New clause 8 - Transition arrangements
Armed Forces (Pensions and Compensation) Bill
4:00 pm
Mr Win Griffiths (Bridgend, Labour)
With this it will be convenient to discuss the following: New clause 12—Assumptions—
'Before introducing any new scheme the Secretary of State shall set out the mortality and longevity assumptions upon which such scheme is based.'.
New clause 13—Comparative benefit statements—
'The Secretary of State shall provide individual comparative benefit statements for each serviceman and woman eligible to elect whether to remain within the scheme in force on the proposed transfer date or transfer to a new scheme promulgated by the Secretary of State.'.
New clause 22—Information to beneficiaries—
'(1) The Secretary of State shall ensure that information about changes to existing schemes and information about new schemes reaches all levels of all units. All relevant information shall be made available to all serving personnel.
(2) The rules relating to compensation for injuries and illnesses shall be made readily available to all serving personnel.
(3) The Secretary of State shall make provision for service personnel to receive access to independent financial advice when making decisions relating to proposed changes to the scheme.
(4) The Secretary of State shall set out at the beginning of future consultation processes a timetable for the completion of that process.
(5) Future changes to the schemes will be possibly by secondary legislation, but the basic principles of the scheme shall be set out in primary legislation and the introduction of a new scheme shall only be possible through primary legislation. Any major changes to the schemes in the future should be by statutory instrument subject to super-affirmative procedure, allowing for consultation both with interested groups and with Parliament, before final secondary legislation is presented to Parliament for approval.'.
Mr Gerald Howarth (Aldershot, Conservative)
The new clauses relate to transition arrangements. We briefly touched on those this morning when we discussed the Bill's commencement date, which the Minister said would be 6 April 2005. The new clauses invite the Government to set out what they propose to do about the transition arrangements.
The Minister said that when he visited a unit in the west country, he was pleased to see leaflets on desks. I find it slightly discourteous that we, who are discussing these matters in Committee in a way in which the House has been unable to discuss them—it certainly has not had all the information before it—have not seen some of the material that has been circulated to members of the armed forces.
Mr Ivor Caplin (Parliamentary Under-Secretary, Ministry of Defence; Hove, Labour)
I am open to correction, but I think that the leaflets have been distributed, certainly to members of this Committee and of the Select Committee. If not, then I am more than happy to ensure that they are distributed and can be seen. I
think they were available on Second Reading. The leaflet is not new: it has been out since the September launch of the scheme.
Mr Gerald Howarth (Aldershot, Conservative)
I shall not make a big song and dance about it, but the looks on the faces of one or two Government Members show that I may not be alone in not receiving the leaflets. I think that I would have known if I had. We all get far too much correspondence and sometimes throw out things that we did not mean to, but I do not believe that I have seen the literature. It might be helpful if the Minister could bring a limited supply to our next sitting.
Mr Ivor Caplin (Parliamentary Under-Secretary, Ministry of Defence; Hove, Labour)
I shall undertake to have a supply of those leaflets available for every Committee member on Thursday morning. I apologise that the hon. Gentleman did not receive a copy. Perhaps my ministerial statement, which contained the details of the scheme, may have been regarded as identical to the information in the leaflet. I will have sent a copy of my statement to the hon. Member for Mid-Sussex (Mr. Soames).
Mr Ivor Caplin (Parliamentary Under-Secretary, Ministry of Defence; Hove, Labour)
Perhaps I might help the hon. Gentleman as he meanders through the last part of our deliberations.
Mr Ivor Caplin (Parliamentary Under-Secretary, Ministry of Defence; Hove, Labour)
It is. Indeed, the hon. Gentleman will know, because we have discussed it before, that I regard my duty as an employer seriously. When our troops are on exercise or in training, we take health and safety seriously. However, Conservative Members will be aware that different rules and different risks apply when they are in combat or on operations, as we debated in the previous sitting.
