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Mr. Rooker: I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker: With this it will be convenient to discuss new clause 7--Widows'/widowers' SERPS entitlements--
'In section 52 of the Welfare Reform and Pensions Act, subsections (1) and (2) shall be left out, and there shall be inserted--
"(1) The Secretary of State may by regulations make such provision as is authorised by subsection (2) and one or more of subsections (3) to (4),
(2) The regulations may provide for any prescribed provision of Part II of the Contributions and Benefits Act (contributory benefits) which relates to additional pension for widows or widowers to
(a) that any such additional pension, or
(b) in the case of any provision of Schedule 5 to that Act (increase of pension where entitlement is deferred), that any constituent element of an increase provided for by that Schedule,
is increased by such percentage as may be prescribed (which may be 100 per cent, and which shall be 100 per cent for any person who had reached pensionable age on or before 5th April 2000).".'.
Mr. Rooker: During the final stages of the Welfare Reform and Pensions Bill last autumn, we introduced legislative cover that would allow us to address, through regulations, the inherited state earnings-related pension scheme problem. At that time, we had not reached a final decision on what to do. On 15 March this year, my right hon. Friend the Secretary of State announced to the House that we had decided to postpone the change that would halve the amount of SERPS that a widow or widower could inherit until 6 October 2002--a 30-month delay--and to set up the inherited SERPS scheme to provide redress for those who had been misinformed.
We are particularly keen to ensure that all who were misinformed and who might have acted differently had they had the correct information need not lose out. During further consideration of our more detailed proposals and, indeed, with the benefit of the reports of the ombudsman and the National Audit Office, it now seems to us that the powers in the Welfare Reform and Pensions Act 1999 need amending slightly. This Bill, which is already in the parliamentary system, is the ideal place to do it. New clause 38, therefore, provides for the 50 per cent. reduction in inherited SERPS to come into effect in respect of deaths occurring on or after 6 October 2002.
We also want to clarify the eligibility criteria for the inherited SERPS scheme. Currently, section 52 of the 1999 Act provides that the scheme may deal with claims made by people who, having received incorrect or incomplete information about the SERPS reduction, either failed to take any steps they would have taken or took any steps they would not have taken had they received correct information. Yet the ombudsman has pointed out that, 15 years down the road, it will be difficult for many people to demonstrate that they would have taken a particular course of action, or not, had they been correctly advised.
The new clause will ensure that the scheme can provide redress for people who, because they relied on the wrong information, were denied the opportunity of considering taking relevant steps to protect their spouse's pension. I will roughly translate what I have just said as, by and large, replacing "would have" with "might have". In other words, we are loosening up the criteria--we are saying that people might have taken action, rather than that they would have taken action, which is what the Act provides for.
Another point that the ombudsman made was that people should not be unfairly excluded from the scheme because, after so long, they were unable to provide documentary evidence. We want to address that concern, and the new clause allows for the regulations to make further specific provision relating to the manner in which decisions under the scheme may be taken.
New clause 7, in the name of Liberal Democrat Members, would effectively put off the policy change indefinitely for all who are pensioners at 6 April 2000. It is not clear what is intended for people who are still contributors and who might in the future be bereaved. That is not a criticism, but I must put it on the record. If the intention is to provide a lesser amount for them, there will be some contributors, perhaps nearing pension age, and on a low income, who have been misled and would therefore benefit from the scheme proposed. Yet the cost of the proposal, although less than the cost of overturning the policy completely, would still be enormous--probably more than £10 billion over the next 50 years. So under that proposal, we would spend considerably more money without helping some of the people who should be helped.
Mr. Webb:
I refer the Minister to his written answer to me of 21 March. Asked the cost of our proposal in lieu of what he has proposed, he replied:
Our first principle must be that if the Government give people the wrong information, they must provide redress. That is what we are doing. All who have been misled are being provided with an opportunity to have their rights restored. The alternative--deferral of the change for 10 or 14 years to reflect the gap between the 1986 legislation and our proposed changes--would merely postpone the problem. The widow of a man who died after that time would still lose out.
Unlike new clause 7, our proposals on the future of inherited SERPS provide the fairest balance between the interests of pensioners and contributors. Full details-- I said this at Question Time, but it is important to put it on the record again--of the inherited SERPS scheme will be put before the House. There will be a proper debate, and the details will not be slipped out in the way we have sometimes been accused of. The National Audit Office and the ombudsman will be fully involved in developing the information that we shall ask for and the procedures that will be followed in decision making. We must be certain that we have the powers necessary to cover those points in regulations, and that is why we propose the new clause.
Mr. Willetts:
I want to say how grateful we are to the Minister for making it clear that there will be a proper debate. The Chairman of the Public Accounts Committee asked for that after the original statement, and it is right that something of this magnitude should be properly debated in the House.
Mr. Rooker:
I am grateful for those remarks. We have gone beyond blame and must think about the future. Obviously, we inherited the current position, but I shall not labour the point. We need consensus across the House
Mr. Webb:
New clause 7 was tabled by the Liberal Democrats, and we see it as consistent with Government new clause 38, but as a measure that goes further. We welcome and support new clause 38, but believe that our additional new clause deserves further consideration.
We welcome the broadening of scope proposed by new clause 38, and the change of phraseology from "could" have to "might" have. However, I find new clause 38 rather bewildering. Can the Minister explain proposed new section 4A of the 1999 Act? It refers to
The estimated cost is £7,100 million.--[Official Report, 21 March 2000; Vol. 346, c. 479W.]
Mr. Rooker:
I am sure that both figures are correct, but probably do not relate to exactly the same point. In pension discussions--this point arose in Committee--it must be remembered that a change to the national insurance system must be translated over people's working lives. I shall have the figures checked and shall write to the hon. Gentleman if there has been an error. However, I am sure that both figures are correct and deal with slightly different aspects.
a person who . . . did not give any consideration to . . .
And so it goes on, completely impenetrably.
(b) refraining from taking a step which is a step he did take but might have refrained from taking had he considered the matter on that basis
to be treated as a case in which his failure to take the step, or his taking of the step he did take, was in reliance on the incorrect or incomplete information.
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