State Pension Underpayments and Arrears for Women

Baroness Stedman-Scott Excerpts

Monday 21st February 2022 Lords Chamber

[Baroness Altmann]

To ask Her Majesty’s Government what progress they have made in correcting State Pension underpayments and arrears for women; what is their latest estimate of (1) the number of women who have had their State Pension increased so far, and (2) the proportion of the total affected by underpayments that this represents; and what steps they are taking to ensure such errors do not occur again.

[The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office and Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

Between 11 January 2021 and 30 September 2021, 38,507 cases were reviewed, 9,491 underpayments identified and arrears of £60.7 million made. We cannot break this down by gender. A further update will be published around the time of the next fiscal event. The department has undertaken steps to prevent future error, including changes to the checking approach, additional learning for staff and, as a failsafe, regularly running a scan to pick up any cases that may have been missed.

[Baroness Altmann (Con)]

I thank my noble friend for her helpful response and for her department’s work. I have two questions: please could she explain why interest is not being added to back payments, as it was earlier for women whose underpayments were corrected after these official errors? Also importantly, I understand that the poorest women are at risk of losing benefits or social care funding when an arrears lump sum exceeds, for example, the £23,250 social care capital disregard. Most of these pensioners probably needed higher pensions and would also almost certainly have spent the money in past years but now risk the arrears being taken back in care fees straight after finally receiving the money. Will the Government consider introducing regulations—as happened after the Manchester bombing—requiring local authorities, to disregard these specific state pension back payments, not future higher pensions, from financial assessments for social care funding or means testing?

[Baroness Stedman-Scott (Con)]

Consistent with other large-scale LEAP exercises, special payments under the DWP discretionary scheme are not routinely made to those who have been underpaid state pension. However, under exceptional circumstances, such as where severe distress has been caused by the way an individual case has been handled, a case may be referred for consideration of a special payment.

On the point that my noble friend raises on social care and the impact of back payments, where a local authority charges a person for their care and support, regulations set limits below which a person’s income and capital must not be reduced by changes. Local authorities may take most of the benefits people receive into account unless it is specifically required to be disregarded by regulations. The responsibility for interpreting and applying the regulations and guidance tests rests with local authorities. I will take the point about legislation back to the department and write to my noble friend.

[Baroness Smith of Basildon (Lab)]

My Lords, that was quite a long response, but I think the short version is no—the Government are not going to make any special arrangements. The point was made very clearly by the noble Baroness, Lady Altmann, that these people, particularly women, were in very straitened circumstances and suffered and paid a high price for not receiving the pension to which they were entitled. Can the Minister reconsider this? This is a case where the Government got it wrong. Surely some special action should be taken to properly correct the errors that were made.

[Baroness Stedman-Scott (Con)]

The noble Baroness makes a very good point. All I can say at the moment is that the Government do not have any plans to change. However, I will take the point back to the department, because it is a very fair one.

[Lord Forsyth of Drumlean (Con)]

My Lords, should my noble friend not be taking the point back to the Treasury? Is this not an example of the Government hiding behind the skirts of local government? The Government provide guidance to local authorities; why can they not provide guidance saying that they should disregard these payments?

[Baroness Stedman-Scott (Con)]

I am very happy to take the point back to the Treasury, although I would not hold my breath—I will probably get told off for saying that. But again, I will take the point back to the department. My noble friend has made the point very clearly, as has the noble Baroness.

[Lord Rooker (Lab)]

Let us get some gender into this. The noble Baroness talks about “people” and “persons”, but we are talking about women. When was the last time tens of thousands of men were short-changed with their pension? I do not recall that happening. When the Government took their long-term holiday from paying into the National Insurance Fund, they deprived hundreds of thousands of women of the pension that they were entitled to. Why cannot that be redressed?

[Baroness Stedman-Scott (Con)]

My Lords, I have no idea about underpayments to men. In terms of underpayment to women, we are doing an exercise; we are going through the whole system to work out who should have had the money and we will get it to them as quickly as possible.

[Baroness Janke (LD)]

My Lords, the Government have explicitly ruled out divorced women from this exercise, yet divorced women’s pensions are really complex and the scope for error is huge. Does the Minister agree with me that to discriminate against divorced women in this way is indefensible? When will the Government act on this, as the Public Accounts Committee recommends, and put an end to such obvious injustice and discrimination?

[Baroness Stedman-Scott (Con)]

Even if somebody is divorced, their ex-husband’s contributions to NI will still be taken into account when deciding their pension award. That has always been the case and it will be the case on this.

[Baroness Wheatcroft (CB)]

My Lords, when more than £60 million that should have been paid has not been paid, surely somebody should be held responsible in the end for that error. In the private sector, the sum of £60 million would be taken very seriously. Can the Minister tell us, therefore, who was ultimately responsible for this failure to pay such a large sum of money?

[Baroness Stedman-Scott (Con)]

The shortfall or underpayment was identified as a result of a marker on the computer system not working correctly. We put it right and we are doing our best to pay people what they should have. It should not have happened, but ultimately the Government must take responsibility.

[Baroness Fookes (Con)]

My Lords, given that many of the people involved are particularly vulnerable and poor, what steps are the Government taking to ensure that those people are prioritised? Government departments do not have a good historical record in ensuring that people who suffer at the state’s hands get redress very speedily.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

I would like to take the opportunity to wish my noble friend a very happy birthday. To answer her question, resolving these errors is a priority for the department. We are committed to doing so as quickly as possible. We have started by reviewing cases where the individual is alive; in doing so, we are initially focusing available resources on older cases and on those people whom we believe are most likely to be vulnerable.

[Baroness Warwick of Undercliffe (Lab)]

My Lords, in her response, the Minister indicated that various steps had been taken by the department to put things right. That was welcome, except that the Public Accounts Committee made a series of very specific recommendations to the department in its very damning report. Can the Minister tell us exactly how much progress has been made specifically on those recommendations? If enough progress has not been made, will she ensure that she reports to the House on just how much the department is monitoring them?

[Baroness Stedman-Scott (Con)]

The department is considering the content of the report, including the recommendations. As is the case for reports such as this, the Government will provide their response to the House in due course through the publication of a formal Treasury minute. Until then, it is not appropriate for me to comment any further on the report, but I am prepared to make a commitment that, when such a decision is made and the response is ready, I will make sure that all noble Lords are appraised of it.

[Baroness Ludford (LD)]

My Lords, one of the points made in this very critical report last month by the Public Accounts Committee was that the DWP lacked any plan to contact the next of kin of deceased pensioners who were shamefully short-changed. Can the Minister tell me what is happening on that score? On the question from the noble Baroness, Lady Altmann, will the Government ensure that any sum ever paid—we live in hope—is not taken into account for, for instance, inheritance tax purposes?

[Baroness Stedman-Scott (Con)]

My understanding of the situation is that, where people have died, a payment will be made to their estate to make up for the underpayment. I cannot tell the noble Baroness when that will happen, but the department will be communicating with and contacting the various people. I have already given an answer in relation to the underpayment and the impact on other benefits and costs.