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The Parliamentary Under-Secretary of State for Pensions (Richard Harrington)
It is a pleasure, as ever, to serve under your chairmanship, Ms Dorries. I thank right hon. and hon. Members for their contributions.
As a junior Minister in Government until July, I recall that one of the great fears we all had, for very good reason, was of being summoned before my right hon. Friend the Member for West Dorset (Sir Oliver Letwin). When he applied for this Westminster Hall debate, I realised that it was an issue to be taken very seriously. I hope that after my remarks he will agree that the Government have indeed done so. In the first instance, it is clear that no Minister—or indeed anyone else—could have anything but sympathy for the constituents who have suffered in these circumstances. There is absolutely no question about it; that is reflected by the morality of the issue and by the fact so many people have come to hear this debate and other debates that have taken place.
I hope to shed some light on the Government’s position, but I am not in a position to answer the questions in the way that my right hon. Friend and other contributors to the debate might expect, which is to provide a solution to the problem. The Government do not believe that we should compensate members of the AEA Technology pension scheme above what is being provided by the Pension Protection Fund. That is very clear. I would rather not be grey about it; that is the Government’s position. We do not accept that the loss of the pensions was the Government’s fault.
As my right hon. Friend said, the note has been widely circulated. I read it. Whatever it may or may not be, the note clearly states at the beginning that it was a note by the Government Actuary’s Department on the options available in respect of accrued benefits. It states that clearly. I do not wish to be pompous about the word “advice”, which means different things in the financial services world than in the general context of conversation between people and in guidance, but it was not designed to be advice. It provides three options and outlines the main factors that people should take into account when reaching their decision on which option to accept.
I accept that on behalf of the Government I may select particular pieces from the note, and other right hon. and hon. Members may select pieces that suit their argument. That is natural and I have tried not to be like that when considering these comments. However, the note specifically and explicitly said that it did not intend to suggest that one course of action was better than another, and that if anyone was in doubt, they should seek independent financial advice. It stated that very clearly in the final note. It said that the intention was not to suggest one option was better than the other.
Sir Oliver Letwin
I entirely understand that the Minister needs time to reach the rest of his argument, but he has hit the nub of the question. Does he accept that if the Government Actuary’s Department calculated on an actuarial basis that the two schemes were equivalent financially, and if it stated, as he rightly said it did, that it was not suggesting that one was superior to the other, but if it was, in fact, the case that one was risk-free and the other was risk-bearing, it follows as a proposition of business logic and economics, as taught in any business school, that the thing that is financially equivalent but is risk-free is superior to the thing that is financially equivalent but risky? Therefore, it should have suggested that one was superior to the other—namely, that remaining was a superior option, because it was.
Richard Harrington
I thank my right hon. Friend for those comments. It is certainly true to say that the area of risk is not discussed explicitly and it is reasonable to argue that there should have been a box with a health warning saying that one piece of advice—or not advice, but information—was different from another because of the risk element, but it is also fair to say that the note does not attempt to assess risk. It may imply by default that one was less risky than the other, but it certainly does not say anything that could be interpreted as misleading the people who received it, in my view.
I understand the position of constituents in the Public Gallery today, some of whom are understandably shaking their heads, given their views about what I have just said, but it is very easy, years later, to pick pieces out of documents. If it said that this was advice, that would be one thing, but it clearly says that people should take independent advice.
My right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb), the former Secretary of State for Work and Pensions, said that independent advice would not cover the risk of transferring. Please do not misunderstand me: I am not saying that I have no reason to believe him, but I cannot understand why an independent financial adviser would be more or less likely than anybody else to comment on the risk or the lack of risk in giving advice. As I said, I accept that it is easy for us to say things all these years later, but the note does not seem to me to be intended to cover every eventuality. It was eight pages long and it was not intended to cover everything. It does not completely ignore the subject of insolvency.
Richard Fuller
I am struggling with something that the Minister said. He indicated that the advice of the actuary was able to be second-guessed by someone then going to an independent adviser. My right hon. Friend the Member for West Dorset (Sir Oliver Letwin) talked about the role of the PHSO and said that it did not investigate the rulings of the actuary so that it could not second-guess the advice the actuary gave on liability. So which way should we have it?