Mr Gerald Howarth (Aldershot, Conservative)
I do not want to detain the Committee too long on this issue, but our armed forces, especially those in command, are concerned about how far they can give orders. The Government will have to address that issue, as we will when we return to Government next year. In the meantime, we must deal with what we have. I remind the Committee that in the summer of 2002 the Minister gave the House of Commons an undertaking that comparative statements would be provided, although the hon. Gentleman may have tried to distance himself from such a commitment at the Defence Committee's last sitting. We need to know about those comparative statements, assuming that they will be given. What does the squaddie do then? If the buck stops with, say, the major, the major will say, ''Look, I am not an independent financial adviser. I can't give you advice.''
The consequences are twofold. First, where should the squaddie go to obtain advice? Who will point him in the right direction? Secondly, his respect for his superior officer will be diminished if that officer cannot give him any advice on this important matter of his welfare. Those in the chain of command are never short of giving advice to those in their charge. Sometimes, that advice is given abruptly. At other times, the relationship will be cosier. In this case, however, any officer who holds himself out as an adviser to a squaddie may find himself in great difficulty. I suspect that he will be deeply reluctant to tell someone what they should do.
So what do the Government propose to do about the providing of advice? Do they, for example, propose to set up a panel of approved independent financial advisers, on whom service personnel can call? Will they have surgeries at fixed bases? Will they send people on to ships, to RAF stations and into barracks, to brief people on the implications of this measure? If they are proposing to do that, whom will they authorise to give this advice? Will they have a
bidding process, and invite the IFAs to nominate themselves as suitably qualified to give this advice to members of Her Majesty's armed forces? The Government appear to have given scant attention to these issues, unless they are simply keeping us in the dark. The Ministry might consider drawing up a list of approved financial advisers who could help. If the Government did that, they would go some way to meeting their duty of care, and they would be facilitating rather than giving advice. At the end of the day, if those in the chain of command hold themselves out as being in a position to give advice and things go wrong, the Minister knows where the buck will stop: it will stop with him.
Mr Eric Joyce (Falkirk West, Labour)
The hon. Gentleman is making rather a meal of this. We are talking about a simple calculation of comparative benefit, which any regimental administration officer in a major unit could make, as the hon. Gentleman knows. Any future member of the pension scheme can go to his regimental administration officer, certainly at major unit level or above, and be told what benefits he will receive from a particular pension scheme. This is simply a comparison between two different schemes. I am sure that the hon. Gentleman recognises that that would be entirely feasible in a comparative situation such as this.
Mr Gerald Howarth (Aldershot, Conservative)
We do not even know yet whether we will get comparative tables. The hon. Gentleman blindly assumes that we will get comparative statements.
Mr Gerald Howarth (Aldershot, Conservative)
The hon. Gentleman says from a sedentary position that such statements are simple to produce, but I suspect that some quite important IT may be required to deliver up to 200,000 sets of individual comparative tables. I may be wrong and he may be right, but I think that the situation will be more complicated than he suggests, and we have a duty to ask questions. I would be happy if the comparative tables given to people were of good quality, clear and straightforward. In such circumstances, I would be inclined to feel that the chain of command could handle the issue, but I do not think that the hon. Gentleman realises the extent to which it will now feel inhibited and nervous about giving advice on a matter of this complexity, particularly when there are issues in the public domain about pensions mis-selling and so on. It is an extremely serious issue.
There are many unanswered questions about the transitional arrangements that the Government intend to introduce. I hope that the Minister will now share with the Committee exactly what he proposes to do. The hon. Member for Falkirk, West has served in Her Majesty's armed forces and may be able to give him some advice. My hon. Friend the Member for New Forest, West may be able to give him advice. The Minister should take advantage of the wisdom in the Committee and tap into it to test what he proposes to do. Time is galloping on, however, and if he wants to have things in place by April 2005 he must crack on, get the systems in place and tell us what the systems are.
