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Baroness Greengross: My Lords, as my noble friend Lord Rix has said, a number of options are now before this House. Although different, each seeks to find a better solution to the inherited SERPS problem than the proposals put forward by the Government. I rise to speak to my amendment, No. 139, but I would also wish to refer to the other amendments tabled by noble Lords.

The proposed protected rights scheme has few supporters. While we welcome the seriousness with which the Government have treated this very big problem, including delaying the change to October 2002, I wonder whether the protected scheme will work. I understand that in another place both the Public Accounts Committee and the Public Administration Select Committee have expressed grave reservations on its practical operation.

At Second Reading I raised some of my concerns regarding the need to make an application to the scheme and the information people will have to provide. I see two key problems. First, many people who contact Age Concern and other organisations echo the statement of one man who wrote:


I gather that the Secretary of State has admitted that in future better information will have to be given when changes are made to state pensions, as finally government have recognised that changes to pensions law are different from most other changes to law, which do not involve planning for one's retirement income.

Although the Minister said that the Government have no legal obligation to tell people of changes, surely the solution should take into account the moral obligation. I might add that, as the Minister knows, we have sought alternative legal advice that is contrary to hers. I believe that the Government did have an obligation to inform SERPS contributors, especially those who had paid into SERPS before the law changed in 1986 and 1995, of the changes made.

Secondly, as the chairman of the Public Accounts Committee, David Davis, said in another place, the protected rights scheme as announced could be good for the dishonest and bad for the honest. Others have suggested that a cottage industry is going to develop to show people how to claim successfully, which might put the cost to the Government much much higher. This puts responsible organisations in an invidious position. We would of course provide information about making a claim but would never urge people to be dishonest.

But what message does this send out to older people, especially to today's older wartime generation? Someone is going to suggest before long a campaign

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called "Lie before you die". This whole sorry story has been dubbed in the media as the "SERPS mis-selling scandal". Many people have contrasted the way that private companies have been obliged to seek out people who may have been mis-sold a personal pension. Therefore, I still believe that the simplest and fairest way to deal with this problem would be to abandon the change altogether for SERPS contributors. This is the only way to reassure everyone who paid contributions in the expectation that their spouse, if widowed, would inherit their full SERPS.

I support the amendment in the name of the noble Baroness, Lady Castle. I am also attracted by the ingenious amendment in the name of the noble Lord, Lord Higgins, although it does not necessarily protect those who are already or almost retired.

It is in a spirit of compromise that I have put forward my amendment, which is fairly modest. It falls short of reversing the change but aims to ensure that the reduction will not apply to the widow or widower of certain people who would now find it difficult or impossible to make alternative arrangements.

Like my noble friend Lord Rix, I wish in particular to protect those who will have already reached pension age or who will have retired due to ill health on 6th October 2002 and people for whom a claim to the protected rights scheme would be impossible due to mental disability. Others, such as younger people who have been misinformed, would still need to rely on the protected rights scheme for protection, which would become a much smaller and more robust scheme and far less costly.

It is likely that a major reason for the Government not going further in addressing this problem is the potential cost. But the cost of the two-and-a-half-year delay and the current protected rights scheme is estimated at £8.2 billion if there are successful claims covering 30 per cent of expenditure. If 50 per cent successfully claim, then the cost will be another £3.8 billion.

However, the costs must not be overemphasised, nor should we be confused by them. The figures are spread over a 50-year period. When else is expenditure totalled up over such a long period? The £10 Christmas bonus costs the Government around £100 million per year in today's prices. Over 50 years, that is £5 billion. Are we suggesting that that is too much? Far from it: most older people rightly say it is not enough. The winter fuel payment is now £150, at a cost to the Government of some £1.25 billion per year. Over the next 50 years that is £85 billion.

It might be expected that exempting certain groups, including all over pension age, would increase costs considerably. Yet in another place the Minister stated that the cost of exempting all who had reached pension age by April 2000 would cost £7.1 billion. While my amendment covers more people and would therefore involve somewhat higher expenditure, above all it must be remembered that what is described as a "cost" must also be considered in terms of the losses that individual older widows and widowers would otherwise face. It is not the Government who lose but future widows.

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In effect, I think that both the amendment in the name of my noble friend Lord Rix and my amendment spend the £8.2 billion which the Government think they might have to spend over the next 50 years in a far more sensible way. My amendment differs from that of my noble friend in that none of the categories I list would have to claim to the protected rights scheme. They would be automatically exempted. But either amendment would greatly lessen the worry and potential financial losses of many older people and would lighten the administrative burden on the DSS by reducing the numbers needed to apply to a protected rights scheme.

10.45 p.m.

Lord Goodhart: In the other place, the representatives of my party moved an amendment to require the Government to pay out to everybody who has retired by 5th April of this year a full widow's SERPS and with a phased reduction for those who are retiring at a later date.

In your Lordships' House, we have not tabled our own amendment. That is in recognition of the fact that the noble Lord, Lord Rix, led the battle over the inherited SERPS rights last year in the debate on the Welfare Reform and Pensions Bill and we thought that, in tribute to him, he should continue to lead the battle in your Lordships' House.

That said, it seems to me that there is a strong case indeed for the Government to do a good deal more than they have already done or have undertaken to do. As regards the burden of proof on being misled, the noble Baroness, Lady Greengross, was right to say that in this case there was an absolute duty on the Government--more on the previous government than on the present one as most of the time concerned was during the period of office of the previous government--to disclose the change in SERPS. Therefore, the absence of information is, in itself, misleading. It should not in any way be necessary to show that anybody asked for information and was given misleading information.

Inevitably, the Government must accept that virtually everybody in this country was misled in the sense of not being informed of the 50 per cent reduction in widows' SERPS. Therefore, there can be no question of the burden of proof resting anywhere but on the Government.

Perhaps slightly more difficult is the burden of proof on the question, "If you were misled, did that make any difference to what you would have done, or would it have made no difference to you if you had known that if you had died after April 2000, your widow's SERPS would be reduced?" I imagine that in the great majority of cases, the only honest answer would be, "I don't really know. This happened some years ago. I never really thought of the matter at the time. I can guess what I might have done but I really cannot say anything definite".

To require people to prove that they acted to the detriment of the future of their spouse because of the misleading information they received or failed to

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receive would be, in effect, a cheat's charter. It would open the whole field to dishonesty and to those who say, "Yes, I definitely would have done something different. I would have made better provision for my widow than I did". There would be no way to disprove that. They are the people who will do well out of this. In some cases, that may be correct. I believe that in the great majority of cases, it probably will not be. But for the people who are honest and say, "I can't say that I would have done something different. I might have done; I really don't know", if the burden of proof is on them, they would get nothing.

Ultimately, if one is to be fair, one has to go down the line of saying that everybody who is not now in a position to see that their surviving spouse is adequately provided for will not suffer from the spouse reduction. The only fair thing to do would be for the Government to accept that as the general position and act accordingly. I know that it will be expensive. However, in fairness to people who have been the victim of this problem, it is the only thing to be done.


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