Select Committee on Public Administration First Special Report


Letter from the Secretary of State, Department of Social Security, to the Chairman

I attach the Government's response to the Committee's report on the inherited SERPS issue. This problem arose when people were given wrong, misleading or incomplete information about rule changes introduced by the previous Government in 1986.

It is clear that the Department failed to ensure that the policy changes were properly implemented or that information provided to the public was accurate and complete. I said in March that 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. And I announced the Government's proposals for doing this on 29 November.

We have already deferred the change to the inheritance rules until 6 October 2002 so no one will be affected by the policy change before this date. The measures that I announced on the 29 November 2000 will give full protection to everyone who has reached state pension age by then. We also propose transitional arrangements for those approaching retirement age. My officials have sent you a draft of the regulations to give effect to our proposals.

To prevent this problem from happening again we have set about changing the Department. I mentioned this in my evidence to your Committee. For the future we want to ensure that people are told about changes to pension policy so that they can plan for their retirement in full knowledge of their position.

The very serious mistakes made following the 1986 inherited SERPS changes should have been sorted out 14 years ago. The measures we have put in place and are proposing will sort out the mess and prevent it from happening again. A detailed response to the Committee's conclusions and recommendations is attached. Clearly some of the matters you raise concern the Government as a whole and the response therefore reflects a cross Government view.

Alastair Darling

9 February 2001

Government Response to the Fifth Report by the Select Committee on Public Administration 1999-2000 (HC 433)

Administrative Failure: Inherited SERPS

(a) We conclude that the failure to amend leaflet NP32 initially was due to human error, but an error made possible by a wider failure of administration systems. (Paragraph 12)

1. The Government agrees with the Committee that a failure of administrativesystems led to the Department of Social Security (DSS) giving wrong information from 1987. As the Committee is aware, steps are being taken to strengthen the systems for ensuring accuracy in future. All benefit leaflets have been reviewed and a new process introduced to ensure all DSS leaflets are written in plain English and that they reflect what the law is at the moment. The Social Security Advisory Committee is scrutinising a selection of the Department's information products, looking at the assurance processes and considering how information and advice is provided. Within the Department audit provisions will be set up to ensure checks are completed systematically.

(b) We record our astonishment that even after the Bill team intervention in 1995, those politically and administratively accountable for the operation of the Department were not aware, or made aware, of a problem that cost billions of pounds to correct. (Paragraph 16)

2. The DSS has taken action to prevent such administrative failure happening again. The new dedicated Pensions Organisation and Working Age Agency will bring together all the services currently provided by DSS for key client groups; including in particular the establishment of end-to-end accountability from policy decision to implementation. The Pensions Organisation is intended to achieve a fundamental improvement in attitudes towards customer service. Pensioners are a distinct and important client group with their own needs and preferences, and DSS is developing a new service to meet their individual needs.

(c) We believe the failure of the Department between 1996 and 1999 to take adequate action to inform their staff and the public perpetuated an already unsatisfactory situation. (Paragraph 17)

3. The planned extension of the DSS's computer systems to give frontline staff access to rules and guidance via the DSS's Intranet and the new process introduced to strengthen the systems for ensuring accuracy of leaflets and involvement of external parties will help to prevent such unsatisfactory situations happening again.

(d) We welcome the Government's commitment to improving the antiquated and unreliable IT systems within the welfare system, which clearly contributed to administrative failure. (Paragraph 18)

4. The Government agrees with the need to replace the IT systems and welcomes the Committee's acknowledgement of their commitment to replacing the DSS's antiquated systems. Replacing the DSS IT system is a massive task which is now underway.

(e) The fact that virtually every witness who appeared before us offered apologies for what happened is a testament to the extent of this failure. (Paragraph 19)

5. The Government has always acknowledged that there was no excuse for the DSS giving wrong information from 1987.

(f) We welcome the moves to reorganise the DSS while noting that the return of operational matters to the Department might be thought to be at odds with the original purpose of the agency system. (Paragraph 20)

6. The Government is pleased that the Committee has welcomed the reorganisation of the DSS. The redrawing of its organisational boundaries has given the Department a much sharper focus on the effective delivery of outcomes for Pensioners and other client groups. It has clarified the role of the Benefits Agency as a service delivery agency and has established clear responsibilities for end-to-end management of services from design to delivery. The new structure remains consistent with the original agency concept of executive day-to-day delivery of services within an effective framework of Ministerial control and Parliamentary accountability

(g) If Benefits Agency staff are to provide the public with more advice, they need both training and the technology to enable them effectively to implement initiatives such as the 'one stop shops'. Communication will have to improve if the joining-up of Government is to work. (Paragraph 21)

7. DSS has suffered from a lack of investment over the last 20 years. As the Committee has said, action is needed to improve the communication of information to DSS's 90,000 staff. Funding is now available (in SR2000) for modernising much of DSS's computer systems, and for extending those systems to give frontline staff access to rules and guidance via DSS's Intranet.