Richard Harrington
My hon. Friend knows very well that I did not say that. I said that an independent adviser is no more or less likely to consider the idea of risk. I was actually referring to the view of my right hon. Friend the Member for Preseli Pembrokeshire that suddenly Government advisers did assess risk, but independent advisers could not possibly do so. I will have to make progress, because we are running out of time. I believe that the note was intended as a helpful starting point but did not constitute advice for members.
I will move on to the parliamentary ombudsman—I must deal with the ombudsman service generally and the choice of ombudsman, because they are so important in this case. It is correct that the actions of the Government Actuary’s Department fall generally outside the parliamentary ombudsman’s remit. I understand, however, that is only one of the reasons that the parliamentary ombudsman gave for deciding not to investigate. I hope I am not misrepresenting what she said—I have tried to look into this in some detail—but it seems to me that her decision was made partly on the basis that the complaints were not about the actions of a Government Department in relation to a citizen, which is what the ombudsman service is for. She has concluded that the complaints are about information provided in relation to employees and employees’ pension rights. That is why it is not the concern of the parliamentary ombudsman. If that is a correct interpretation of her opinion, changing the legislation to allow her office to have greater oversight of GAD would not solve the difficulty raised in this debate.
Richard Harrington
I really think I should make progress.
As for the pensions ombudsman, which I have some responsibility for and some knowledge about, members of a pension scheme can complain to the pensions ombudsman, who has the power to investigate, and does investigate, public sector pensions schemes as well as private sector schemes.
The pensions ombudsman looks at maladministration —for example, when a trustee or a manager has been given incorrect advice or information. The previous pensions ombudsman investigated a complaint last year concerning the AEA Technology pension scheme. GAD was not a party to that complaint. In the determination, the ombudsman specifically said that he was not ruling on whether the actions of GAD came under his jurisdiction and that no inference should be drawn from his comments about whether it did or did not, or about the likelihood of a successful complaint about GAD.
I understand that the current ombudsman has since considered some AEA complaints and the ombudsman’s office has decided not to investigate. I cannot comment on any particular complaint, but I have been informed that, in accordance with the usual procedures, all the complaints were looked at individually. Many reasons for not investigating the complaint were given, but they did not include that GAD was outside the pensions ombudsman’s remit.
It is possible, of course, to challenge the pensions ombudsman’s decision through the courts by judicial review or by appeal. I would briefly like to mention the Equitable Life case, which has been discussed during the debate. The parliamentary ombudsman did an investigation and asked the Government to expand the jurisdiction for this case alone. She informed us that public sector pensions are beyond her remit, so it seems to me that it is in the pensions ombudsman’s remit. He has looked at these two cases but has said that GAD was not a party. As far as I can see, however, there is nothing to stop people from going to the pensions ombudsman and naming GAD as a party to the case. If they are still not satisfied, there is the system of judicial review in the Court of Appeal, because the pensions ombudsman is a quasi-judicial body. I meet the pensions ombudsman regularly, and I am prepared to bring the subject up straightaway and ask whether he has difficulties within the scope of his existing jurisdiction in dealing with complaints brought to him.
Richard Harrington
I am afraid there is not time. I am really sorry, but I only have three minutes left.
The Government have announced their intention to bring forward a draft Bill to create a new public service ombudsman, the focus of which remains the resolution of complaints from individual citizens who claim to have suffered injustice. The response to the consultation said that the ombudsman should operate a “no wrong door” approach, which is referring individuals and possibly transferring their complaints when they fall wholly or partially within the jurisdiction of another body. As for whether GAD should be included in its remit, the Government’s commitment at the moment is that it should take on just the jurisdiction of the parliamentary, health service and local government ombudsmen, but if right hon. and hon. Members believe—as my hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson) does—that there will be gaps, the Government are willing to listen to their concerns. After I found out about this debate, I spoke at some length with the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Kingswood (Chris Skidmore), and he would be pleased to meet my right hon. Friend the Member for West Dorset to discuss this and other relevant issues.
I realise, Ms Dorries, that you are about to tell me that my time is up. I am sorry that I do not have more time to go into details, but I hope that I have given some indication of the Government’s thinking.