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I express only two regrets. I refer to the fact that the other place chose to turn my half page amendment into two-and-a-half pages, which perhaps shows verbosity. At the same time I am rather sad that I have been removed from star billing at Clause 1 to Clause 48. However, with those two regrets I am happy to accept the amendments from another place.
I have a final word for the Secretary of State. I would ask that when reviewing the possibilities of compensation and probably taking into account the views of the Ombudsman, he will pay particular attention to the needs of those who paid into SERPS from 1978 to 1986 when it was the law of the land.
Lord Higgins: My Lords, the House will be grateful to the noble Lord, Lord Rix, for his initiative in promoting the original amendment which, as he rightly points out, has been increased in size and verbosity by the Government.
Earlier on, the Minister stated that she hoped to let us know the final decision before the matter passed into legislative form at the conclusion of our debates. She has now said that she is unable to do so. We understand; this is a highly complex matter. It is more important to get the matter right than for it to be done in a hurry.
On the other hand, the original amendment moved by the noble Lord, Lord Rix, and that which we now have before us from the Government, effectively set a deadline on these deliberations. We hope that that deadline is not broken and that the many people who have problems in this area will know, at any rate by next April, what the Government now propose.
I believe that the Minister, in a slip of the tongue, referred to the "inherited problem of SERPS" rather than "the problem of inherited SERPS". Both are perhaps true. We have inherited a problem due to the action of both Governments. However, there is also the problem of people who, as widows, inherit their SERPS. The Government have now made clear that they go along with the decision of the former Government--which they previously strongly opposed--to make changes in this respect.
Perhaps I may pick up some of the points made in the debate in another place last week by Mr Rooker. I have great respect for him. He is clearly suffering considerably in dealing with these problems. However, from what he said it seems clear that the Government now accept that there is a legal liability to the extent that people were misled on the matter.
In that context, perhaps the Minister can tell us whether she understands that that legal liability, or the ability of people to bring action against the Government, will be wholly superseded by the legislation now proposed by the Government or whether those who feel they should take legal action will still be able to do so, even after the Government's proposals are made.
Could she also tell us the present state of play as to when she anticipates that the Ombudsman's report is likely to become available? This is not her immediate responsibility but presumably she has some information on the subject. In particular, could she tell us whether we are likely to have such report before the Government make a final decision on the matter or whether their decision may be made in advance of us knowing the view taken by the Ombudsman?
The clauses now before us give the Government power to make regulations with regard to this problem. In another place, on 3rd November, at col. 367 of Commons Hansard, Mr Rooker set out various options. One was to vary the rate of inherited SERPS for some or all widows--I presume under the new legislation, now widowers also. A second was to postpone indefinitely the change to cut widows' benefits to 50 per cent. As has been pointed out, that would involve an extremely large sum of money--something over £5 billion.
The third choice--the alternative now being considered--is a "protected rights scheme". The Minister referred to that and the clause is before us in that respect. But I must confess, looking at the amendment as it now stands, that I am not at all clear what form that protected rights scheme might take, and in particular whether there would be problems with regard to the standard of proof which might be required from those claiming such protected rights. In short, this was something that came up last week in the other place and we did not discuss the alternative.
As your Lordships will eventually need to take a view on whatever the Government come up with, because the matters are to be under the affirmative resolution procedure, it would be helpful, by way of a trailer, if the Minister could tell us what kind of protected rights scheme the Government now envisage. In particular, could the Minister deal with the problem of proof as to whether someone was misled and as a result did not make provision for their widow which they might otherwise have done?
Finally, I come to the question of who pays. The Minister in the other place seemed to indicate that whatever the costs of putting right this problem, none the less they would be borne by people in the SERPS scheme. One would have thought, as the noble Earl, Lord Russell, has pointed out previously, that as this was a failing by government, the cost would come from the general exchequer rather than from any alteration in the amount of money in the SERPS scheme at the moment; for example, the surplus in the National Insurance Fund.
I should like, first, to thank the noble Lord, Lord Rix, for his persistence in this subject. I am delighted to see it rewarded. It is a good illustration of Aristotle's maxim that it is important that legislators should be subject to the laws which they themselves make. As a guarantee of good legislation, it is vital.
Secondly, I pay tribute to my honourable friend Mr. Rendel who was first responsible for spotting this issue and who has also had a great deal to do with putting it on our agenda. In addition, I thank the Minister for providing us with a real model of how business should be conducted. If that model had been followed on other issues, we might not have such a contentious afternoon before us as we probably do.
This amendment, as it stands, is an old friend of my late noble friend Lady Seear because, "the Secretary of State may do whatever he likes". It is one of the greatest conferments of flexibility in any parliamentary provision that I can remember seeing for a long time. I understand, with the time-scale before us, why the Secretary of State wanted to claim the flexibility. But now he has been given his declaration of indulgence to say he can do whatever he likes, I should like to know what he would like to do. Presumably he will have to take a decision before 5th April next. Other people will need to react to that decision and make whatever provision is necessary to accommodate it.
The Secretary of State has given himself the options of a higher rate, individual compensation and deferment of the introduction of the provision. The Minister spent a great deal of time in the course of our proceedings dwelling on the difficulties of any scheme of individual compensation. I understand what she said. The problem of proof, especially when dealing with compensation arising out of telephone conversations, is considerable. If that standard of proof were applied strictly, many people may fail to obtain the compensation they deserve. If it were applied loosely, it could be open-ended to the point of some alarm. So the preference of these Benches would still be for deferment. I understand that the Minister is not willing to consider the 10 years for which this party pressed. But if she were willing to go so far as considering five years, that may help the situation considerably. With thanks to all those who have taken part in this, I await the Minister's reply.
The noble Lord, Lord Higgins, asked what "protected rights" means as to some extent it is a new phrase coming into the agenda. It means that those who demonstrate that they were misadvised and therefore acted to their detriment will have their national insurance record amended to ensure that a surviving spouse will inherit 100 per cent of their SERPS. The difference between that and compensation is that it is not a question of how much actual loss was suffered, but that their position would continue to be the same as though the 1988 changes had not come into effect. That is what is meant by "protected rights".
However, I repeat that no decision on which system, or any mix or match of these strategies, has yet been taken. Your Lordships will be aware that it is technically complicated in terms of trying to assess the degree of loss that people may have suffered. It is also extremely expensive, running between £5 billion and £10 billion. I was grateful for the recognition of that by the noble Lord, Lord Higgins. It is important to get it right. Clearly, until we have got it right, the situation that exists pre-April 2000 continues. That was the point of the amendment of the noble Lord, Lord Rix.
The noble Lord, Lord Higgins, also asked who will pay. The cost comes from the National Insurance Fund. Of course, the Government stand behind that fund. I assure the noble Earl, Lord Russell, that no decision has been made on whether deferment will be five or 10 years; whether it will be protected rights, individual compensation or any mix or match. We are trying to establish a scheme which both properly addresses the problems facing those who would otherwise have made different arrangements and who have suffered a financial loss as a result, and being prudent in our role to protect taxpayers' interests. That is what we are seeking to do.
Finally, like others, I thank the noble Lord, Lord Rix. This point was first picked up in 1995 when my noble friend Lady Gould tabled an amendment to the Pensions Bill of that year. It was flagged up by the Box, but then was quickly forgotten until it was resurrected recently. Given that fact, I hope that your Lordships will be content when I ask the House not to insist on Amendment No. l, to which the Commons have disagreed, but to agree with the Commons in their Amendments Nos. 1A and 1B in lieu thereof.