure that the principle is there the regulations may easily escape. I support my noble friend's amendment, as my noble friend Lord Renton has done.

Lord Elton

My Lords, I rise to speak briefly only because the noble Baroness, Lady Greengross, in speaking to her amendment, said in her closing remarks that in some way a palliative might be applied to her wish to have an amendment involving a reduction and that there would be regulations which we could discuss. The frustration of this place is that we can discuss regulations but we cannot amend them. Almost never do we reject them. I cannot remember when regulations were rejected. Therefore, once we get to Third Reading and beyond, the rabbit is out of the hutch and there is nothing that can be done.

The Government always prefer to proceed by regulation for fairly obvious reasons. My noble friend has left them with the opportunity, but merely stated the principle on which the regulations should be based. I should have thought that we are all agreed on that. I hope that his amendment can be accepted.

Baroness Hollis of Heigham

My Lords, we have debated the issue of inherited SERPS on many occasions. Like your Lordships, I endorse the tenacity, good humour and degree of detailed information that the noble Lord, Lord Rix, has brought to this matter on numerous occasions. I admire some of those virtues more than others.

We shall debate the matter once again once the regulations for the inherited SERPS scheme are drafted. I know that noble Lords opposite are suddenly filled with distaste for regulations, but perhaps I may point out that for 18 happy years the government of that time were perfectly pleased to carry quite substantial items through regulations without their necessarily being in the affirmative. This sudden change of heart when in Opposition is rather churlish. We are rather more scrupulous about using the affirmative rather than the negative procedure compared with the previous government.

Baroness Carnegy of Lour

My Lords, does not the noble Baroness agree that the issue we are now talking about is of a magnitude unlike almost any other for so many people? To have to deal with that matter by regulations in this House seems churlish.

Baroness Hollis of Heigham

My Lords, on the contrary, we shall be bringing forward the structure of a scheme, but its details may involve quite specific levels of payment. They need to be uprated without having to return to primary legislation, otherwise we shall fall foul of the Henry VIII principle. It been well established in the field of social security that matters involving numbers normally have to be dealt with through regulations for uprating without involving primary legislation and all its consequences.

Baroness Warnock

My Lords, I am grateful to the noble Baroness for giving way. The point is not that the detail has to be on the face of the Bill, but the principle. If the principle is there we may be content for the detail to come through regulations. I also point out that it may be true that a great deal was done by the Conservative government through regulations, but that was not willingly accepted by many Members on the Cross-Benches.

Baroness Hollis of Heigham

My Lords, I do not mean to sound discourteous, but noble Lords who have a particular concern often wish to see matters on the face of the Bill which in other areas they would regard as inappropriate because they are either declaratory or, alternatively, far too detailed.

Noble Lords will know, particularly on the Benches opposite—I see a smile of recognition from the noble Lord, Lord Higgins—that parliamentary draftsmen are very anxious that legislation should be tight and fitted to the appropriate purpose and that it should not embody broad statements of principle on the one hand, which come through statements made at Second Reading, nor the kind of detail that comes through regulations. Obviously, if your Lordships feel that the wording of proposed legislation should be amended, it is in your Lordships' hands to do so. However, so far as I am aware, we are following the broad principle established by parliamentary counsel and accepted by this House over many years.

Consultation about regulations is under way and I am grateful for the constructive contributions that many noble Lords have already made to this exercise. This is a problem that we have inherited. I am particularly grateful to the noble Lord, Lord Rix, for his amendments because it gives me the opportunity to reassure the House about the way in which we envisage deciding claims to the inherited SERPS schemes. It also gives me an opportunity to say a little about how we propose to allow for the situation where a would-be applicant for redress is no longer able to provide evidence of what happened because of mental disability.

As your Lordships know, we undertook to consult widely, including the parliamentary ombudsman, the National Audit Office, the Social Security Advisory Committee, Age Concern, and other organisations, about the operation of the scheme. I am grateful to the noble Lord, Lord Rix, and to the noble Baroness, Lady Greengross, for their contributions.

Our consultations are still progressing and I should not want to prejudge the outcome. I hope noble Lords will also understand where I am coming from and that I cannot anticipate some of the detail on which noble Lords might reasonably seek assurance until those consultations are complete.

