David Prosser: Memo to Government: shame on you

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The Independent Online

The refusal by ministers to properly compensate 85,000 people who have lost their pensions was shocking enough, even before this week's report by the Parliamentary Ombudsman.

Now that Ann Abraham has ruled that the Government wrongly advised people that their pensions would be safe, its position is indefensible.

Forget the bluster from pensions ministers such as John Hutton and Stephen Timms in recent days. The facts of this case are straightforward - and only two issues really matter.

First, for many years, the Government published leaflets advising members of final salary pension schemes at work that their benefits would be "guaranteed" and "protected by law". Second, 85,000 people lost some or all of their savings when their employers went bust and their pension schemes turned out not to be secure after all.

It seems an open-and-shut case. On the one hand, the Government urged people to join pension schemes and save for old age, and promised them it was safe to do so. On the other, the life savings of thousands of people later disappeared.

No one disputes these facts. Hutton and Timms argue that the Government never intended people to act on its guidance and that savers should have taken independent financial advice first.

Leaving aside the fact that, at the time, the Government was accusing thousands of independent financial advisers of mis-selling personal pensions - which was hardly likely to encourage people to go back to them for more advice - do ministers really think this is a credible defence?

Put it this way; can you imagine the Government letting a private company off the hook in this fashion? If you or I were to advise someone, in a professional capacity, to invest thousands of pounds in a venture that subsequently went belly-up, do you think we'd be allowed to walk away from the mess scot-free?

In the 40 years since it was set up, the Parliamentary Ombudsman's office has never had its recommendations ignored in this way. But maybe the Government is preparing to take a stand. The Ombudsman is also investigating whether the Government is partly to blame for the Equitable Life débâcle - if Abraham finds ministers at fault in her report later this year, she could again recommend compensation for savers. Will ministers dismiss her views again?

There are very sensible arguments for a Government change of heart. This stance hardly encourages people to save for the future, for one; and taxpayers will have to pick up extra costs in any case, because many of these people will now be reliant on state benefits.

Above all, however, what ministers have done is plain wrong. It is a shameful betrayal of people who did their best to provide for the future. The moral case is the most damning of all.

nnn Having castigated credit-card companies when they're up to no good, it's only fair to praise them when they do better. So, congratulations to Barclaycard for its mobile-phone initiative. The lender has offered to send text messages to all its nine million customers each month, warning them when they have five working days left to settle bills. It will also do more to warn of the dangers of only making minimum payments.

Now, if Barclaycard could just be persuaded to give up credit-card cheques, I might even forgive it for its uncompetitive interest rates.

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