Women’s State Pension Age Communication: PHSO Report
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
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”.
Baroness Humphreys (LD)
My Lords, today will be a day of disappointment for many women. They will feel that this new Government, by ignoring the independent ombudsman’s recommendations, have turned their back on the millions of pension-age women who were wronged through no fault of their own. That has to be of concern.
Liberal Democrats have long backed calls for women born in the 1950s affected by the pension changes to receive proper compensation for the Government’s failure to properly notify them of the changes, and have long supported the ombudsman’s findings. Today’s announcement is a hammer-blow to these women, who have fought tirelessly for many years to be properly compensated. I appreciate that the Government have had to make difficult decisions, but have they chosen to ignore the PHSO’s recommendations because they disagree with the findings or because they do not want to find the money to rightly compensate these women?
The PHSO’s ruling in March recommended that some women should get a payout and an apology. Obviously today they have received an apology, but they will not receive a penny of compensation for the maladministration found by the PHSO. Will the Minister outline why the Government have chosen to accept one half of the recommendation but not the other?
One WASPI woman dies every 13 minutes while this appalling scandal continues. Today’s announcement will be devastating for the WASPI community, which has campaigned tirelessly to rectify the maladministration. Does the Minister really think that today’s announcement is a fair solution?
Finally, in her letter to us today, and in the Statement, the Minister promises that this Government will protect the pensions triple lock, so that the yearly state pension is forecast to increase by up to £1,900 by the end of this Parliament. I welcome this promise. The pensions triple lock was a Lib Dem policy adopted by the coalition Government and I am proud of it, but this will be advantageous to all pensioners, not merely the WASPI women. Sadly, it in no way compensates these women for their losses. My colleagues in the other place have promised that they will continue to press Ministers to give those affected the fair treatment they deserve.
Baroness Sherlock (Lab)
My Lords, I thank the ombudsman for the considerable work that went into producing this report. The issues it raises are complex and I am grateful that we have time to discuss them this evening, though I share with the noble Viscount the wish that we had more people here while we do it. I would always rather discuss these things with a wider audience.
I thank both noble Lords for their responses. Before I engage with the specific points that they raised, I want to say a few more words about the background to this. The noble Viscount began by, in essence, attacking my colleague the Secretary of State for politicising the issue and then went on to politicise it himself. Therefore, we can either do that—we can take it in turns to point at each other—or we can try to address the issues. I am going to try to do the latter.
We have been looking seriously into the issues raised since we came into office in July. That work has involved looking at what Parliament has said, examining the evidence submitted to the ombudsman, meeting the interim ombudsman and listening carefully to the views expressed by the women affected. We listened, we read, and we reflected before coming to a decision.
The most important thing, to start, is to be clear about what exactly the ombudsman investigated. The ombudsman did not investigate the decision, first taken in 1995, to equalise the state pension age for men and women. I know that many women have strong feelings about that change, particularly the decision taken by the former Government—the Conservative/Liberal Democrat coalition Government—in 2011 to accelerate the changes sharply, which made a significant difference to a number of women. That was a policy that Labour opposed at the time, but the policy was agreed by Parliament, maintained by subsequent Governments and upheld in the courts. It is not the issue at hand today.
What the ombudsman did investigate was how the change of the state pension age was communicated by DWP to the women affected. I can see a Whip on the opposite Benches shaking his head. That is literally what the ombudsman did; I invite him to read the report. The ombudsman concluded that between 1995, when the original decision was taken, and 2004, our communications,
“reflected the standards we would expect it to meet”.
However, it found that between 2005 and 2007, there was a 28-month delay in DWP sending out personalised letters to the women affected. The ombudsman found that that constituted maladministration by the department. It argued that that led to injustice and proposed that financial remedy should be paid to those affected.
The Government accept the ombudsman’s finding of maladministration. We are sorry for the 28-month delay in writing to the 1950s-born women and we are determined to learn lessons from this experience to ensure that it does not happen again. I will come back to that.