(h) It is our opinion, certainly in cases such as this, that if Select Committees are unable to question those directly involved, then their investigatory function is severely curtailed. It is clearly important that when retired officials are asked to appear before Select Committee they are provided by Departments not only with the access to papers, to which they are entitled, but also with any further support they might need. (Paragraph 28)

8. The Government acknowledges the right of Select Committees to call whomsoever they wish, and it recognises that there may be exceptional cases where, without a former Minister's or retired civil servant's personal recollection, a Committee's knowledge and understanding may be incomplete.

9. The Government believes however that such cases will not be common. The basic principle of accountability to the House remains that it is the current Minister who is directly accountable to Parliament both for their own policies and for the actions of their Department. A former Minister clearly cannot give evidence on behalf of the Government, which must be the responsibility of current Ministers. Officials who give evidence to Select Committees do so only on behalf of their Ministers and under their direction; the evidence of retired officials cannot therefore form part of a Minister's accountability to the House since they are no longer representing him or her. It can only be an occasional supplement to the formal account offered by Ministers and their serving officials.

10. There are sound reasons for the convention that the current Ministerial or official post-holder gives evidence on behalf of the Government. Only the current holder has full access to the full analytical resources of the Department in question, both to provide a thorough briefing to the Committee and to represent the views of Ministers of the day. The life span of any piece of work very rarely coincides with one office holder, and only the current incumbent can give a Select Committee the whole story from a single source. The incumbent is also in a position to put matters right where errors have occurred. Conversely, retired officials are unable to provide evidence on developments since their retirement, and they do not necessarily have the time available to serving civil servants to prepare for such hearings. Nor does the Government believe that it would be right effectively to invite retired officials to break the obligation of confidentiality owed under common law to their past employers, for instance, by giving evidence about policy advice which they or others have offered.

11. In the event of their being called to give evidence, former officials may have access to papers, and Departments stand ready to provide them with support if they request it. However, it should be recognised that an appearance before a Select Committee is a considerable burden requiring a great deal of work for a private individual, regardless of any assistance that they receive.

12. The Government therefore remains of the view that, except for the unusual case where an individual's personal involvement and recollection is critical to an issue, it should be for current Ministers, or officials on their behalf, to consider the relevant papers and account to Select Committees.

(i) Doctrines of accountability and responsibility are central to parliamentary Government in Britain but the case of inherited SERPS illustrates the gap that exists between theory and practice. We believe that one of the lessons from this case is that steps should be taken to ensure that this gap is filled. (Paragraph 29)

13. The Government believes it is important to distinguish between the inherent difficulty in establishing the course of events, many of which took place more than a decade ago, which unfolded over a period of years and which were overseen by a previous administration, and issues about the system of accountability.

14. It has long been recognised that the chain of accountability is broken when events come to light after a change in the political party in power. Current Ministers cannot be held responsible for the actions of Ministers of a different Government. Equally, there may be obvious difficulties about seeking to hold former Ministers to account. The Government believes that the proper course is to hold the present Minister and serving officials liable to give an account of what happened, within the conventions including those relating to the papers of a previous Government.

15. In the SERPS case, despite the accepted difficulty in investigating events, which took place a long time ago under a previous administration, the Government notes that:

  • ministers and officials alike have accepted responsibility for wider administrative failures;

  • the DSS has set about putting the situation right;

  • individuals affected will of course have redress.

(j) We believe that the failure to inform the public was a systematic failure of the Department. We therefore concur with the Ombudsman that the obligation for redress is with the Department and that redress should be on a global, rather than an individual basis. (Paragraph 31)

16. The Government's proposal for redress was announced by the Secretary of State on 29 November 2000. Regulations will be laid before Parliament in due course.