Mr Ivor Caplin (Parliamentary Under-Secretary, Ministry of Defence; Hove, Labour)
I shall consider new clauses 8, 12, 13 and 22 in some detail in a few moments. I shall start where the speech by the hon. Member for Aldershot ended: what arrangements have we put in place? Of course, if my hon. Friend the Member for Falkirk, West has any ideas, we will be more than willing to hear them. I shall reserve judgment on the hon. Member for New Forest, West just in case he returns to new clause 5 too quickly.
A full project team is at work at the Ministry of Defence. It is managing the overall project on the armed forces' pension and compensation schemes. We also have teams working in the agencies, such as the Veterans Agency. They are preparing for the role that they will play in delivering the new services. A substantial number of staff are considering communications. That is important and I shall say more about it as we continue. We intend to build up the number of such staff in the coming weeks and months as we head towards April 2005.
The hon. Member for Aldershot made a point about advice for the squaddie, as he calls it. I am sure, although I have not been able to find this in the three Hansard reports of our proceedings, that I dealt with that issue. I probably did so when we debated clause 1. I have been clear about the role that will be played: we at the Ministry of Defence are not licensed, nor are commanding officers, but we are going to look at how advice is provided. That is clearly our responsibility within the confines of the Financial Services and Markets Act 2000.
Of course, the ultimate decision will be down to the individual members of the forces. They will be given an offer to transfer with the relevant form. Yes, we have to have a computer system and we have to get the right information out to them, even those who are on service overseas—I will deal with that in a moment. We are looking at the possibility of setting up helplines, and, as I have said before, at a range of independent financial providers and associates who might be able to assist.
Current service personnel will have a choice about which scheme they belong to—I have been very clear about that from the moment I announced it on 15 September. As I indicated, transfer arrangements are developing, which is a phrase I would like to use today. Such arrangements will include consideration of the transfer value of service under the current arrangement, and I can assure the Committee that all this information will be available in good time for current members of the armed forces to make a properly thought-through decision.
The hon. Gentleman asked me a couple of other questions. The first was about the date of joining the scheme. We have concluded that, to be fair and equitable, the date of joining the pension scheme will be the date of joining our armed forces, which is not the current situation.
Mr Gerald Howarth (Aldershot, Conservative)
So the day that someone joins up at age 16 or the day that someone enters Sandhurst will be when they join the scheme. That is very helpful.
Mr Ivor Caplin (Parliamentary Under-Secretary, Ministry of Defence; Hove, Labour)
That is the case. The hon. Gentleman raised an interesting issue about these windfall examples. I have not previously had sight of those cases, so I am grateful to him for raising the issue. Perhaps he will forgive me for saying that I want to go away and have a look at it in more detail.
I shall deal with the four proposed new clauses. The purpose of the first new clause is to require details of the transfer arrangements of the new pension scheme for current service personnel to be set out in a statutory instrument, as well as to allow the Committee the opportunity to discuss that aspect of the new arrangements. The statutory instrument for the new armed forces pension scheme, in line with normal practice, will set out the transfer arrangements applying to those currently serving members of the armed forces who choose to join the new scheme. Therefore, I can give the hon. Gentleman a categoric assurance that when we come to the secondary legislative aspects, we will set out the issues in relation to transfer in a statutory instrument. In my view, there is no need for them to be specified in primary legislation.
New clause 12 concerns the mortality-longevity assumptions used to cost the new pensions scheme in the public domain. Here I have good news for the Committee: I have already made those assumptions available to the House. The Defence Committee had them, and they were published in the second volume of the Committee's first report of the 2003–04 session, which covered oral and written evidence in relation to armed forces pension and compensation. If my memory serves me correctly, it was tagged to the debate on Second Reading on 22 January. I intend for that information to continue to be provided to the House whenever the scheme is re-costed, but I do not see any need to make that the subject of primary legislation. I hope that that is a suitable explanation for the Committee.
