Overseas Service Pensioners

– in the House of Commons at 7:10 pm on 22nd January 2003.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Heppell.]

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions) 7:12 pm, 22nd January 2003

The British empire, excluding what were often known as the old dominions, was, by and large, wound up quickly in the 30 years after India and Pakistan were granted independence in 1947. Those who had served it, by which I mean both the colonies and the home country, often did so with great distinction and sometimes at risk to their life and creature comforts. They were progressively repatriated and almost all of them have now returned. No one would, or indeed does, begrudge them a pension. Indeed, the various arrangements made post-independence have been achieved to secure and make certain the pensions of those involved. In many cases, they are paid through what is now known as the Department for International Development, and I am delighted that its Minister, who is also my constituency neighbour, is to reply to the debate.

I should explain my interest in the matter. As so often in my experience, it arises from the case of one of my constituents, in this case Mr. Douglas Hodson of Byfield, who has given me permission to quote from his file. I have come to admire him for his articulacy and persistence, which he has demonstrated over the years since I first heard of his case in 1999. He got me involved with the Overseas Service Pensioners Association, with which I had not dealt before. Its secretary, Mr. David Le Breton, has provided invaluable and exemplary briefing on the wider aspects of the matter.

The association provides a focus of interest and representation for the distinctive interests of colonial pensioners and presses for equitable treatment alongside that available for home civil servants in the principal civil service pension scheme, of which I was fleetingly a member. For completeness, I add that, more recently, I have held some Front-Bench responsibilities for issues relating to pensions generally.

The wider matters raised by issues of colonial pensioners, such as the revised principal civil service pension scheme and the anomalies in armed forces pensions, which I know greatly concern my hon. Friend Mr. Howarth, who is also involved with OSPA, would perhaps overload this debate, so I do no more than flag them up and emphasise that they are relevant to the pursuit of equity. Equally, I shall do no more than touch on some of the special problems of pensioners with colonial service in the then Southern Rhodesia, now Zimbabwe.

Photo of Mark Tami Mark Tami Labour, Alyn and Deeside

I thank the hon. Gentleman for giving way and congratulate him on securing this debate on such an important topic. To be frank, I knew little about this issue until one of my constituents, Mr. Arnold Woolley from Buckley, who served in Rhodesia, informed me of the pension received by him and many of those who served with him. I was struck by the fact that because the pension is linked to the local currency, and we all know of the current state of Zimbabwe, what may have seemed a good pension is now worth pennies a week. That is a terrible way to treat people who have served us so well.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

I very much agree. I have at least one constituent who is in that situation. All those people have lost out badly, and the Minister may want to clarify their situation when she responds to my remarks.

The important principle underlying the concern of anyone who attends this debate should be that, as far as possible, those who have served the Crown in whatever capacity should be treated equitably. It remains incumbent on Ministers to identify, monitor and iron out any anomalies wherever possible.

OSPA, the representative association of these pensioners, was founded in 1960. As it says in its briefing, since then,

"successive Governments, slowly and usually reluctantly, have conceded that . . . members should not be treated worse than their counterparts in the two UK services", by which it means the home civil service and the diplomatic service. It refers to a number of advances that its pressure, and that applied by the House, has helped to secure.

Those include the extension of indexation to colonial pensioners in the 1960s, the Overseas Pensions Act 1973, which allowed for the central takeover of such pensions to ensure their continuing payment, and, in the 1980s and 1990s, important concessions to war service credit. Most recently, in 1996, the Government agreed to a special safeguard scheme for colonial pensioners who had served in Hong Kong. I shall refer to that service in a minute.

OSPA believes, and in this it goes along with modern good pension practice, that the position of widows and dependants in the various schemes should also be fairly aligned. It says that

"the most glaring case of inequality at present is that of post-retirement marriages."

That brings me squarely to the case of my constituent, Mr. Hodson. His first marriage ended in divorce, but many years ago. He remarried 14 years ago, and has one young daughter of that marriage. Understandably, as he is now in his 60s, he is anxious to safeguard his family's position.

Under present arrangements, as Mr. Hodson's remarriage took place after his retirement, his pension will die with him. What he finds particularly galling is that although he saw many years of service with the colonial police, first in Uganda, then Fiji and finally Hong Kong, he knows of cases in which the widows of other colonial servants in Hong Kong are receiving a discretionary pension from the Chinese authorities, even though the remarriage was also post-retirement.

