Women’s State Pension Age Communication: PHSO Report

Earl of Effingham Excerpts

Tuesday 17th December 2024 Lords Chamber

[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.

Child Poverty

Earl of Effingham Excerpts

Monday 29th April 2024 Lords Chamber

[The Earl of Effingham (Con)]

My Lords, I thank the noble Lord, Lord Bird, for securing this important debate.

As we have heard, by the Government’s own estimate there are 4.3 million children—or to put it another way, 30% of all children in the UK—living in relative low-income housing, after housing costs. That is clearly a most alarming statistic. I truly believe that by addressing child and parental ill health, in addition to child and parental qualifications, we have the ability to solve long-term worklessness and low earnings.

The key to solving child poverty is to get people into work, and the data backs this up. Children living in workless households are more than six times more likely to be in absolute poverty, after housing costs, than those in households in which adults work.

Step one would be to empower children and parents to make the right food choices, which is the building block to eradicating child poverty. Many of your Lordships will be familiar with the phrases “gut instinct” and “you are what you eat”. What we put into our bodies is what drives us. If we put unhealthy food that is high in calories and saturated fat into our system, it is highly likely that we will be overweight, feel ill and lack motivation, positivity and the will to succeed. We have to find a way to educate both children and their parents on healthy eating. Fortunately, there are charities such as Chefs in Schools, whose mission is to help

“schools serve up generation-powering, mind-opening, society-changing food and food education that fuels the future—all within school budgets”.

We can go much further. Feeling good is roughly 70% diet and 30% exercise. We have to encourage both parents and children to take exercise. Physical exercise and sport make a hugely positive contribution to society, to the extent that for every £1 spent on sport and physical activity, around £4 is generated in return across health and well-being, strengthening communities and the economy. “PE With Joe”—Joe Wicks—transmitted during the pandemic, proved that you do not need to go to the local sports centre to stay fit and healthy. It can be done in your flat or in the local park, and it costs no more than a pair of trainers and shorts, and a t-shirt. It is essential to get the message out about the importance of physical exercise.

To drill down on the point made by the noble Lord, Lord Bird, about inherited poverty, my third area of focus is that we can eradicate child poverty, particularly generational poverty, through financial education. Assuming that families can find success with food education and physical education, they will be back in work, feeling good and able to save even just small amounts of money. Financial education is now crucial, because it is possible to grow those small amounts into life-changing sums. Using tax-free allowances, it is feasible to turn £10 per week into £160,000, using a medium rate of return over a 50-year timeframe. That £160,000 could be enough to take the next generation of a family out of poverty and into home ownership, mortgage free. Saving £20 per week at a slightly higher rate of return can produce £645,000.

My Lords, four minutes was a narrow window; I could speak in much more detail, but please let me finish by asking the Minister what the Government will do to address food education, physical education and financial education for both children and parents currently living in poverty.