This debate has reflected concern about the hoops and hurdles that many fear we may put in the way of applicants for redress. We have accepted the Parliamentary Commissioner's report and we are designing the scheme in a way that provides ready access to redress for those who are entitled to it.

If I disagree with the noble Lord, Lord Rix, it is about the best way to put the provision into law. He prefers to add it to the face of the Bill. While I appreciate his intentions and largely share the aims of his amendment, I should not want to pre-empt the results of the consultation exercise. I therefore prefer that the Government use the greater flexibility that is provided by setting out the detail in regulations. The Bill sets the framework for the scheme, but we are not yet ready to define all the rules in detail and we need the maximum scope to respond to points such as those raised by the noble Lord, and other points that we have probably not yet anticipated.

Having said that, I am clear on the two issues raised by the noble Lord in his amendment. I shall now follow my script quite closely and my words may be made available for circulation to organisations in order to provide advice and at least giving the reassurances that the noble Lord seeks.

The noble Lord's first point related to people who received one of the leaflets that provided incorrect or incomplete information about the rules on inheritance of SERPS additional pension. I am clear that anyone who read one of those leaflets and who took the information contained in the leaflet into account in ma king decisions about building up their pension satisfies the principal test. That would also include people who took into account information passed on to them by, for example, friends or relations who had read the relevant leaflets. I am happy to confirm that this includes the clients of organisations such as Age Concern and citizens advice bureaux who were given incorrect or incomplete advice obtained originally from the DSS.

When the time comes for people to make their claims, we envisage asking them a few questions about how and roughly when they saw a leaflet. I want to make it clear that we shall not expect them to produce the leaflet or to quote it verbatim. Their own account of what they did is likely in many cases to be enough to reach the decision that they are entitled to redress to have their rights preserved. We have not finally decided what the regulations will say, and I should not want to be prescriptive at this point about all the circumstances we expect to cover, but I am happy to tell your Lordships that we shall make that clear.

Lord Higgins

My Lords, I am grateful to the noble Baroness for giving way. Yes, of course, it is true that if people saw the leaflet or if they were wrongly advised by someone who had seen it, they were misled. But it is also true that people who did not see a leaflet for one reason or another thought that the situation was the same as they had originally thought; consequently they, too, have been misled. In other words, anyone who believed that he or she was entitled to widow's SERPS was misled, and that is what the amendment seeks to address.

3.45 p.m.

Baroness Hollis of Heigham

My Lords, the noble Lord refers to his own amendment. I am dealing with the amendment moved by the noble Lord, Lord Rix. If the noble Lord will do me the courtesy of waiting until I have finished responding to the noble Lord, Lord Rix, I shall be happy to engage in the debate on his amendment and perhaps address his point.

The second part of the amendment of the noble Lord, Lord Rix, deals with people who may have received incorrect or incomplete information but who are no longer able to make a claim for themselves for redress because they suffer a severe and continuing mental disability. That is an issue that the noble Lord helpfully raised as part of our consultations.

I am happy to confirm that we accept the spirit of the noble Lord's amendment and want to make sure that such people are covered in an appropriate way that is unambiguous. I am not in a position now to define precisely what the outcome will be. We have work to do on a definition of the people we should wish to include. We also have more to do to decide exactly how we should allow for people in that situation.

But our intention is clear. People with a severe and continuing mental disability will not be disadvantaged in their ability to obtain redress. On that basis, I hope that the noble Lord, Lord Rix, will feel able to withdraw his amendment. I have done my best to give him the assurances that he sought in moving it.

I am grateful also to the noble Baroness, Lady Greengross, for her contributions on this subject. I know that she is concerned that the SERPS scheme should work as effectively as possible. The noble Baroness's amendment refers to circumstances in which a person could reasonably have been expected to be informed about the SERPS reduction and that such circumstances should be taken account of when considering whether or not a person satisfies the first test. As the noble Baroness said, she is concerned that those people who made inquiries about their pension entitlement. For example, they may have asked for a pensions forecast but did not specifically ask about widows entitlement—this overlaps with the concerns of the noble Lord, Lord Higgins—and who had a reasonable expectation to he informed about the widows changes.