Leaving aside the oddity of a communist Chinese regime being more generous to former servants of the Crown than Ministers of the Crown, there are important anomalies in the treatment of home civil servants. A concern for those civil servants and their unions is the fact that in introducing the new principal civil service pension scheme in 2000, the Government decided not to make any change to the rule added to the old scheme in 1978, but without retrospective effect, thus allowing pensions for widows of post-retirement marriages for service after April 1978 only. There is therefore discrimination between the oldest and often neediest pensioners in various Crown pensions and people with later service.

Another anomaly, which bears directly on Mr. Hodson's case, is that the 1978 decision was applicable only to civil servants, not colonial servants. However, Mr. Hodson, unlike a large number of colonial servants, was still in service in Hong Kong at that time, as the colony was our main outstanding colonial commitment, although officers may have been serving in the Gilbert and Ellice islands—I use the colonial name—the Solomon islands, the New Hebrides and British Honduras, which did not achieve independence until just after 1978. The old colonial pension schemes had a different funding basis from the home scheme, but I cannot help but agree with OSPA, which says that

"denial to the few officers still then serving in these territories and who subsequently became married after their retirement of treatment given to their home counterparts is hard to defend".

Although data are scarce, any contingent liability for such cases would not amount to more than a tiny fraction of the departmental budget.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

As my hon. Friend knows, I am an unpaid consultant to OSPA. Does he agree that those colonial servants were vital to the smooth running of some territories, particularly the former Rhodesia? If they had not stayed on, even though they were not part of the United Kingdom's domestic civil service or the Foreign Office, without their continued commitment to that country, there would not have been a period of calm for many years after independence.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

I agree entirely. It is one thing to run a colony, but to disengage our country from its responsibilities and achieve a smooth and peaceful transition of power to a successor Government is a genuine achievement. Many of those people put themselves to great personal inconvenience in doing so.

I shall touch for completeness on two minor aspects of my constituent's case, both of which relate to the rules of the Uganda pension scheme, which he joined many years ago. That scheme includes an additional disqualification rule if a marriage is concluded before 55. That seems to be a belt-and-braces approach or an oblique way of ruling out a post-retirement marriage, as 55 was the retirement age. The nature of Mr. Hodson's subsequent service in Hong Kong from 1976 to 1988 was on contract gratuity terms. The Department seems to have argued in correspondence with him that that disqualified as public service under the original Uganda scheme, which is at best nit-picking.

I shall close with the wider issues. British colonial servants, now sadly declining in number and nearly all retired, did a good job and deserve fair treatment. That is easier said than done because of the complexity of the various pension schemes and employments, and I have shared some of those issues with the House tonight.

As a former Minister, I appreciate that the Treasury and others are always vigilant and properly on the look-out for contingent liabilities, Trojan horses and dangerous precedents. I also acknowledge that, in a Department whose vital daily business is the delivery of aid and development resources to very needy people in the third world and developing countries, the matter of discharging traditional responsibilities may not carry the highest priority, but I hope that it carries the sympathy of this Minister and her Secretary of State. I was somewhat disappointed by a written reply that I received from the Secretary of State on 20 June 2002. I asked her

"what plans she has to review the pension arrangements of British colonial officials", and received this very short, dusty and, if I may say, somewhat uncharacteristic answer:

"None."—[Hansard, 20 June 2002; Vol. 387, c. 502W.]

I think that this Minister could do better than that. What is required is a better understanding of what is involved and, if I may put it this way, a determination to achieve fairness in the treatment of my constituent's particular case and others.

That is a legitimate and pressing public concern for the House. I invite the Minister to respond by explaining her understanding of these problems and, I hope, by giving the House some assurance as to her readiness to examine ways of overcoming them.

Photo of Sally Keeble Sally Keeble Parliamentary Under-Secretary, Department for International Development 7:26 pm, 22nd January 2003

I congratulate Mr. Boswell on securing this debate and join him in paying tribute to the people who previously worked in the colonial service. I am of course aware of his interest in development issues and colonial pensions, including those relating to Zimbabwe and the former Federation of Rhodesia and Nyasaland, as well as the particular issues that he raised about the variation of clauses and terms in the different pension schemes.

I know that the subject of Zimbabwe pensions is also of considerable interest to the Overseas Service Pensioners Association, which has expressed its concerns on numerous occasions and continues to do so, as does my hon. Friend Mark Tami.

