The Department for Work and Pensions has confirmed it is to appeal against the verdict of the Judicial Review which found the government guilty of providing misleading information on the security of occupational pensions.
Exactly a year after the Parliamentary Ombudsman published her report “Trusting in the Pensions Promise” on 15 March 2006, which accused the government of maladministration, John Hutton, Secretary of State for Work and Pensions, has announced the DWP will appeal the verdict.
On the 21 February the High Court agreed with the Parliamentary Ombudsman’s findings suggesting government information on the level of security offered by occupational pension schemes was misleading, in particular regarding a leaflet published in 1996 explaining the 1995 Pensions Act.
At the time of the judgement Hutton announced the DWP would pay the costs of the pensions campaigners who brought the case and stated the government would reconsider the issue of compensation and report back before the end of the Pensions Bill proceedings.
However the DWP hinted last month it may appeal the verdict as it said as both sides had been given permission to appeal against the judgement, the government “wishes to consider the implications of this complex judgement, both in relation to this specific case and more widely across government”.
As a result a DWP spokesman today confirmed the government has appealed the findings of maladministration “because the judgment raises important constitutional issues which need to be resolved”.
Although he points out the appeal will not prevent it from reconsidering the Ombudsman’s recommendation with regard to compensation in line with the High Court’s direction.
He says: “We have real sympathy for people who lost their pensions when their schemes went into wind-up, and appreciate that they need to know where they stand. The Secretary of State said last month that his aim is to return to Parliament with conclusions and proposals before the end of proceedings of the Pensions Bill."
“That remains the case and would not be affected by the outcome of this appeal.”
However Dr Ros Altmann, an independent consultant and former government adviser working with the campaigners, says it is so disappointing the suffering continues when those affected did everything right.
She says points the judicial review ruled the government’s behaviour was “unlawful, unreasonable and irrational, yet still those who are struggling without their pensions have not been rescued”.
Altmann argues the £15bn figure used by the government to justify the rejection of the report “has been shown to be a grotesque exaggeration, seemingly designed to frighten MPs into believing that compensation would be too expensive”.
Instead she says the cost of full compensation should be more like £2bn over 50 years, around £100m a year, and points out this sum is not unaffordable at all, and she says while the government claims the Financial Assistance Scheme (FAS) is helping those in most urgent need and that taxpayers can’t afford to do more – that is just not true.
She adds: “In practice, the FAS is little more than political spin, seemingly designed to quell backbench disquiet, rather than helping those who have lost out. Only a few hundred of the 10,000 people already past pension age have received a penny from the FAS. MPs have been misled.”
Altmann claims the government has not put £2.3bn into the FAS at all, calling it a “statistically nonsensical cash cost” which has never been used to measure long-term government expenditure, and points out in reality the FAS has paid out just £3m, while administration of the scheme has cost taxpayers £7m.
She says: “Now the DWP wants to spend more taxpayer’s money on legal fees to defend the indefensible. They are four-nil down, and still arguing with the officials about the score.”
“When will the government finally own up to its mistakes and do the right thing? How long does it take for MPs to force Ministers to act to rescue their constituents? The government is facing defeat on this issue if it does not come forward with a proper compensation scheme quickly. Confidence in pensions cannot be restored while the suffering of these people continues.”
David Laws, Liberal Democrat Shadow Secretary of State for Work and Pensions, says those who have been waiting years for fair pensions compensation will be furious to see the government contesting the maladministration finding.
He says this appeal means yet more delay for the tens of thousand of citizens who lost their occupational pensions after receiving potentially misleading information from the government.
“The government should now fairly compensate those who lost their pensions, rather than wasting yet more taxpayers' money appealing this decision. This matter must be resolved before the Report Stage of the Pensions Bill in the House of Commons," says Laws.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7034 2681 or email [email protected]IFAonline
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