For the second time in less than a month the government has suffered a partial defeat in a pensions case.
This time round four pensioners – Henry Bradley, Andrew Parr, Rob Duncan and Tom Waugh – took the Department of Work and Pensions (DWP) to the High Court in a judicial review of its decision to ignore the parliamentary ombudsman’s finding of maladministration.
Mr Justice Bean ruled that work and pensions minister John Hutton acted outside his powers when he ignored the ombudsman’s finding of maladministration in the phrasing of official advice on occupational pensions.
But he upheld the DWP’s decision to ignore the ombudsman’s finding that the maladministration had directly caused the losses to all those affected – estimated at between 75,000 to 125,000 people. He also upheld the DWP’s rejection of a finding of maladministration connected to the minimum funding requirement.
The judge was particularly scathing about the government’s arguments that its official advice had not been misleading, saying that it relied on the kind of minute textual analysis that: “can in my view only give comfort to those who consider that it is unwise to believe anything one reads in a government publication”.
He added that one of the leaflets, PEC3: “…gives the clear impression that following the enactment of the new law scheme members can be reassured that their pensions are safe whatever happens. I have no doubt that this is what it was designed to do. I agree with the ombudsman that it was inaccurate and misleading.
“I do not consider that it is necessary to go through each item of official information which was scrutinised by the ombudsman. It is sufficient to say that in my view her finding that official information was ‘sometimes inaccurate, often incomplete, largely inconsistent and therefore potentially misleading’ was well open to her on the evidence. Indeed, in the case of leaflet PEC3, I consider that no reasonable secretary of state could rationally disagree with that view.”
Mr Justice Bean went on to hold that the minister’s decision not to consider restoration of the lost pension benefits would have to be reconsidered, as the political environment would be different once maladministration was admitted.
The claimants’ solicitor John Halford, a partner at Bindman and Partners, said: “The government had been caught red-handed in an act of constitutional vandalism intended to deprive thousands of working people of justice.
“Mr Hutton sought to take a sledgehammer to one of the most important checks and balances on government power: the independent ombudsman’s ability to reach a definitive view on whether any citizen has suffered the effects of government maladministration.
”Tens of thousands of people have awaited this ruling. They continue to suffer extreme financial hardship and the associated stress because they invested in pensions they believed were safe having been told as much by that very department.
“That this case has to be brought at all is an absolute scandal. We hope the government will now – very belatedly - do the right thing by those it misled and offer meaningful compensation for what they have lost.”
Ros Altmann of the Pensions Action Group said: “The government must accept its guilt in misleading the public about the safety of their pensions. DWP denials of any wrongdoing have yet again been ridiculed. Will Ministers now agree to own up to their mistakes and pay proper compensation to those who have lost their life savings in pension schemes that the government said were safe and protected by the law?
This is the third damning indictment of the government’s behaviour over this pension scandal – a scandal created by ministers who keep claiming that those who lost their pensions cannot be helped any more because taxpayers’ money has to be spent wisely, but who meanwhile vote themselves huge pensions at taxpayers’ expense.”
Following the ombudsman’s report, the House of Commons Public Administration Select Committee had called on the DWP to reconsider its rejection of the findings but was also ignored.
In January, the European Court of Justice ruled that the UK has failed to meet EU standards for protecting workers from losing their pensions if their employer goes bankrupt but stopped short of saying the government should compensate victims, saying that was a matter for the national courts.