DWP may go to House of Lords after losing pensions appeal

The Government suffered another embarrassing defeat in the courts yesterday, as three judges threw out its appeal against last year's judicial review of the occupational pensions scandal.

But the Department for Work and Pensions (DWP) immediately announced it was considering taking its case all the way to the House of Lords, further angering the 140,000 victims of the scandal.

The Court of Appeal backed up last year's High Court ruling, which accused the Secretary of State for Work & Pensions of being both irrational and unlawful for rejecting a 2006 Parliamentary Ombudsman report into the pensions scandal.

The Ombudsman's report had accused the Government of maladministration over its management of the pensions sector, demanding that it pay compensation to the 140,000 people who lost their savings when their companies went bust.

Delivering the appeal court's verdict yesterday, Sir John Chadwick said the maladministration had directly caused "a sense of outrage, distress, anxiety and uncertainty... the loss of opportunities to make informed choices or to take remedial action".

Lord Justice Wall added: "Nobody reading the papers in this case could have anything but the utmost sympathy for the plight of the complainants, all of whom, it seemed to me, were decent, hardworking people who, through no fault of their own, had been – or were at serious risk of being – deprived of that for which they had worked, namely a modestly comfortable retirement."

Ros Altmann, the former government pensions adviser who has helped the victims of the scandal fight their case, said she was astonished James Purnell, the new Secretary of State for Work and Pensions, was considering taking the case to the House of Lords.

"This attitude merely reinforces the High Court and Court of Appeal verdicts that the Government's decisions in this matter are irrational," she said. "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."

In December, the Government finally agreed to replace most of the victims' lost pensions, via its Financial Assistance Scheme. However, the DWP claims it wants to glean a final decision from the House of Lords due to the case's constitutional significance.

The case will set a precedent for how the Government deals with future reports from the Parliamentary Ombudsman, and may prevent them ignoring its recommendations in the future.

In spite of upholding many of the Ombudsman's allegations of maladministration against the Government, the High Court also conceded the Government's point that the Ombudsman's findings would not always be binding.