(k) We welcome the Secretary of State's commitment to this Committee that we will be consulted on the draft regulations governing redress and be invited to respond to them. (Paragraph 36)

17. The draft regulations relating to the new proposals have been sent to the Committee.

(l) Our fear is that the original maladministration in this case may well now be compounded by a redress scheme that has all the makings of an administrative disaster. (Paragraph 39)

18. On 29 November 2000, following consultation on the protected rights scheme, the Secretary of State announced new proposals that replace the scheme to which the Committee referred.

(m) We welcome the Secretary of State's assertion that in future the public will be given more information about their entitlements and his commitment to introduce individual pension statements. (Paragraph 40)

19. For many years DSS has offered a service to individuals who wanted to know about their likely state pension entitlement. In 1987 a more comprehensive, dedicated, centralised forecasting service was introduced. A new service is planned for October 2001; working in partnership with employers and pension providers, the DSS will provide customers of participating schemes with a statement of their current and projected entitlement to state pension with their existing annual statements. This will also provide the opportunity for the Government to give people more information than it has done in the past about pensions and the choices they can make. The DSS is considering what further information it can provide for people both with these statements and through other means. For example, the Department is writing to all pensioner households to inform them of the plans announced on 29 November 2000 for the amount of State Earnings-Related Pension Scheme (SERPS) that widows or widowers can inherit from their spouse. The letter is designed to ensure that all pensioners are aware of these new arrangements and that the change will be effected automatically. Further steps to ensure that others are aware of the proposals will be taken.

(n) We agree with the Liaison Committee that pre-legislative scrutiny is a valuable addition to Parliament's range of tools for holding the Executive to account and for improving the quality of legislation. (Paragraph 41)

20. The Government is pleased that both the Liaison Committee and the Select Committee on Public Administration agree that pre-legislative scrutiny is valuable. The Government explained the constraints on the preparation of bills for such scrutiny in its response to the Liaison Committee Report (CM4737). Nonetheless, the Government is committed to publishing bills in draft where this is appropriate.

(o) We should like to see Select Committees, or special committees constructed for the purpose, undertaking regular post-legislative scrutiny. (Paragraph 43)

21. The Government notes that Select Committees already have the power to conduct post-legislative scrutiny, if they choose to do so, and some have held such inquiries. The Government has already indicated its willingness to consider the case for particular ad hoc committees on crosscutting subjects, if the Liaison Committee so requests.

(p) We recommend that Ministers, when introducing legislation, provide the House with a timetable showing how they intend to implement it. (Paragraph 43)

(q) We recommend they should also be required to publish Post-Legislative Reports (PLRs) on the implementation and effects of particular pieces of legislation. The timetable for PLRs should be contained within the implementation plan as part of the original Bill. (Paragraph 43)

22. The Government is committed to providing information about the implementation of legislation as soon as possible. But implementation planning often involves consultation with interests outside Whitehall, and requires regulations to be laid before Parliament; these may impact on any timetable for post-legislative scrutiny. Departments are already encouraged to evaluate their policy implementation and these evaluations are often published.

(r) We therefore recommend that each Department should institute a programme to review each piece of legislation to check departmental literature and internal procedures are consistent with the legislation and Ministerial statements. (Paragraph 44)

23. The Government recognises the importance of ensuring that supporting documentation is consistent with legislation, and will draw the Committee's concern to the attention of all Departments. The good practices of the DSS described in paragraphs 1 & 2 will be shared with other Departments. The Government does not however consider, on cost effective grounds, that the case for a formal Government-wide review of the kind that the Committee envisages has been made.

(s) This is certainly an extraordinary case. It represents a political and administrative failure that will cost the public purse many billions of pounds. It also represents a story of injustice to individuals. It reveals the gap between policy-making and its effective implementation. It underlines the long-term costs of not investing in proper infrastructure and keeping IT systems up to date. The present Government inherited the problem from its predecessors and has taken steps both to improve administrative systems within the DSS and to establish a redress scheme. We welcome these steps while warning about a redress scheme that is fraught with administrative difficulties and suggesting that alternative - and simpler - approaches should be examined. It is important that one administrative failure, of astonishing proportions, is not compounded by another. (Paragraph 45)

24. The Government welcomes the Committee's recognition of the steps it has taken to improve administrative systems. In the Secretary of State's announcement of 29 November 2000, he announced alternative proposals to provide transitional arrangements for those approaching state pension age and full protection for all pensioners.

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