In response to the question from the noble Baroness, Lady Humphreys, the reason the Government accepted this in part is that maladministration is about the actions that were taken at the time when things went wrong. We recognise that those letters should have been sent 28 months earlier. They were not; we apologise for that and accept maladministration. Injustice and remedy are about the consequences of those actions. Where we diverge from the ombudsman is on the impact of that failure. That is why we accepted the finding of maladministration, but we are not able to agree with the ombudsman’s decision on the approach to injustice and remedy. That is because the ombudsman had assumed that receiving those letters earlier would have changed what the women knew and how they acted, despite evidence to the contrary.
Research has shown that letters are not an effective means of communicating state pension information in the great majority of cases. Research from 2017 found that only one in four people who got an unsolicited letter remembered receiving and reading it. That suggests that sending letters earlier, as the ombudsman suggested, would not have affected what most women knew and, therefore, the decisions that they took. In other words, while we accept there was unnecessary delay in sending letters to women, we do not accept that that delay led to injustice in the great majority of cases. Given that, with the research suggesting that 90% of 1950s-born women were aware of changes to the state pension age, we cannot justify financial remedy. Paying compensation to all 1950s-born women at the rate proposed by the ombudsman, as the Statement said, could cost as much as £10.5 billion. We cannot justify paying out such a significant sum of money—taxpayer money—when the great majority of 1950s-born women were aware of the changes and therefore experienced no injustice. Writing letters to those who were unaware would not have made a difference for most.
The noble Viscount, Lord Younger, asked whether we had assessed how many women’s cases were strong. The answer is that we have not, for the reasons set out in the Statement. It is the same question, in essence, as whether we could create a targeted compensation scheme to compensate only those affected. Of course, we looked carefully at that possibility, but we concluded that such a scheme is impossible to deliver in a way that is fair and represents value for money. In fact, the ombudsman itself pointed out the challenges in doing that, as the noble Viscount will know, since I know he has read the report. It took the ombudsman, as it pointed out, nearly six years to investigate six cases.
To set up a scheme whereby the DWP would have to consider the detailed personal circumstances of as many as 3.5 million women born in the 1950s would take thousands of staff many years. In fact, we estimated that if we received claims from 60% of that 3.5 million, running a bespoke scheme would require 10 times as many staff as currently administer the state pension for all 12 million pensioners. That is the scale and the impact on the everyday running of the department.
Even more crucially, it would require us to make subjective judgments about whether giving each affected individual different information at different times would have led to different decisions and what the consequences would have been. Those are inherently difficult to consider, never mind prove, and it would be impossible to verify the claims for a scheme where someone self-certifies that they have suffered injustice. As a result, because we do not agree with the ombudsman’s approach to injustice, because 90% of 1950s-born women were aware of the changes and because it would be impossible to set up a bespoke scheme that would be fair, reliable and value for money, we cannot justify paying compensation.
I think it is worth dwelling for just a moment on the fact that this is not about the state pension age because I think that is one of the biggest challenges. We understand that that is difficult, but that decision was made in 1995 and has been settled, and I think nobody is arguing for reopening that.
The noble Viscount asked about learning lessons. The DWP is committed to learning lessons from the ombudsman’s findings so that we can deliver the best possible services in future. This case highlights just how important it is to get communication with our citizens right. We have already taken steps to make this better. We regularly engage with stakeholders and customer representatives, not just in general, but to test and provide feedback on many of the communication materials that we put out.
However, as the Secretary of State said, there is more to be done. The action plan is something that we are going to work on with the ombudsman. We will report on that in due course, and I will keep the noble Viscount informed as that work develops. We are determined to work with the ombudsman to develop an action plan identifying and addressing all the lessons this experience offers. We are continually developing our policy on communicating state pension age changes, rooted in our commitment to give clear and sufficient notice of any changes to those affected.
The noble Viscount quoted in my comment in the letter I sent to all Peers earlier today that
“even taking the difficult decisions we are faced with in government, we feel a deep sense of responsibility to ensure that every pensioner gets the security and dignity in retirement they deserve”.
I will allow myself one little bit of politics here. It is that, despite the very large hole in the finances that the previous Government left, we have none the less managed to find the money to maintain the triple lock, which will involve spending £31 billion, with the result that the new state pension and the basic state pension will go up by 4.1% next April, and in the case of the new state pension, the full yearly rate by the end of the Parliament is likely to be £1,900 higher.