New clause 13 would require the Ministry of Defence to provide each service person eligible to transfer with a comparative pension benefit statement. I have already indicated that we intend to do that, and I recognise the importance of ensuring that our current service personnel have the information they need to make an informed decision on which pension scheme will meet their personal needs.
We will provide a range of material to assist members of our armed forces to make that decision, including individual statements of the benefits under the old and new schemes as well as information about the key features of the two schemes. That information will be fully compliant with the requirements of the Occupational Pension Schemes (Disclosure of Information) Regulations 1996. There is therefore no need for the requirement in new clause 13 to be set out in the Bill.
I was asked about personnel on operations overseas. We recognise the challenges involved in ensuring that all our armed forces personnel receive the information they need. We plan to allow a longer decision period for those on operations. For example,
the civil service had a three-month decision period, and although we have not reached a conclusion, I can comfortably say that ours will be longer. If members of our armed forces fail to respond, we will try to get a response. I can give clarification, however, in that the default position is that they will remain within the current pension scheme arrangements. That approach was also adopted by the civil service scheme, and it is right to follow it until the individuals make the decision to transfer to the new scheme. There should be no confusion about that.
The largest of the new clauses is new clause 22, which runs to five subsections. Someone was clearly working overtime at Conservative central office to produce it. I am sure that those people are now obsessed by the Bill rather than the shadow Chancellor's strange speech, to which we will return at a later date, when you are not in the Chair, Mr. Griffiths.
The Committee has already discussed in detail the majority of issues raised by new clause 22. My right hon. Friend the Secretary of State gave an excellent and eloquent explanation on Second Reading of why enabling legislation is the most sensible way to make the schemes work. As I said this morning, our approach gives Parliament more involvement in the new scheme than it has in the current scheme. That is also in line with what is happening to other public service schemes.
I do not need to go through each subsection in detail, as enough has been said about all the points in our last few sittings.
Mr Gerald Howarth (Aldershot, Conservative)
Before the Minister sits down, I have one more question to ask. I am grateful for some of his comments, but there has been an awful lot of, ''We're going to'', and, ''We've got in hand'', which I do not find hugely reassuring. For example, will he say categorically whether a computer system for the comparative individual statements is up and running? Is there a programme for it and are people operating it? I am confident his reply will be helpful.
Mr Ivor Caplin (Parliamentary Under-Secretary, Ministry of Defence; Hove, Labour)
The answer on whether there is a computer system today is no. Is someone working on a programme to produce the relevant statements? Yes. That is why I made the opening statement on the various project teams, including a communications team, working in the Ministry of Defence, which will deliver such changes.
Mr Gerald Howarth (Aldershot, Conservative)
So there is no computer system working yet, although there are people working on it. I return to my point about the 2005 implementation date: when does the Minister expect to be able to report to Parliament that the system is up and running, including a date on which our constituents may expect to receive the product of the system—namely, their individual comparative benefit statements?
Mr Ivor Caplin (Parliamentary Under-Secretary, Ministry of Defence; Hove, Labour)
I know that this is difficult for members of the Committee to believe, given how IT systems develop, but I said that we have people working on a programme, not working on a system. I make that distinction for the record. The work to identify the appropriate system is in hand, and there are people working on it. This is a huge issue.
There are other, similar systems; we are not trying to re-invent the wheel. We have obviously considered the civil service scheme, which went before us, so we are not re-inventing the processes. I believe that that is acceptable.
The hon. Gentleman will forgive me if I do not commit myself to a date on which to report to Parliament on an IT system. I recall that Ministers over the years, going back over successive Governments, have fallen foul of that, so I shall learn the lessons of my predecessors, not just at the Ministry of Defence, but at other Departments. My hon. Friends are clear about the fact that we do not need these four new clauses and I shall ask them to resist the proposals if the hon. Gentleman does not see fit to withdraw them.
I want to clarify for the Committee a point that was raised in an earlier sitting. I can confirm that all changes to the pension scheme rules will be made by statutory instrument and will therefore be subject to the negative resolution procedure, which we discussed on the last full day on which we sat a couple of weeks ago. On that basis, I invite my hon. Friends to resist the new clauses if they are pressed to a Division.
