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TRUSTING IN THE PENSIONS PROMISE: GOVERNMENT BODIES AND THE SECURITY OF FINAL SALARY OCCUPATIONAL PENSIONS
(HC984: 14 March 2006)
Introduction
1. The purpose of this Memorandum is to assist the Committee in its inquiry in relation to the Government's response to the above report.
2. The Memorandum is in three parts:
(i) This main section sets out my concerns about the wider implications of the Government's response to my report: first in relation to the constitutional position of the Ombudsman's office, and the role that Parliament has determined the Ombudsman should play in investigating complaints about the administrative actions of public bodies; and secondly in relation to what citizens can reasonably expect of official information.
(ii) Annex A sets out my detailed observations on the Government's response to my report which was published on 6 June 2006. In summary my observations are that the Government's response:
- fails to address the basis on which I found that maladministration had occurred;
- makes selective use of the comprehensive and detailed evidence set out in my report;
- provides an unbalanced view of the role of Government in the system of final salary occupational pension provision; and
- misrepresents what my report says about the causes of financial loss.
(iii) Annex B provides information about cases in the past which have been the subject of a section 10(3) report; and about cases which, although not laid before Parliament under section 10(3), raised similar issues. In some cases Government initially rejected findings but remedied the injustice; in others it accepted findings but did not, at first, provide an appropriate remedy.
However, in no case did Government both reject findings of maladministration and refuse to consider righting the injustice that had been sustained in consequence of that maladministration. Nor has an injustice remained unremedied in any previous case. There is, therefore, no precedent for the Government's response to my report.
Constitutional issues
3. In my Memorandum to the Committee of 26 April 2006, I said that I was concerned about the implications of the Government's initial response to my report. The Government's subsequently published full response has done nothing to allay my concerns, which have been compounded by what I now perceive to be an emerging attitude amongst Government officials and Ministers that has serious implications for the Ombudsman's office.
Precedent
4. The Government suggests that there is precedent for its actions. Paragraph 64 of the Government's response says that:
'While the Government has rejected reports in the past (for instance in relation to the Barlow Clowes investigation in 1989) no Government does so lightly'.
5. As Annex B shows, there is no precedent for a Government both rejecting findings of maladministration and refusing to compensate those people who had suffered injustice. A refusal even to consider doing so is entirely unprecedented.
6. In the Barlow Clowes case, whilst the Government said that it did not accept the Ombudsman's 'assertions', compensation was paid to the complainants and others in a similar position to them, 'out of respect for the Office of the Parliamentary Commissioner'.
Maladministration and injustice
7. In its response, the Department for Work and Pensions (DWP) continues to assert that it can be the final arbiter of complaints about its own actions. As the Committee will understand, this position goes to the heart of the system of independent scrutiny of executive action that Parliament has established; and to the confidence that citizens can have that they will receive an effective scrutiny of and outcome to their complaints.
8. The Government's own rule book, Government Accounting, says (in paragraph 5 of Annex 18.1):
'In the light of the investigation of a case, the Parliamentary Ombudsman will decide whether complainants have suffered injustice because of maladministration; and whether any injustice has been, or will be, remedied. The Parliamentary Ombudsman's findings on maladministration are final; there is no established avenue of appeal.'
Recommendations for redress
9. Implementation of any recommendations I might make to remedy injustice is another matter. As I explained in my Memorandum to the Committee of 26 April 2006, the Government may:
'…reject recommendations that I may make, after proper consideration of the public interest, and other calls on the public purse, and any other relevant matters. That is a decision that it is entitled to take, was one envisaged by Parliament when it decided that I would not have powers to make binding recommendations, and would be one for which the relevant Department would have to account to Parliament.'
10. The Government appears to draw no distinction between a rejection of the Ombudsman's findings of maladministration and injustice and a rejection of the Ombudsman's recommendations for redress.
11. Moreover, the nature of the Government's response to this report appears to represent a new and significant departure from historical precedent and constitutional practice.