The amendment as drafted could have a very wide application. I am not sure whether the noble Baroness is arguing the point, but we could not, for example, accept that her amendment embraced those who might argue that they should have been notified individually of the changes in the law. We went over this ground in Committee and I can only repeat that I do not believe that a special case should be made for inherited SERPS. This is only one of three significant changes made to state pensions in the Social Security Act 1986.

If the Government accepted that people had a reasonable expectation of being told about the change to inherited SERPS, would it not mean that the other changes introduced at that time should also not apply to them if they were not personally told about them? Of course, they were not. These changes included, for example, that entitlement based on the 20 best years was no longer to be the case but was to be based on the whole working life; and they included the difference in accrual rates. The provision with regard to widows is of lower financial significance than the 20 best years provision. People were expected to rely on the information in the leaflet, and there was never any suggestion that they should be individually notified about the changes or, if they were not individually notified, that they were entitled to be protected from their impact. The case of inherited SERPS and widows must therefore be aligned with the other changes that took place as a result of the 1986 Act.

I accept the point that inherited SERPS is an exceptional case in that the information was consistently omitted from departmental leaflets for 10 years. Even after it was included, many people were still given incorrect or incomplete information. There is no disagreement about that. I accept also that the noble Baroness seeks to ensure that the scheme operates fairly. But my comments in relation to the noble Baroness's amendment also apply here. We are still consulting. We have not finally decided on the regulations.

What I am concerned to establish is that we should not accept, or appear to accept, the principle that everyone was entitled to individual notification. That has never been the way of government legislation. As we are still consulting, it would be premature to be prescriptive at this stage. However, we shall certainly take account of the views expressed to us on these points. On that basis, I believe that the noble Baroness's amendment is premature and I hope that she will feel able to withdraw it.

As to Amendment No. 75 in the name of the noble Lord, Lord Higgins, on 15th March I repeated the Government's statement about inherited SERPS. The noble Lord was quick to highlight the issue of where the burden of proof should lie in an application for redress under the scheme. He urged, as did the ombudsman, that it should lie with the department. The noble Lord, Lord Goodhart, quoted from the ombudsman's report and urged the Government to accept that the scheme should cater for people who took no action and would have difficulty demonstrating that they would have acted differently if correctly advised.

The words used in the Statement in another place and repeated by myself were: I intend to accept all the recommendations made by the NAO and the ombudsman".—[Official Report. 26/3/2000; col. 1609.] Among other things, the Government accept that the burden of proof lies with the department. We accept also the ombudsman's point that the inherited SERPS scheme must be capable of a global solution that includes providing redress to persons who were misled and took no action.

Amendment No. 75 requires us to presume that all applicants under the scheme received incorrect or incomplete information unless they were specifically given the correct information. That goes much further than the amendment of the noble Baroness, Lady Greengross. It does not allow for the situation in which a person had neither received nor requested any information. The noble Baroness's amendment deals with persons who raised a query being expected to cast a wider net for information.

The noble Lord, Lord Higgins, was logically contradictory. He said that the first test was whether the person would have acted differently, to avoid financial detriment. If one accepts that a person did not know positively about the change—the amendment presumes they were misled—I do not see how the second test of suffering loss could be established, if the individual did not know there was any change that might produce the loss that followed.

On the basis of the noble Lord's case, anybody who did not know about the change would be entitled to compensation—provided they could show financial loss. But if they did not know—and did not know the action they might have taken if they had known—one cannot logically move on to the noble Lord's second step.

The noble Lord is looking puzzled. There are two steps. First, it is expected that the person can show that they were misled. The burden of proof is on the department. If a person claims that they relied on the information to take action—or to decide not to take any action—with resulting financial consequences, they move on to the second step of financial detriment. The noble Lord seems to be saying that somebody who did not know— whether or not they were misled because they had no information at the time—could subsequently show that they suffered financial loss. We cannot know whether they suffered financial loss if they did not know at the time about the changes and the action they might have taken.

Lord Higgins

My Lords, either they were misinformed—that is common ground—or they thought the situation was as originally stated, which was that the wife would inherit the full SERPS. If they did not know about the change, they may not have made provision for their wives as they otherwise would have done.

