Pensions Action Group

Press Release from Dr Ros Altmann
7th February 2008

But DWP in denial - wants to waste more taxpayers' money on Lords Appeal

This morning, three Court of Appeal judges delivered another crushing verdict against the Government.  The Secretary of State's appeal against last year's High Court judicial review ruling that 'no reasonable Secretary of State could rationally disagree' with the Ombudsman, was dismissed.    In fact, today's verdict is even stronger than last year's High Court ruling.  The three judges not only confirmed that the Secretary of State's rejection of the Parliamentary Ombudsman's findings was irrational and unlawful, but also ruled that he must accept that his Department caused injustices which go beyond just financial losses.  The Government DID mislead at least 125,000 people about the safety of their pensions and caused their suffering.  The verdict says the Government's maladministration also led to:
   *  a sense of outrage
   *  distress
   *  anxiety
   *  uncertainty
   *  lost opportunities to make informed choices about their pensions
   *  and denied them any chance to take remedial action to protect their pensions.

We warmly welcome this judgment which, yet again, vindicates our arguments and confirms that the Government misled trusting citizens about the security of their pension savings.  But we are astonished that the Secretary of State, James Purnell, wants to appeal to the House of Lords.  It is now 6 - nil against the DWP. How many verdicts will it take to make the Government see sense? 

This attitude merely reinforces the High Court and Court of Appeal verdicts that the Government's decisions in this matter are irrational.  For the past few years, it has tried, unsuccessfully, to wear us down and even tried to bully the victims into submission, by threatening to bankrupt them if they lost the case. 

We are vigorously opposing the Government's request for leave to appeal to the House of Lords in this case.  It is a waste of taxpayers' money and would just further prolong the suffering caused.

The Government's argument is that Ministers are perfectly entitled to reject their own Ombudsman's findings if they 'do not agree' with them, and even if they have no good 'cogent' reasons for disagreeing!   This cannot be right. This outrageous scandal is a worrying affront to our democracy.  Our Parliamentary safeguards are not working well enough to protect ordinary people as intended.   In this particular case, a Minister who was not there at the time, who admitted he had not even fully read the Ombudsman's report, and who has not objectively investigated all the evidence, still wants to be entitled to prefer his own view over that of the independent adjudicator established by Parliament to protect citizens from Government wrongdoing - without even having to provide cogent reasons! 

The Government wants to make a last desperate appeal against a verdict that it has never liked.  It beggars belief that the DWP would waste still more taxpayers' money fighting this case, trying to defend the indefensible.  Despite such a strong verdict against the Government, it still wants to wriggle out of taking any blame for what it did.  As the Parliamentary Ombudsman herself said 'it's maladministration, get over it.'  But it seems the Government is unable to bring itself to do so.

Despite Peter Hain's welcome pre-Christmas announcement of increasing the Financial Assistance Scheme (FAS) payments to the Pension Protection Fund level for all victims, the money is not yet coming through.  There is much work to be done in ensuring that all those who should be paid will actually start receiving their money and we urge the Government to work as quickly as possible to get the money to people.  Instead of spending time mounting a challenge against these legal verdicts and denying any wrongdoing, they should be working on speeding up the resolution of the problems that they caused!

In any case, having already offered fair treatment to most of the victims, why does the Government still refuse to admit it did anything wrong?  The FAS payments are only classed as 'assistance' not 'compensation', and provide no remedy for the non-financial injustices so many of these people have endured.  At the very least it would mean a great deal to many of the victims to receive an apology from the Government for what it has done to them, but none has been offered. 

We need the Secretary of State to face up to his responsibilities and apologise to past victims of this official 'mis-selling' of private pensions, while also ensuring that the Government does not make the same mistakes in future. 

And what about the implications for the new proposed personal pension accounts in future?  If these pensions are not really safe, people must be told the truth.  If they should not be putting their money in, or if there are significant risks that they may lose much or all of any pension savings because of means testing in the pension credit calculations, as will potentially be the case for hundreds of thousands of personal account contributors, the Government must not mislead them into a false sense of security.  They should be warned of that before they are automatically enrolled into a pension.

We don't want to have to watch thousands of people in future going through the same trauma as these victims have suffered.  The Government must face up to its responsibilities to ordinary citizens who trust officialdom and want to provide for their own future.  If they end up finding their money is all gone because the Government did not take enough care to properly inform them of the risks they face, and prevented them from making informed choices for their own future, this case will come back to haunt us all.

Dr. Ros Altmann

Notes for editors:
1.     This judgment is damning of the Government's arguments.  For example, it points out that the Secretary of State did not even bother to respond to the Ombudsman's specific criticisms that the Government misled people by giving them 'assurances which it was never the Government's intention to meet.' The official description which told members that the 1995 Pensions Act introduced 'a new rule "aimed at making sure that salary related schemes have enough money in them to meet the pension rights of their members" was again confirmed to be inaccurate and misleading, but the Government has never even bothered to respond to the Ombudsman's actual criticisms.  As the judges point out 'Any expectation that the DWP Response would seek to meet that criticism would have been disappointed' (para 86).  They say it is 'a striking feature_that the Secretary of State has not, even in this Court, sought to meet the Ombudsman's finding that the assurances _were incompatible with the Government's intentions' (Para 83).  Specifically referring to the Government's defence, the judgment slams the DWP's arguments with phrases such as 'I find nothing which seeks to respond to the specific criticisms' (para 83) 'I am not persuaded that that is the correct approach' (para 91) 'neither proposition can withstand scrutiny' (para 94), 'the suggestion cannot be sustained' (para 94), 'it was irrational for the Secretary of State to reject the Ombudsman's finding' (para 95).
2.     The Secretary of State's grounds for leave to appeal to the House of Lords are that the Appeal court judges were all wrong 'In failing to find that the Secretary of State is lawfully entitled to disagree with the findings of the Ombudsman on the basis of a bona fide and rational difference of view, but rather must have 'cogent reasons for disagreeing'!  This is a staggering statement and suggests that politicians can be above having to explain themselves properly, even when defending their rejection of their own Ombudsman.
3.  Between 1997 and 2005 at least 125,000 people lost the company pensions they had been assured were properly protected by law.  In 2004, the Parliamentary Ombudsman was asked to investigate the Government's role in these pension losses and in March 2006 she published her report 'Trusting in the Pensions Promise' which concluded that the Government was guilty of maladminstration which caused injustice to the victims and that the Government should consider replacing the lost pensions in full, apologising to the victims and also making some 'consolatory payments' in recognition of the stress and distress they had suffered.  The day after her report was published, the Government rejected it in an unprecedented fashion.  We then mounted a Judicial Review against this decision.  The Parliamentary Public Administration Committee also conducted an investigation and confirmed that the Government was wrong to reject the report and that the Ombudsman had been right.  In February 2007, the High Court Judicial Review verdict found against the Government, but it immediately lodged an appeal against that ruling.  Today's verdict is the result of that Appeal.
4.  The Pensions Action Group is very grateful to our legal team - John Halford of Bindmans and Dinah Rose and Tom Hickman of Blackstone Chambers - for their help in this case.
The Government has come up with its own version of today's ruling.  It fails to mention that the Government's  appeal against the Judicial Review ruling in the High Court last year was dismissed.  It has tried to put a positive spin on this, but it is a bad defeat.

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