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Lord Rix: As the noble Lord, Lord Higgins, said, the Minister of State, Stephen Timms, has made a number of promises in another place about a compensation scheme for widows and widowers who were not informed of the prospective reduction in SERPS. I believe that telephone calls to the Benefits Agency are recorded and kept for a maximum of six months.

This amendment seeks to place such a compensation scheme clearly on the face of the Bill. I welcome that, and I thus offer my support to the noble Lord. Unfortunately, the phrase "how long is a piece of string?" keeps entering my mind in regard to such compensation. My Amendments Nos. 91A and 92A are more specific in this area. However, I will withhold any further comments about them until later. I, therefore, support the noble Lord, Lord Higgins, in whatever decision and direction he may take.

Earl Russell: This amendment is very similar to Amendment No. 91A standing in the name of the noble Lord, Lord Rix. However, it is a good deal less sweeping than our Amendment No. 92D, which we shall come to later. If the noble Lord, Lord Higgins, should be minded to press the matter to a Division at a later

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stage, we will remember that half a loaf is better than no bread--indeed, it may be a good deal more than half a loaf.

At least the facts of the matter are reasonably clearly agreed as they were set out by the Minister on 4th May and on other occasions. It is agreed that a change was introduced by the Social Security Act 1986 and that the change was not communicated adequately to those who would suffer from it. It is also agreed that that remained true until at least this April.

The last time we discussed this issue, the Minister said that she had not yet discovered why the misinformation was disseminated. If she has now made that discovery, I will listen with interest. The crucial point that the noble Lord, Lord Higgins, made clear is that, as a result of the misleading information, a great many people have done what they otherwise would not have done and--more importantly--have not done what they otherwise would have done. In fact, many people have not made provision for their spouse's widowhood, which they most undoubtedly would have made had they known what the law was.

Knowing the law relating to social security is extremely difficult. Except for the present Minister, who is extraordinary in this respect, there are few of us, even Ministers, who outside the Chamber taken by surprise would know exactly what the law on social security was. So if Ministers do not know, how can we expect husbands making ordinary provision for their ordinary families to know when they have been told otherwise by people whose business it is to give them honest information? Outside public life, that would give rise to a strong claim to compensation.

The Minister knows that I am not inclined to make anything of the point that the country party has turned into the court and Treasury party. That happens all the time. However, I believed that Mrs Beckett's remark,


    "I advise anyone who is married to a man who is lingering on 5th April 2000 quickly to shove a pillow over his face because it will halve the pension entitlement if the husband dies on the following day", was perhaps taking the freedom of opposition to a rather extreme extent. The legal position would be interesting were anyone to take that advice--

Baroness Hollis of Heigham: I think that she would enjoy parliamentary immunity!

Earl Russell: That is just what I was about to say, but I was about to add that the pleading of parliamentary privilege might tend to bring that doctrine into discredit and might lead to as much political loss as legal gain. I believe that prudent Ministers do not let it come to that point.

In the past, the Minister has made distinctly encouraging noises on the subject. I have heard them and I have been distinctly encouraged. But distinctly encouraging noises and legally binding commitments where the Treasury is in the wings are not the same things. The Division Bell concentrates the mind wonderfully. The noble Lord, Lord Higgins, has allowed a stay of execution. We await developments.

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10.30 p.m.

Baroness Fookes: I welcome the amendment in the name of my noble friend as a first stab at dealing with what I regard as a serious problem. It is intolerable that a department of state should allow the situation to occur. As the noble Earl said, it is difficult for ordinary people to understand the law and they rely on what they are told by officials of the state.

However, I am concerned about the necessity for proof because I suspect that in many cases it will not be forthcoming. That does not make the problem of the person involved any the less. Indeed, I should think it would be even more frustrating if he knew that compensation was available but remained beyond his reach because he was unable to offer sufficient proof. I should have thought that a more drastic solution was called for, even to the point of deferring the operation of the scheme. I await the Minister's reply with interest.

Baroness Hollis of Heigham: Never has an amendment tonight been awaited with such interest. I suspect that never shall I disappoint so many people at once on one amendment. It relates to the provisions reducing inherited SERPS for widows and widowers similar to those put forward in another place. It is not dissimilar in principle to the issues raised in your Lordships' House at Question Time.