Mr Gerald Howarth (Aldershot, Conservative)
I am bound to say that the Minister is sensible not to commit himself to a date, much as I was intrigued to get one out of him. If I were in his shoes, given Governments' experience and their apparent inability to wrestle with the world of IT—this is a universal point—I would think it wise not to give a date. However, if the computer programme is not yet developed, and given that this is an important item, I would like to feel that the Minister has it in his mind's eye that he will be able to report back to Parliament at least by the end of the Easter recess to give us some indication of how progress is being made. These measures will affect virtually every Member of the House, because we all have constituents who will be affected.
On the example of the civil service, which is clearly the template that the Government are considering in respect of this new scheme, I suggest that the Minister might add to his little package of goodies, which he will bring before us on Thursday, an example of what went out to civil servants. Obviously, we do not want individual names. Given that the Government have adopted that template, it might assist the Committee if the Minister gave examples to show how the civil service made the change. The hon. Member for Falkirk, West thinks it is all frightfully simple, which may be so, but it would be helpful to have illustrations to see what we can make of them. The Minister is nodding, and I thank him on behalf of the Committee.
As to financial advice, the Government appear to be taking a futuristic approach, saying that they are ''going to'' look at how financial advice is dispensed. That matter has been discussed for some time, so either I am exceptionally thick or there has not been much progress in working out a clear line on dispensing financial advice and deciding who will give it. The Minister said that we must get the information to servicemen and that he is working on it. Attempts are being made to deal with those who are in far-flung corners of the globe and the possibility was
raised of having helplines. It seems that everything is still up in the air and that there is no clear framework for the transition.
I am grateful to the Minister for undertaking to provide us with more information on the windfall issue and I am happy to let him have my documents on the subject if they would be of help.
The Minister rejects the new clauses on the basis that what they propose is already covered. I welcome the fact that the details of the transition will proceed under the statutory instrument procedure—an affirmative resolution that must be debated. However, there is no date for the statutory instrument to be presented to the House for our consideration and it is disappointing to hear that that matter is also still out in the long grass.
We welcome the longer decision-making period for those overseas. Presumably, it is envisaged that there will be a consultation period that will expire at a certain point. Meanwhile, people will be making and reporting their individual decisions at different times. I assume that at some point everyone who wishes to switch will do so on a specific date, not on different dates chosen by individuals. Has the Minister a clear idea of when in the two-year period the decision might be taken? It would be helpful to have that information, even if he cannot provide it now.
The default position—if someone does not decide to do otherwise, they stay in the existing system—seems to be a sensible way to proceed, and I am grateful to the Minister for that.
The Committee will be relieved to know that time does not permit me to mention the longevity assumptions in new clause 12. As the Minister rightly said, they have been provided for this scheme, and that should also be done in future. That is one of the key points that we believe should be in the Bill. I do not deny that this is dry stuff, but, among the key components of how the Government make up their mind on a new scheme, longevity is an important factor to take into account. I therefore feel that this is a legitimate point to include, in respect of any future scheme that the Secretary of State might devise. As we know, clause 1 gives the Secretary of State unlimited powers to produce a new scheme to present to Parliament, providing an open-ended opportunity.
We have had an extensive, albeit not entirely satisfactory, debate. The Minister has offered us some help, but a lot of issues are still outstanding and much uncertainty remains. It would be helpful to him if he were able regularly to report to Parliament on how progress is being made. We want to help; we do not want him to be caught in the mangle of another ministerial, departmental and IT disaster, because such a disaster would affect not only him, but those whom we in the Committee value above ourselves—the members of Her Majesty's armed forces. I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
Further consideration adjourned.—[Vernon Coaker.]
Adjourned accordingly at one minute past Five o'clock till Thursday 26 February at five minutes to Nine o'clock.