Source · Select Committees · Work and Pensions Committee
Recommendation 22
22
Rejected
Paragraph: 161
Legislate urgently to provide indexation on FAS compensation for pre-1997 rights, funded by taxpayer
Recommendation
Financial Assistance Scheme (FAS) members are likely to have more of their service before 1997, so are particularly likely to be affected by non-indexation of pre-1997 benefits. Any improvements for PPF members should also apply to FAS members. Given the age of many FAS members, the Government should legislate as a matter of urgency to provide indexation on FAS compensation for pre-1997 rights, where their schemes provided for this, funded by the taxpayer. The Government should review the Financial Assistance Scheme, including looking at the case for removing other discrepancies in FAS compensation, compared to the PPF, such as the continued application of the compensation cap and lack of interest on arrears.
Government Response Summary
The government states it is considering how to address the lack of pre-1997 indexation for FAS members. However, it explicitly rejects awarding interest on arrears due to no legal basis and rejects removing the FAS compensation cap due to significant cost implications for the Exchequer.
Paragraph Reference:
161
Government Response
Rejected
HM Government
Rejected
It is worth noting that both the PPF and FAS are compensation schemes that operate differently and have different qualifying and eligibility conditions. The Department understands that the lack of indexation of PPF and FAS payments based on pre-97 benefits is important for the affected members. There are a number of cross-cutting issues which require detailed review and include implications for the Exchequer as mentioned above. The Government is considering how it might address this issue and will provide further detail in due course. Following the conclusion of the litigation in the domestic courts, the PPF identified its members and FAS members affected by the Hampshire Judgment and increased their payments to comply with the terms of the Judgment. The payment of arrears was backdated, but there is no legal basis for awarding interest on any arrears of FAS payments. The award of interest in the form of ex gratia payments is only considered where there is maladministration by the Department or in exceptional circumstances. This is not the case here as payments were correctly paid under the law as it was understood at the time. The cap on payments from the FAS has not been the subject of legal action, unlike the cap on PPF compensation. The PPF compensation cap was disapplied by the Court. The removal of the cap on financial assistance would significantly increase costs to the exchequer and has not formed part of our considerations.