Schedule 3 — Repeals

Orders of the Day — Armed Forces (Pensions and Compensation) Bill – in the House of Commons at 5:00 pm on 6th May 2004.

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Amendment made: No. 3, in page 12, line 7, at end insert—

'Naval and Military War Pensions, &c., Act 1915 (c. 83) Section 6.'.—[Mr. Caplin.]

Order for Third Reading read.

Photo of Mr Ivor Caplin Mr Ivor Caplin Parliamentary Under-Secretary, Ministry of Defence 5:15 pm, 6th May 2004

I beg to move, That the Bill be now read the Third time.

I begin by thanking my hon. Friends Mr. Griffiths and for Normanton (Mr. O'Brien), who conducted affairs from the Chair during proceedings in Standing Committee. I thank the Under-Secretary of State for Constitutional Affairs, my hon. Friend Mr. Lammy, who dealt with the clauses relating to appeals tribunals on behalf of the Department for Constitutional Affairs. I thank the Clerks and officials in the Ministry of Defence who have been dealing with the Bill, in some cases for a long time.

It has been a feature of our debates on Second Reading, in Standing Committee and again today that the armed forces, both regular and reserve, are held in the very highest regard throughout the House. Members on both sides of the House have rightly paid tribute to their professionalism, courage and skill. The Ministry of Defence is a good employer and as such we must make available high-quality conditions of service for service personnel. The new pension scheme does just that.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I take the slightly unconventional step of intervening on the Minister at this stage to associate myself entirely with what he just said to ensure that there is no doubt beyond these walls, especially among those serving in Iraq, that we hold our armed forces in the very high esteem that he described.

Photo of Mr Ivor Caplin Mr Ivor Caplin Parliamentary Under-Secretary, Ministry of Defence

I am grateful for those comments.

We had an interesting debate that centred on the new part of the arrangements following the announcement that I made last week in relation to the Armed Forces Pay Review Body, which will provide a regular external validation of the new pension scheme that will compare it with other schemes in the market. I am delighted that the chairman and members of the review body have agreed to take on such a task.

Everyone who has been involved in our discussions will recall that concern was expressed that the Government should provide independent oversight of the arrangements provided for our armed forces in this respect. In Committee, I made it clear that I recognised the intent behind those concerns and that I would consider how best to respond on Report. Last week's announcement was made in response to those concerns, and I hope that today's debate has been helpful in highlighting the way in which the review body will deal with the matter. Its reviews will take place broadly every five years, but that does not preclude it from considering pensions issues if it feels that it should do so in the course of its normal work.

We are in active communication with the review body to determine the details of how the system will work. We agreed it only in the past couple of weeks and I shall return to the House with a further statement when we have more details. I am confident, however, that the change will provide for more independence in reviewing the terms of the new pension scheme while helping us to ensure coherence across the broader remuneration package of pay and pensions. It should also provide additional reassurance for service personnel, and for Members of both Houses, by ensuring effective independent validation of the appropriateness of the pension provisions for our armed forces, including those who choose to transfer to the new scheme and those who will be members from 6 April 2005, subject to the completion of the legislative process. I feel sure that hon. Members will acknowledge that that represents a major step forward in tackling the concerns that have been expressed in the past few months. It also addresses the desire for stronger controls in legislation over the scheme's benefit structure.

Before I conclude, I want to be slightly partisan and present two challenges to Mr. Howarth. I hope that he does not have a scripted speech because he might wish to respond. My first challenge is about benefits being payable on an equal basis, irrespective of sexuality. In Committee, he said:

"My party's view was set out admirably by my hon. Friend the Member for Mid-Sussex in the debate."

He means Second Reading. He continued:

"We shall have to see how the land lies when we come into government, and review the position at that point."—[Official Report, Standing Committee B, 10 February 2004; c. 143.]

The hon. Gentleman has had three months to consider the matter. Does he stand by that comment or will he support the Bill and the equal benefits that it provides for all members of our armed forces?

I shall outline my second challenge. The hon. Gentleman clearly supports the legacy issues, as he showed yesterday and a few moments ago. In Committee, I said that I would calculate the amount of public spending required and I have done that. The total for the first year is £661 million. Every subsequent year, he will need £127 million for the legacy proposals that he presented this afternoon. Does he intend to pursue that as Conservative policy? The equivalent of £661 million is, for example, the single living accommodation project and the service family accommodation upgrade project. They would both have to be abolished to cover the sort of funding that his proposal would require. He can either play the politics of opportunism in opposition or make a serious point at the Dispatch Box about the legacy issues that the Conservative party never tackled. I am sure that he will respond to those challenges.