The proposed new clause would prevent implementation of the changes to inherited SERPS unless the Government have introduced a compensation scheme by 5th April 2000. The noble Earl, Lord Russell, the noble Lord, Lord Rix, and others make an alternative suggestion later.

The changes to inherited SERPS were introduced by the previous government 13 years ago. The stated intention was to bring SERPS into line with occupational pensions, where it is the norm to inherit half of the scheme, and so to ensure a level playing field between occupational schemes and state provision.

The implementation date for the changes, which apply to widows and widowers above state pension age and widows below state pension age, was set for the year 2000, 14 years after the original legislation. This should have given people who might be affected plenty of time to alter their financial arrangements.

It is common ground that those changes were not well handled by the previous administration. The noble Baroness, Lady Fookes, talked about the present situation being intolerable. What was intolerable was the situation that the Government inherited. The noble Lord, Lord Higgins, says that if the Government do not come up with a satisfactory answer he will press the amendment to a Division. That is a bit rich, coming from the party which created this horrendous mess in the first place, and with huge costs that we seek now to address.

Earl Russell: Speaking for a party not involved in this, I wish to say that we know this Committee is amply populated with pots and kettles. Need we waste time saying so?

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Baroness Hollis of Heigham: I rather think so, because the pressure is on the Government to solve a multi-billion-pound problem which we have inherited and which we only registered as a problem towards the end of last year. Yet we are being pressed, when over the past 14 years the previous administration failed to take action or do what they should have done.

I take the point made by the noble Earl, Lord Russell, who is not in the major Opposition party or the Government, but the Government are being put on the defensive, to produce a solution involving multi-billions which was created by the previous administration, who are quick to criticise us for not coming up with a solution and very slow to apologise either to the Committee or to people at large for the mess they created, the failure to publicise and the inadequacy, therefore, of people's subsequent financial arrangements.

I was not seeking to make party political points, but it would well behove the Opposition, who in government introduced this change--that is their privilege--and then failed to publicise it, and continued to give misleading information for nearly 14 years, to take some responsibility for their actions, instead of seeking to turn the matter around on this Government for having failed to respond quickly to what an ombudsman may or may not currently be contemplating.

It is unwise, imprudent, ungenerous and unfortunate of the noble Lord, Lord Higgins, to try to turn the issue into one of this Government's incompetence, as opposed to his Government's maladministration.

Earl Russell: In the light of the fact that the misinformation has gone on under both parties, the remarks of the noble Baroness, the Minister, remind me of the marginal rubric in the UN delegate's notes: "Weak point. Shout."

Baroness Hollis of Heigham: On the contrary, the previous administration introduced this change, and therefore had a responsibility for publicising it. We did not, and we did not know that it had not been publicised. There is a total difference in our situation, and I am surprised that the noble Earl, Lord Russell, does not accept that there is a difference--and a qualitative difference--between us.

We are well aware that this matter was not handled well, and we are very concerned that people have been worried about the reduction and the misleading information that some have received. But the costs of delaying or phasing in the change are substantial. To give an example, the cumulative cost of delaying the reduction would be more than £5.5 billion by 2010, and there would be a continuing cost of around £1 billion a year for some time after that. Those are the sorts of sums we are talking about.

If one were starting afresh with that sort of money to put into pensions, it is not immediately obvious that the pressure point one would seek to address would be to bring a SERPS 50 per cent pension up to 100 per cent for widows. To reverse the change, or to introduce an open-ended compensation scheme--the noble Baroness, Lady Fookes, was absolutely right about that; it would

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be an open-ended compensation scheme--would have the same early effect, but with a bill for expenditure in the future that would continue to increase.

There is a very real issue of proof. The noble Lord, Lord Rix, asked me about telephone calls. No record is kept of telephone calls, any more than a record is normally kept of conversations at the desk. Paper records are kept for about six months. But if someone asserted that he had received that misleading advice, I suspect it may well be the case that the Government would have to prove that he had not, rather than the contrary, because there would be no evidence to counterbalance it.


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