I should like to deal first with the points that the hon. Gentleman made about his constituent, Mr. Douglas Hodson, after which I shall deal with some of the other points concerning Zimbabwe and federation public service pensions. I believe that Mr. Hodson was present at a meeting in Daventry that both the hon. Gentleman and I attended. I do not want to speak in detail about the personal circumstances of Mr. Hodson's case. The hon. Gentleman has obviously had his permission to do so, but I do not feel it appropriate for me to speak about such matters across the Floor of the House.

I am glad to have this opportunity to draw the attention of the House to this particular aspect of my Department's work. As the hon. Gentleman said, it is separate from the main business of development assistance, but it is worth pointing out that DFID currently pays and administers some 50,000 pensions to more than 23,000 former colonial public servants. Although some problems have been raised from time to time—they include, in particular, those that he mentioned—it is a major operation and for the most part a very efficient one. I pay tribute to those of my Department's staff who have to administer such a complex operation. The type of issues that he raised illustrates why it is so complex. There is a variety of different schemes relating to different countries and periods. Having had to deal with a number of the cases, I know that variations in terms and conditions are widespread. They are sometimes due to the very different terms on which people were employed, which may not be immediately obvious either to the people themselves or to the wider public.

The point that the hon. Gentleman raised in respect of his constituent, Mr. Hodson, concerns pensions for the widows of colonial service officers where the marriage has taken place after the officer's retirement. Under the rules of most of the colonial widows and orphans schemes, second or subsequent wives are entitled to be registered as potential beneficiaries only where the marriage has taken place before the termination of the officer's public service.

Occasionally, colonial pensioners have requested that the colonial schemes be amended to allow post-retirement wives to be registered as potential beneficiaries, in line with what happened in the principal civil service pension scheme, which for ease I shall refer to as the principal scheme. The principal scheme was amended in April 1978 to allow the widows of post-retirement marriages to qualify for pensions.

A similar change to the colonial widows and orphans schemes was considered after 1978 but, whereas the principal scheme was, and still is, a very large and active scheme, the many colonial schemes were not. In fact, by 1978, most colonial officers had already retired and ceased to be contributors to the various widows and orphans schemes. It was therefore not a viable option to change the law for the few officers who were still contributing at that time. The colonial widows and orphans schemes differed from the principal scheme in many other respects, and there was no justification for bringing that single provision into line.

The hon. Gentleman referred to a response given to him by my right hon. Friend the Secretary of State on 1 June last year. The hon. Gentleman also received a detailed explanation on 13 October 1999, which sets out quite a number of the details relating to Mr. Hodson.

I turn to the issue of Zimbabwe public service pensions, and if there is time I shall also deal briefly with pensions paid to former staff of the Federation of Rhodesia and Nyasaland. Although the British Government acknowledge that they have a special responsibility to protect the pensions of certain officers who were employed in the public services of our former dependent territories, that responsibility extends only to those who were appointed by or on behalf of the Secretary of State for the Colonies to serve overseas on expatriate terms in the central Government of a colony. Zimbabwe public service pensioners or those recruited directly to the former Federation of Rhodesia and Nyasaland do not fall within those protection arrangements—the reason being that such staff were not appointed by or on behalf of the Secretary of State and all served on local, as opposed to expatriate, terms of service.

Southern Rhodesia was a self-governing colony from 1923 and was directly responsible for recruiting its own public servants, including those who were recruited directly from Britain. The British Government were not involved with the recruitment process or the formulation of terms and conditions of service for any Southern Rhodesia or Federation of Rhodesia and Nyasaland public service staff.

All Zimbabwe public service pensions—to come to the reasons behind the problems highlighted by my hon. Friend the Member for Alyn and Deeside—are the responsibility of the Zimbabwe Government. That has always been the case. At the time of independence, the pension rights of both retired and serving Zimbabwe public servants were preserved under the Zimbabwe constitution, which was formulated during the Lancaster house negotiations. The constitution guaranteed that existing pension entitlements would not be adversely affected by any changes in law that came into effect after independence, and that pensions paid externally would not be subject to any deductions. The constitution also guarantees to continue payment of pensions to former Zimbabwe public servants, wherever they reside.