Baroness Hollis of Heigham

My Lords, how could they know now what they would have done then, if they had known what they did not know? The noble Lord's second position cannot hold. If they did not know, they could not have known what they might have done if they had known. By definition, that has to be true. I will send the noble Lord a note to that effect.

The change to SERPS inheritance was only one of three significant changes in the Social Security Act 1986. The others were the 20 best years calculation, the reduction over 10 years from 25 per cent of earnings to 20 per cent, and the reduction in the survivor's pension from 100 per cent to 50 per cent. In 1995 there were further major changes. The link between SERPS and alternative pension provision was broken and the annualisation formula was introduced—matching a person's earnings to the years in which they were earned. Finally, there was the equalisation of state pension age, so that women would not be able to collect their SERPS until age 65—the same as men.

If the Government accepted that people had a reasonable expectation of being told about the change to inherited SERPS, would that not mean that the other changes that I have outlined would also not apply to people who were not personally told about them? Although the information was contained in the leaflets, the previous administration did not tell people personally about those changes. People who did not pick up the right leaflet would also have remained ignorant of the change to the 20 best years rule.

It has never been the Government's position that they are responsible for people's ignorance of changes to the law. We have here the much narrower situation in which the then government persistently gave misinformation in leaflets. Our changes are intended to redress that situation.

The Government have already publicly accepted the NAO and ombudsman's recommendations. We are consulting widely on how to put them into effect and will put the resulting regulations before the Social Security Advisory Committee, Public Administration Select Committee and the ombudsman. As a final stage, the recommendations will come before both Houses of Parliament and require your Lordships' approval.

The situation that we inherited was not that people did or did not know about the change but that some—we do not know how many—were misled as a result of the then government's continued propagation of misinformation. We are seeking to correct misinformation, not lack of information. That is the difference between the noble Lord's amendment and our position. The Government have never been responsible for correcting lack of information—only misinformation of which the Government were the author. The inherited SERPS scheme must provide redress to individuals and the regulations that establish it must satisfy various interested parties—including the ombudsman.

I hope that I have addressed the issues raised by the noble Lord, Lord Rix. I have gone as far as I can to meet the concerns of the noble Baroness, Lady Greengross, although they are still for discussion. The noble Lord, Lord Higgins, is asking us to take a step much farther—one that his government would not have contemplated in the 1985 and 1986 Acts—in saying that unless a person was notified by the Government, it must be assumed that they were misled. That has never been the Government's position. No government could adopt such a position. However, where government were the author of misinformation, they have a moral and, in my view, legal and financial obligation to correct the situation—which is what we propose in good faith. With that explanation, I hope that noble Lords will not press their amendments.

Lord Rix

My Lords, before the Minister sits down, did I hear her say that organisations will have the opportunity to see draft regulations before they are laid'?

Baroness Hollis of Heigham

My Lords, if we are asking organisations to take part in drawing up the regulations, I see no reason not to allow that. A different status applies, in terms of consultation, in respect of official organisations such as the Social Security Advisory Committee.

Lord Rix

My Lords, there has to be some logic in rolling boulders up hills. If one is persuaded that the chances of getting further are remote, the logic is to call a halt. The Minister has helpfully gone as far as the Government are prepared to go at the pre-regulation stage. I appreciate and welcome her assurances—particularly the opportunity to study and comment on the draft regulations before they are laid and past amending.

Like the actor I once was who wishes to believe his kind notices, then is surprised when the box office is disappointing—I am happy to say that I was rarely in that position—I wish to believe the Minister's kind words and will be most surprised if the regulations are disappointing. In light of the Minister's undertaking, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Higgins moved Amendment No. 75: Page 33, line 36, at end insert— (""(4B) The regulations shall be based on the presumption that claimants have received incorrect or incomplete information unless the Secretary of State provides proof that the information the claimant received was correct and complete."").

The noble Lord said: My Lords, I beg to move Amendment No. 75 and seek the opinion of the House.

4 p.m.

On Question, Whether the said amendment (No. 75) shall be agreed to?

Their Lordships divided: Contents, 166; Not-Contents, 135.