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A wider pattern
12. It is not only in relation to this report that I have concerns. There appears to be an emerging attitude amongst Government departments that they can properly, and with impunity, reject my independent assessment of their actions, and my findings of maladministration.
13. As the Committee knows, the Chairman of Her Majesty's Revenue and Customs told another Parliamentary Committee that he did not accept my judgement that maladministration had occurred in relation to the administration of tax credits.
14. The Permanent Secretary of the Home Office has recently informed me that he does not accept my findings of maladministration in relation to a number of immigration cases.
15. It would appear that DWP's response to this report has given permission for a wider pattern of behaviour to develop. If this becomes a general pattern, or a culture, I am sure the Committee will agree that this can only undermine the confidence and credibility that is necessary to ensure that the Ombudsman's office can fulfil its role and purpose.
A future loss of confidence
16. Whilst I remain concerned that everything possible is done to secure whatever Parliament considers to be appropriate redress for the people who have lost their pensions, I am also concerned about the implications of the Government's response for the constituents of Members who might wish to complain to me in the future.
17. Since publication of my report, I have received many letters from people with complaints about the loss of their pension, and also from other members of the public.
18. One such correspondent asked me: '…what was the point of me coming with my complaint to you if, whatever you say, the Government can still refuse to accept that my complaint was justified? Can the Government ignore the courts, too?'
19. Another said: 'I thought you were an independent investigator who could decide on the facts whether my complaint was well founded. If the Government refuses to accept the verdict of Parliament's own Ombudsman, what hope is there for other people who have suffered injustice because of Government action?'
20. Such a loss of confidence is inevitable if Government creates the impression that it is prepared to pick and choose which of my findings it is willing to accept.
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Official information
21. I am aware that the Committee has a long-standing interest in official information and the role it plays in good administration and the delivery of public services.
22. The Government's response to my report appears to suggest that, unless a public body is wholly responsible for the structure and administration of the subject matter of any of its publications, citizens would be acting unreasonably if they were to rely on the information provided by Government about that matter - or if they were to expect such information to be correct and complete.
23. My report shows that DWP's own standards required that information it provided to the public had to be accurate and complete. Those standards did not apply only in respect of leaflets about social security benefits but related – as they still do – to all the information and advice (both general and specific) provided by DWP.
24. These issues are not new. It has long been a concern of good administration that the information provided by public bodies should not be factually inaccurate or materially incomplete. One of my predecessors noted in his Annual Report for 1985 that 'it is obviously important that the public should be able to rely on the correctness of the information' contained in the leaflets issued by DWP's predecessor department.
25. Complaints about official information and advice have formed a constant theme in the work of my Office since then. Indeed, incorrect and incomplete information given by officials and set out in summary leaflets was at the heart of the inherited SERPS case, which led to the development of the DWP standards and processes which aimed to ensure that the information and advice it provided was accurate and complete.
26. If the Government's response indicates that it is now the view of DWP and/or other parts of Government that official information cannot be expected to meet the standards previously set by public bodies or to conform to standards of good administration, then this would clearly have significant ramifications for public administration generally and for the degree of trust that citizens are likely to have in official information.
27. I am sure that these wider issues relating to the extent that citizens can rely on official information will be of interest to the Committee.
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Conclusion
28. I am deeply disappointed that the Government's response to my report has rejected my findings and misrepresented my recommendations. My report does not suggest that the redress for the undoubted injustice suffered by many thousands of pension scheme members should be paid for wholly by the taxpayer. However, for the reasons given in my report, I do believe that only the Government can organise a proper remedy for the losses sustained by those who complained to me. I remain concerned that everything possible is done to secure whatever Parliament considers to be appropriate redress for the people who have lost their pensions.
29. In addition, I am concerned that the Government's response to my report, together with what appears to me to be an emerging attitude amongst Government officials and Ministers in relation to my findings of maladministration, has serious implications for the constitutional position of my Office.
30.Finally, I believe the Government's response to my report raises wider issues in relation to official information, which are likely to be of interest to the Committee.
Ann Abraham
Parliamentary and Health Service Ombudsman
26 June 2006
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