The decision today does not mean that we do not understand that some women are facing financial hardship. The noble Viscount asked me for figures about pension credit. I can tell him that 150,000 people applied for pension credit in the 16 weeks following the announcement. Of those 42,000—I think, from memory, and I will write to him if I am wrong—had a successful claim. We know that at the very least there are those extra numbers of people, significantly more than there would have been in the comparable period previously, who are already getting pension credit and there may be many more. People have until 21 December to apply. Those cases that are in before that deadline will get processed and in due course those who succeed will get not only get the winter fuel payment, which is what the noble Viscount brought up, but all the benefits of pension credit itself and all the passported benefits that it brings with it.
This was a difficult decision to make. There were other questions. The noble Baroness, Lady Humphreys, asked whether we just disagree or whether it is about money. I hope I have answered that. I have set out the arguments. The noble Baroness may or may not disagree with them, but I have tried to set out the reasoning the Government did. We tried throughout this to follow the evidence. That is all that a Government can do when faced with a report such as this. We went through it incredibly carefully. It is evidence that the noble Viscount will be very familiar with. Since he was doing my job before me, he will have had it rather longer than I have. We spent the past six months going through it in detail. We have considered the evidence, and we have made what we believe is the right decision. That does not mean it was not a difficult decision, and I recognise that it will be a disappointing one for many 1950s women. It is not a reflection on their campaigning or anything else, but we feel that, despite that, it was the right decision, for the reasons I set out, and I hope that the House can accept that.
The Earl of Effingham (Con)
My Lords, perhaps the Minister might allow me to clarify something. She highlighted that I was shaking my head. Just for the record, I was communicating with her noble friend Lady Anderson about the supplementary questions. I was not shaking my head at anything she was saying.
Baroness Sherlock (Lab)
I apologise for oversensitivity on my part. I thank the noble Earl for clarifying that.
Baroness Bryan of Partick (Lab)
My Lords, I would like to ask a supplementary question. I first congratulate my noble friend on her new position. I am only sorry that it has come on the same day as this announcement and that she is thrown right into this difficult debate. I know she will be extremely aware that the very women who are most affected by the change in pension age and the delay in sending out notifications are the very same ones who were least aware of the changes. In many cases, they had already taken the decision to leave work, usually because of caring responsibilities, but with the expectation that they would receive their state pension on the date that they had been led to expect, and hopefully before their savings ran out. These women were probably the most isolated, care-worn and least able to access information online. In many cases, the letters came too late to allow them to make alternative plans.
Just because an injustice is widespread does not mean that it should be ignored. I repeat the question asked by the WASPI women today: what is the point of those six years of the ombudsman giving the report if the Government can simply ignore it?
Baroness Sherlock (Lab)
My Lords, I thank my noble friend for her opening comment. I fully recognise the point that she is making. There will be women out there who are very disappointed. There will be many women who expected to retire at 60 and then found that they could not. I hope she will agree with me that one of the biggest drivers of that concern and of the impact was the decision of the previous Government to accelerate those state pension changes in 2011. That meant that they were brought forward very sharply, which had a significant impact on a number of women. However, that is not what the ombudsman was talking about today, it is not what the report was about, and it is not what we are doing here.
I should say at the outset that letters are only ever one part of any communications system. There was extensive communication. The ombudsman found that our communications between 1995 and 2004 were just as they should be. The ombudsman was also aware that a lot of other kinds of activity were going on. There were advertising campaigns, work with employers, and all sorts of information going out. The letters were only one small part of that.
The 28-month delay in those letters has led us to believe not that there are not women who had hoped to retire at 60 and were not able to do so, but that this injustice was not caused by the failure that we described. It is because of this that we simply do not feel able to do it. We had to come back to the evidence. Is the evidence there that that specific act of maladministration caused that injustice? We do not believe that it did, and therefore we do not believe that it was appropriate to provide a compensation scheme.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I beg to move that the House—
Viscount Younger of Leckie (Con)
I would like to come back briefly with a further question, as there is time; we do have time for Back-Bench questions as well as Front-Bench questions. As regards the future, can the Minister give us a feel for how progress on AI is going in the department in respect of the data for WASPI women?
Baroness Sherlock (Lab)
My Lords, I would like to talk to the noble Viscount outside to understand exactly what he is asking about AI. If he can clarify the question, I will be very happy to write to him with an answer.