Division No. 1
CONTENTS
Ackner, L. Elton, L.
Addington, L. Ezra, L.
Alton of Liverpool, L. Falkland, V.
Anelay of St Johns, B. Fookes, B.
Astor, V. Forsyth of Drumlean, L.
Astor of Hever, L. Garel-Jones, L.
Attlee, E. Geddes, L.
Avebury, L. Geraint, L.
Beaumont of Whitley, L. Glenarthur, L.
Belstead, L. Glentoran, L.
Biffen, L. Goodhart, L.
Blackwell, L. Gray of Contin, L.
Blaker, L. Greaves, L.
Blatch, B. Hamwee, B.
Boardman, L. Hanham, B.
Brabazon of Tara, L. Hanson, L.
Bradshaw, L. Harris of Greenwich, L.
Bridgeman, V. Harris of Richmond, B.
Brittan of Spennithorne, L. Haslam, L.
Brougham and Vaux, L. Hayhoe, L.
Burnham, L. Henley, L. [Teller]
Buscombe, B. Higgins, L.
Butterworth, L. Howe, E.
Byford, B. Howe of Aberavon, L.
Caithness, E. Howell of Guildford, L.
Campbell of Alloway, L. Hurd of Westwell, L.
Campbell of Croy, L. Hylton, L.
Carnegy of Lour, B. Jacobs, L.
Chadlington, L. James of Holland Park, B.
Chalker of Wallasey, B. Jenkin of Roding, L.
Clark of Kempston, L. Jopling, L.
Clement-Jones, L. Kelvedon, L.
Coe, L. Kimball, L.
Colwyn, L. Kingsland, L.
Cope of Berkeley, L. Laing of Dunphail, L.
Courtown, E. Lamont of Lerwick, L.
Cowdrey of Tonbridge, L. Lester of Herne Hill, L.
Cranborne, V. Linklater of Butterstone, B
Crathorne, L. Liverpool, E.
Crickhowell, L. Ludford, B.
Cuckney, L. Luke, L.
Dean of Harptree, L. Lyell, L.
Denham, L. McNally, L.
Dholakia, L. Mar and Kellie, E.
Dundee, E. Marlesford, L.
Eden of Winton, L. Masham of Ilton, B.
Elliott of Morpeth, L. Methuen, L.
Miller of Chilthorne Domer, B. Selborne, E.
Miller of Hendon, B. Selsdon, L.
Monro of Langholm, L. Sharp of Guildford, B.
Monson, L. Sharples, B.
Montrose, D. Shaw of Northstead, L.
Mowbray and Stourton, L. Shrewsbury, E.
Moynihan, L. Shutt of Greetland, L.
Murton of Lindisfarne, L. Simon of Glaisdale, L.
Naseby, L. Skelmersdale, L.
Newby, L. Smith of Clifton, L.
Nicholson of Winterbourne, B. Stewartby, L.
Northbrook, L. Stoddart of Swindon, L.
Northesk, E. Strathclyde, L.
Northover, B. Swinfen, L.
Norton of Louth, L. Taverne, L.
Oppenheim-Barnes, B. Tebbit, L.
Palmer, L. Thatcher, B.
Peyton of Yeovil, L. Thomas of Gwydir, L.
Phillips of Sudbury, L. Thomas of Walliswood, B.
Pilkington of Oxenford, L. Thomson of Monifieth, L.
Plummer of St. Marylebone, L. Tordoff, L.
Rawlings, B. Trefgarne, L.
Reay, L. Trumpington, B.
Redesdale, L. Vivian, L.
Rees, L. Waddington, L.
Renfrew of Kaimsthorn, L. Wallace of Saltaire, L.
Renton, L. Walmsley, B.
Roberts of Conwy, L. Walton of Detchant, L.
Rodgers of Quarry Bank, L. Warnock, B.
Roper, L. Watson of Richmond, L.
Russell, E. [Teller] Wigoder, L.
Ryder of Wensum, L. Wilcox, B.
Saatchi, L. Williams of Crosby, B.
Saltoun of Abernethy, Ly. Willoughby de Broke, L.
Scott of Needham Market, B. Windlesham, L.
Seccombe, B. Wolfson, L.
NOT-CONTENTS
Acton, L. Falconer of Thoroton, L.
Ahmed, L Farrington of Ribbleton, B.
