Select Committee on Social Security First Report


The Social Security Committee has agreed to the following Report:—


1. The Social Security Act 1986 reduced by 50% the maximum amount of State Earnings Related Pension that widows or widowers could inherit on the death of their spouse, if they died after 5th April 2000. The advance warning of the implementation of the changes, of some 14 years, was designed to allow people to plan their pension arrangements. The then Government gave assurances during the passage of the Bill[1] that it would mount a major publicity campaign to explain the changes. There was a failure to do so. Incorrect leaflets were issued and incorrect information given by local offices. This failure persisted even after it came to official attention during the passage of the Pensions Act 1995.[2] Reports by the Public Accounts Committee[3] and the Public Administration Committee[4] following reports by the C&AG and the Parliamentary Ombudsman highlighted the failure either to recognise the problems or effectively manage the administrative process.

2. The Department of Social Security ('the Department') does not have a duty to provide information on changes in law, but where it does issue such material, it has a legal responsibility to ensure that it is accurate and complete. This leads to the paradoxical situation that, if the Department had provided no information, there could have been no question of liability. The Permanent Secretary of the Department said in evidence to the Public Administration Committee[5] that if the Department had not said anything about changes in inherited SERPS, then technically it would not have been liable.

3. In normal circumstances the Department operates a non-statutory scheme to offer financial redress for maladministration. Under this it may make a special payment to any person who has suffered a loss of statutory entitlement or an actual financial loss as a result of misleading information or advice. Each case is decided on its own merits. However, the Government announced[6] that, in this instance, redress would be on a global basis and that a claim for compensation would be considered from anyone who could establish that the advice they received was inaccurate and, as a result, acted to their detriment. Prompt action partially to alleviate the problem was taken by proposing a delay to the implementation of the change to 6th October 2002 (at a cost of two and a half billion pounds) and asking the independent Social Security Advisory Committee (SSAC) to conduct a public consultation on the proposals for redress.

4. The SSAC issued a strongly critical report[7] which rejected the Government's proposals, and proposed instead a system of transitional protection for people over 60 or approaching retirement age in 2002 when the reduced inherited SERPS provisions come into effect. The Government then made a further announcement[8] of an entirely new scheme which broadly encompasses the SSAC proposals. The package will provide protection for more than one and a half million widows and widowers over the next ten years[9]. The total cost (over 50 years) will be £12billion. Details of the proposals are in the Appendix to the report.

5. In evidence[10] the Secretary of State undertook to consult the Committee and added[11] that the Department had been re-organised in order to focus on those in receipt of benefits, such as pensioners. The Government's firm intention to implement the new scheme as soon as possible was confirmed in the statement to the House:

    "... the regulations that will enable us to operate the scheme will be sent to the SSAC 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...I want to get the regulations through the House as quickly as possible, so that the matter is dealt with once and for all." [12]

The draft regulations were sent to the Committee on 20 December.

6. The very poor administration which allowed this mistake to be perpetrated and continued for some 10 years is of very great concern to the Committee. The error is now going to be corrected, but at enormous expense, using money which could be much better spent in improving the lot of the poorest in our society. We believe, however, that it is to the Government's credit that it has responded to the representations of the SSAC and others by announcing an entirely new scheme rather than persevering with the compensation plan which would have led, in our view, to severe problems of implementation, centred around the burden of proof that claimants had been misinformed.

7. Having studied them carefully, we believe the proposals contained in the draft regulations which will be laid before the House are broadly acceptable and will give people a reasonable time to make appropriate alternative arrangements while protecting the interests of those who will be affected in the period from 6 October 2002 when the transitional arrangements start to be implemented.

8. Of course if the original plan had been properly implemented the need for this expensive replacement would have been avoided. Therefore the Committee is very concerned that there should be a comprehensive publicity campaign announcing the changes and that clear information (in various languages where appropriate) should be widely disseminated via the media, the Department's local Offices and at Post Offices. Those people who have contacted the Department during the period of misinformation and whose addresses are available to the Department should be contacted directly. Furthermore we believe that the Department should take all necessary steps to ensure that the implementation of the scheme is undertaken efficiently and fairly. We shall expect the Government, in its reply to this report, to give firm assurances that the mistakes of the past will not be repeated and that the implementation of the Inherited SERPS scheme will be undertaken to the highest standards.

9. The Committee will observe the progress of the scheme with great interest. We may wish to investigate the implementation of the revised scheme for Inherited SERPS and consider whether the reorganisation of the Department has delivered the improvements which were expected. Since the scheme will come into force from 2002 our successor Committee in a new Parliament may also wish to follow up our inquiry.

1   HC Deb (1985-86) col 471, Standing Committee B Back

2   HC Deb (1994-95) 14 March 1995, col 818 Back

3   34th Report from the Committee of Public Accounts, HC, 1999-2000, 401 Back

4   5th Report from the Select Committee on Public Administration, HC, 1999-2000, 433 Back

5   HC, 1999-2000, 433, QQ 21-22 Back

6   HC Deb, 5 March 2000, col 307 Back

7   Report of the Social Security Advisory Committee on the proposed scheme for providing redress to those misled about the 1986 changes to SERPS, 28 November 2000 Back

8   HC Deb, 29 November 2000 Back

9   See Appendix Back

10   Ev 12 July 2000. HC, 1999-2000, 717-i, Q1 Back

11   Ev 12 July 2000. HC, 1999-2000, 717-i, Q2 Back

12   (HC Deb, 29 November 2000, col 971). Back

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