A cross-party committee of MPs is to launch an inquiry into why the Government ignored the findings of the Parliamentary Ombudsman's report on occupational pensions.
The report, published yesterday, accused the Government of maladministration in its regulation of pensions between 1994 and 2005, calling on it to pay compensation to 85,000 workers who lost most or all of their savings when their employers went bust. But, speaking in the House of Commons yesterday, Tony Blair dismissed the recommendations, saying the Government was not willing to put up any more money for those affected, claiming the potential cost of £15bn was too high.
"We simply cannot do that in the circumstances where the reason for the loss is the collapse of the pension scheme itself," he said.
Tony Wright, a Labour MP who chairs the Public Administration Select Committee, said he was appalled the Government had been found guilty of maladministration again, months after another ombudsman report levied similar charges against it over its running of the tax credits scheme. He said his committee would start an investigation into the situation.
This is the second time in a year the Parliamentary Ombudsman has used her powers to report to Parliament that an injustice has been caused by government maladministration and will not be remedied," he said.
The pressure continued to mount on the Government elsewhere, as Ros Altmann, the former Downing Street pensions adviser who took the original complaint on pensions to the Ombudsman, said the pensioners were considering suing the Government.
David Laws, the Liberal Democrat Pensions spokesman, said he intended to pursue all avenues to ensure the victims were compensated. "What we need to do now is work cross-party to bring pressure to bear on the Government," he said. "For one of the parties to completely ignore its [the Ombudsman's] findings is to bring the whole parliamentary system into disrepute."
He warned that the Government may try to fob off victims of the scandal by announcing an extension of the FAS (Financial Assistance Scheme), perhaps in next week's Budget. But he said this was unlikely to lead to anything near to the full compensation the Ombudsman recommended. "We must be wary of Gordon Brown producing a white rabbit from his hat to ease the pressure from his backbenches."