As my hon. Friend said, the major problem with Zimbabwe pensions has been the gradual diminution of their sterling value—in recent times, it has perhaps diminished more rapidly—as the Zimbabwe dollar has fallen against the pound. There is no provision in the Zimbabwe constitution to protect externally paid pensions against adverse exchange rate movements, and the pensions increases awarded by Zimbabwe have not compensated for the shortfall. The problem is not just internal inflation but the exchange rate.

Over the years, this problem has triggered many calls from Zimbabwe pensioners and their pensioner associations—representations have been made directly and through their Members of Parliament—for the British Government to intervene and include Zimbabwe pensions in our pension protection arrangements. Successive Governments have rejected those representations.

Although the Government accept that they have a special responsibility to protect the pensions of officers who were employed under the auspices of the Secretary of State for the Colonies, Zimbabwe public service pensioners do not fulfil the long-standing and clearly defined criteria for inclusion in the arrangements. The terms and conditions of their employment are normally clearly established at the outset.

A more recent problem, which has been the subject of several representations at different times, is the delay that pensioners who live outside Zimbabwe experience in receiving their monthly pension payments. That has occurred in the past, generally due to lack of foreign exchange. On those occasions, the British Government have always reminded the Zimbabwean Government of their responsibilities. We continue to do that. However, we have also been advised that pensioners who are not receiving their pensions should contact the director of Zimbabwean Government pensions. He has promised to examine the reasons for the delay in pension payments. I have received several such representations. It has been possible, through the numbers that have been distributed, for the pensioners to contact the Government directly. The problem of delays has therefore been resolved.

On post-retirement marriages, the small numbers involved mean that it was not considered viable in 1978 to bring the variety of colonial widows and orphans schemes into line with the principal civil service pensions scheme when it was amended to allow the widows of post-retirement marriages to qualify for the pension. That was one of several differences between the various schemes. Some 25 years later, when there are no colonial officers in service or contributing, there is no prospect of revisiting the issue. It is only fair to make that clear.

We acknowledge and sympathise with the many problems that Zimbabwe and Federal pensioners face. However, we would need to breach fundamentally the long-standing arrangements for pension protection if we provided assistance. We understand the deep anxieties of pensioners whose incomes have been severely eroded by the currency depreciation that the gross economic mismanagement in Zimbabwe caused. However, Zimbabwe must deal with the matter; the Government cannot tackle it in the framework of our colonial pension arrangements.

I hope that I have set out some of the framework of a complex matter, which covers a wide range of different pension schemes that affect people who were employed on a variety of different contracts or bases. I hope that that provides some clarity.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

It is most generous of the Minister to give way. My hon. Friend the Member for Daventry (Mr. Bosworth) and I—and, I am sure, Mark Tami—all understand the legalities of the position. We are trying to make the point on behalf of our constituents who fled Zimbabwe that, although the Lancaster House agreement did not cover them, if they had not been there during the transition to provide continuity, the British Government would not have been able to make the Lancaster House agreement. We implore the Minister to revisit the issue in the light of the circumstances, which she accurately described, under which the country has been destroyed by the mismanagement of the Mugabe regime.

Photo of Sally Keeble Sally Keeble Parliamentary Under-Secretary, Department for International Development

The pension schemes were set up on specific criteria for people who were employed in a variety of countries in different circumstances. When examining the cases that are referred to me, it is clear that officials administer the schemes properly. However, I am also aware that those schemes were clearly drawn up, and that there is therefore no basis for varying them. Some schemes have continued, while others have been closed. No people have served under those terms and conditions for a long time. Unpicking some of the schemes would cause an injustice, as it is impossible to harmonise across the range of different provisions.

Photo of Sally Keeble Sally Keeble Parliamentary Under-Secretary, Department for International Development

I am afraid that we are very near the end of the debate. If the hon. Gentleman, or any other hon. Member, has any remaining problems, he should put them in writing. I shall be very happy to write back in detail, but it would be wrong of me to stand here and pretend that it is possible to harmonise a plethora of different pension schemes to suit the circumstances of a very few people, even though I understand that they have given great service to different Governments.

The people in Zimbabwe were employed on local terms, not expatriate terms. I understand that changing circumstances have left them in a difficult position. I pay tribute to the service that they gave to the wider community and recognise the difficulties that they face, but it would be wrong to pretend that those problems could be rectified by attempting to harmonise the various schemes. That would be impossible. However, if any matters remain outstanding for the hon. Member for Daventry, I should be happy go through them in detail with him.

Question put and agreed to.

Adjourned accordingly at nineteen minutes to Eight o'clock.