My Lords, with the leave of the House, I shall repeat a Statement made earlier today in the other place by my right honourable friend the Secretary of State for Work and Pensions. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement on the investigation by the Parliamentary and Health Service Ombudsman into the way that changes in the state pension age were communicated to women born in the 1950s.
The state pension is the foundation for a secure retirement. That is why this Government are committed to the pensions triple lock, which will increase the new state pension by more than £470 a year from this April and deliver an additional £31 billion of spending over the course of this Parliament, and it is why Governments of all colours have a responsibility to ensure that changes to the state pension age are properly communicated so that people can plan for their retirement.
Before I turn to the Government’s response to the ombudsman’s report, I want to be clear about what this report investigated and what it did not. The report is not an investigation into the actual decision to increase the state pension age for women in 1995 or to accelerate that increase in 2011—a decision that the then Conservative Chancellor George Osborne said
“probably saved more money than anything else we’ve done”.
Understandably, that comment angered many women and sparked the original WASPI campaign.
The ombudsman is clear that policy decisions to increase the state pension age in 1995 and since were taken by Parliament and considered lawful by the courts. This investigation is about how changes in the state pension age were communicated by the Department for Work and Pensions and the impact this may have had on the ability of women born in the 1950s to plan for their retirement.
I know that this is an issue of huge concern to many women, which has spanned multiple Parliaments. Like so many other problems we have inherited from the party opposite, this is something that the previous Government should have dealt with. Instead, they kicked the can down the road and left us to pick up the pieces, but today we deal with it head on. My honourable friend the Pensions Minister and I have given the ombudsman’s report serious consideration and have looked in detail at the findings and at information and advice provided by the department which was not available to us before coming into government.
The ombudsman looked at six cases. He found that the department provided adequate and accurate information on changes to the state pension age between 1995 and 2004, including through leaflets and pension education campaigns and on its website. However, decisions made between 2005 and 2007 led to a 28-month delay in sending out letters to women born in the 1950s. The ombudsman says that these delays did not result in the women suffering direct financial loss but that they were maladministration.
We accept that the 28-month delay in sending out letters was maladministration, and, on behalf of the Government, I apologise. This Government are determined to learn all the lessons from what went wrong, and I will say more about that in a moment. We also agree that the women suffered no direct financial loss because of this maladministration. However, we do not agree with the ombudsman’s approach to injustice or remedy, and I want to spell out why.
First, the report does not properly take into account research showing that there was considerable awareness that the state pension age was increasing. It references research from 2004 showing that 43% of women aged over 16 were aware of their state pension age, but it does not sufficiently recognise evidence from the same research that 73% of women aged 45 to 54—the very group that covers women born in the 1950s—were aware that the state pension age was increasing, or research from 2006 that 90% of women aged 45 to 54 were aware that the state pension age was increasing.
Secondly, the report says that if letters had been sent out earlier, it would have affected what women knew about the state pension age. However, we do not agree that sending letters earlier would have had the impact the ombudsman says. Research given to the ombudsman shows that only around a quarter of people who are sent unsolicited letters remember receiving them or reading them, so we cannot accept that, in the great majority of cases, sending a letter earlier would have affected whether women knew their state pension age was rising or increased their opportunities to make informed decisions.
These two facts—that most women knew the state pension age was increasing and that letters are not as significant as the ombudsman says—as well as other reasons, have informed our conclusion that there should be no scheme of financial compensation to 1950s-born women in response to the ombudsman’s report. The ombudsman says that, as a matter of principle, redress and compensation should normally reflect individual impact. However, the report itself acknowledges that assessing the individual circumstances of 3.5 million women born in the 1950s would have a significant cost and administrative burden. It has taken the ombudsman nearly six years to investigate the circumstances of six sample complaints. For the DWP to set up a scheme and invite 3.5 million women to set out their detailed personal circumstances would take thousands of staff years to process.
Even if there were a scheme where women could self-certify that they were not aware of changes to their state pension age and that they had suffered injustice as a result, it would be impossible to verify the information provided. The alternative put forward in the report is for a flat-rate compensation scheme at level 4 of the ombudsman’s scale of injustice. This would provide £1,000 to £2,950 per person, at a total cost of between £3.5 billion and £10.5 billion.
Given that the great majority of women knew the state pension age was increasing, the Government do not believe that paying a flat rate to all women, at a cost of up to £10.5 billion, would be a fair or proportionate use of taxpayers’ money, not least when the previous Government failed to set aside a single penny for any compensation scheme and left us a £22 billion black hole in the public finances.
This has been an extremely difficult decision to take, but we believe it is the right course of action and we are determined to learn all the lessons to ensure that this type of maladministration never happens again. First, we want to work with the ombudsman to develop a detailed action plan out of the report, so that every and all lessons are learned. Secondly, we are committed to setting clear and sufficient notice of any changes in the state pension age, so that people can properly plan for their retirement. Thirdly, I have tasked officials to develop a strategy for effective, timely and modern communication on the state pension that uses the most up-to-date methods, building on changes that have already been made, such as the online ‘check your state pension’ service that gives a personal forecast of your state pension, including when you can take it, because one size rarely ever fits all.
We have not taken this decision lightly, but we believe it is the right course of action because the great majority of women knew the state pension age was increasing, because sending letters earlier would not have made a difference for most, and because the proposed compensation scheme is not fair or value for taxpayers’ money.
I know there are women born in the 1950s who want and deserve a better life. They have worked hard in paid jobs and in bringing up their families. Many are struggling financially with the cost of living and fewer savings to fall back on, and they worry about their health and how their children and grandchildren will get on. To those women I say: this Government will protect the pensions triple lock so that your state pension will increase by up to £1,900 a year by the end of this Parliament; we will drive down waiting lists, so you get the treatment you need, with an extra £22 billion of funding for the NHS this year and next; and we will deliver the jobs, homes and opportunities your families need to build a better life. I know that on this specific decision many 1950s-born women will be disappointed, but we believe it is the right decision and the fair decision. I commend this Statement to the House”.