A new scandal was revealed in the House of Lords this afternoon which could affect tens of thousands of the poorest pensioners already cheated for decades of the right money for their pension.
The underpayments running to tens of millions – exposed by Sir Steve Webb, the former Liberal Democrat pensions minister – is slowly being sorted out by officials at the DWP though as this blog exposed earlier with the most complicated cases being delayed under a secret ” drop and go ” scheme to get the numbers up.
The minister Baroness Deborah Stedman-Scott revealed that so far £60.7 million had been paid out to 9491 people cheated of their full pension – suggesting that some of the payments must be pretty large.
Extraordinarily she could not give a gender breakdown – which led to a rebuke from Labour peer Lord Jeff Rooker who accused her of hiding the fact that vast majority must be all women.
But then came the killer blow. In answer to a question to another former pension minister, Baroness Ros Altmann, Baroness Stedman-Scott confirmed that the poorest pensioners who got the money -mostly in their 80s and 90s – would cease to get their fees paid by local councils if they got more than £23,250 in England
Hidden bonanza for care home owners
Instead they would have to pay privately until their pension savings money fell below £23,250. Given that many care homes charge differential rates for people residing there – local authority rates are often lower than private rates – this could even be a new bonanza for care home owners – as they could get more money for providing the same services.
This “pay out and grab back” scheme was universally condemned by peers of all parties. Not one supported Baroness Stedman-Scott who was looking increasingly uneasy at having to admit this.
She hinted that in rare cases the DWP could make a special payment to a pensioner or that local authorities could perhaps waive individual fees.
“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.”
This got no purchase with the peers. The most critical comment came from Lord Forsythe of Drumlean, another former Tory minister, who accused the government of ” hiding behind the skirts of local government” rather than take national responsibility for the change.
Lord Rooker linked this action to the failure to pay out the 50s women when the pension age was raised to 66.
“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?”
Government ignores answering who is to blame at the DWP
Conservative peer Baroness Patience Wheatcroft, a former journalist, wanted to know who in the DWP was responsible for this failure to pay so many people the right pension.
“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?”
The minister couldn’t – she just blamed it on a computer failure.
She did promise under pressure to approach both the Treasury and Therese Coffey to see if the government could introduce regulations for councils to ignore the pension back payment. But admitted she might get short shrift from the Treasury.
All this points to another blow for the 50s born women when and if they get compensation in the future. By that time many may well need social care -only to find out that they will have to give back their payments to cover their care home costs.
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