Ali, L. Faulkner of Worcester, L.
Amos, B. Filkin, L.
Andrews, B. Fyfe of Fairfield, L.
Archer of Sandwell, L. Gale, B.
Ashley of Stoke, L. Gavron, L.
Ashton of Upholland, B. Gibson of Market Rasen, B
Bach, L. Goldsmith, L.
Bassam of Brighton, L. Gordon of Strathblane, L.
Berkeley, L. Goudie, B.
Bernstein of Craigweil, L. Gould of Potternewton, B.
Billingham, B. Graham of Edmonton, L.
Blackstone, B. Greengross, B.
Blease, L. Gregson, L.
Borrie, L. Grenfell, L.
Bragg, L. Hardy of Wath, L.
Brennan, L. Harrison, L.
Brooke of Alvcrthorpe, L. Haskel, L.
Brookeborough, V. Hayman, B.
Bruce of Donington, L. Hilton of Eggardon, B.
Burlison, L. Hogg of Cumbernauld, L.
Carter, L. [Teller] Hollis of Heigham, B.
Chandos, V. Howells of St. Davids, B.
Christopher, L. Hughes of Woodside, L.
Clarke of Hampstead, L. Hunt of Kings Heath, L.
Cledwyn of Penrhos, L. Hylton-Foster, B.
Crawley, B. Islwyn, L.
Davies of Coity, L. Janner of Braunstone, L.
Davies of Oldham, L. Jay of Paddington, B. (Lord Privy Seal)
Desai, L.
Diamond, L. Jenkins of Putney, L.
Dormand of Easington, L. Kennedy of The Shaws, B.
Dubs, L. King of West Bromwich, L.
Elder, L. Laird, L
Evans of Parkside, L. Lea of Crondall, L.
Evans of Watford, L. Levy, L.
Lipsey, L. Rendell of Babergh, B.
Lockwood, B. Richard, L.
Lofthouse of Pontefract, L. Rix, L.
Longford, E. Sainsbury of Turville, L.
Lovell-Davis, L. Sawyer, L.
Macdonald of Tradeston, L. Serota, B.
McIntosh of Haringey, L. [Teller] Sewel, L.
Shepherd, L.
MacKenzie of Culkein, L. Sheppard of Liverpool, L.
Mackenzie of Framwellgate, L. Shore of Stepney, L.
Mallalieu, B. Simon, V.
Marsh, L. Smith of Leigh, L.
Mason of Barnsley, L. Stern, B.
Massey of Darwen, B. Stone of Blackheath, L.
Merlyn-Rees, L. Strabolgi, L.
Milner of Leeds, L. Symons of Vernham Dean, B
Taylor of Blackburn, L.
Mishcon, L. Taylor of Gryfe, L.
Mitchell, L. Tomlinson, L.
Molloy, L. Uddin, B.
Molyneaux of Killead, L. Varley, L.
Morris of Castle Morris, L. Warner L.
Morris of Manchester, L. Warwick of Undercliffe, B.
Nicol, B. Wedderburn of Charlton, L.
Orme, L. Whitaker, B.
Parekh, L. Whitty, L.
Patel of Blackburn, L. Wilkins, B.
Peston, L. Williams of Mostyn, L.
Pitkeathley, B. Williamson of Horton, L.
Plant of Highfield, L. Winston, L.
Ramsay of Cartvale, B. Woolmer of Leeds, L.
Randall of St. Budeaux, L. Young of Old Scone, B.

Resolved in the affirmative, and amendment agreed to accordingly.

4.10 p.m.

[Amendments Nos. 76 and 76A not moved.]

Clause 39 [Home responsibilities protection]:

[Amendment No. 77 not moved.]

Baroness Fookes moved Amendment No. 78:

After Clause 42, insert the following new clause—

    cc784-800
  1. CONSULTATION ON PENSION UPRATING: RESIDENCE OUTSIDE GREAT BRITAIN 8,288 words
    2. cc800-6
  2. STATEMENT OF GOVERNANCE OF OCCUPATIONAL PENSION SCHEMES 2,888 words
    3. cc806-52
  3. REMOVAL OF RESTRICTION ON PENSION ANNUITIES 23,275 words, 2 divisions