I am confident that the new schemes constitute a good deal for our service personnel: a pension scheme that is based on final salary, against the trend in the wider economy; a significant improvement to the benefits to widows and dependants; the introduction of common terms for officers and other ranks that also deal with equality issues; and a compensation scheme that focuses on the more severely injured and, for the first time, makes lump sum payments for pain and suffering. The chiefs of staff strongly welcome those aspects of the new arrangements. They perceive them to be an important part of a package that offers a high level of assurance to service personnel and their families, now and in future. The Bill is essential to providing the new schemes and I commend it to the House.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence) 5:23 pm, 6th May 2004

I note that the Under-Secretary is getting frightfully excited. He raised several issues—two in particular—with me. The Government have introduced changes that extend the benefits to unmarried partners and the Opposition have accepted that. I hope that that will allay his concerns on the matter.

The Under-Secretary tried to stick on me a figure of £500 million a few moments ago, but it has now increased to £661 million. I knew that the Labour party was the master of inflation but that is excessive. He is the Under-Secretary and suggests that some of my proposals would cost £661 million. I do not recognise those figures and I do not believe that he will be able to justify them. He might be able to, however, and the House will look forward to his placing copies of his calculations in the Library.

I made a specific point to the Minister—I am not going to let him get away with this—about extending the benefits to unattributable widows who remarry. He has no way of knowing how much that would cost, because it is impossible to quantify. He extended the benefits to attributable widows in 2000, but he never made any corresponding cuts to accommodate that. He knows very well that only a very small number of people are involved, and they are being paid at the moment. They cease to be paid when they remarry. He has no way of knowing how many would remarry, in the event of his acceding to our suggestion, so his objections are just ministerial bluster. He even suggested that the proposal would have to be funded by cancelling the single living accommodation improvements. He flagged up the fact that he was going to make a partisan point and he did not disappoint. The public outside will have noted it and I think that they expect our debate to be conducted on a slightly more elevated scale than that.

My hon. Friend Mr. Soames said on Second Reading that we would not divide the House at that point, but that

"we reserve our position and will judge the Government on any progress made in Committee."—[Hansard, 22 January 2004; Vol. 416, c. 1499.]

We have now considered the Bill in Committee and only one change has been made. We welcome that change, and, along with the Minister, we wish the members of the Armed Forces Pay Review Body well in undertaking their enhanced remit. However, that change is modest and fails to deal as comprehensively with the needs of Her Majesty's armed forces, and those who have served, as the measures that we proposed in new clause 2—which the Minister would not accept—would have done.

Furthermore, some of the criticisms levelled at the Bill by the Defence Committee, at the outset and subsequently, remain outstanding. Save for the one change that the Minister has made, there is nothing in the Bill that presents the House with any greater opportunity to scrutinise what is being proposed. It is an enabling Bill that gives unfettered power to the Secretary of State to draw up whatever pensions and compensation schemes he likes. The only scrutiny available to the House will be through a one-and-a-half-hour debate on the relevant statutory instrument, the detail of which will be unamendable. Our original criticisms, and those of others, therefore remain. The final details of the early departure payment scheme were not available on Second Reading. They were produced in Committee, which we welcome, but some of the original criticisms on that issue still stand.

We judge the Bill by its ability to do justice to the men and women of Her Majesty's armed forces, who have given—and, as we speak, continue to give—outstanding service to our country. It is our view that their contract with the nation sets them apart from every other group in the country. Their commitment to lay down their lives in the defence of the people of these islands and of the wider interests of the United Kingdom places them in a wholly special category, deserving of the very best that the nation can give them. That means that they are, quite literally, a special case.

We are therefore disappointed that the Government have not reflected that special status in the schemes that lie behind the Bill. Comparing their benefits with those available to "other public sector workers" betrays the Government's reluctance to distinguish sufficiently between the needs of the armed forces and of those operating elsewhere in essential public services. The burden of proof in compensation is one example of the Government's thinking that it is perfectly in order to apply tests

"in line with the practice of other occupational pension schemes and the civil courts."

This is not another occupational pension scheme. We believe that the scheme applied to Her Majesty's armed forces should start by being at least as good as those available elsewhere. That is why, for example, we welcome the improvement of the death-in-service benefit from one and a half to four times' salary.

I hesitate to do so, but I hope that Rachel Squire will forgive me if I quote from her speech on Second Reading.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I genuinely do not wish to embarrass the hon. Lady, but I do wish to echo her words, and I think the House ought to reflect on them. She said:

"On pensions, the proposals essentially amount to 'making ends meet'. We do not consider that that is what our highly valued and professional armed forces deserve . . . The proposals are based not on what the forces deserve, but how much money they get at present."—[Hansard, 22 January 2004; Vol. 416, c. 1507.]

I therefore invite the House to decline to give the Bill a Third Reading. I invite the Government to address the serious concerns that have been expressed across the Floor of the House and to bring back a Bill that reflects the desire of our country to have the very best for those who are placing their lives on the line for our security. I can tell the Minister that, if he does not do so, there will be trouble in another place. I suspect that even if he gets his Bill tonight, this will not be the last he sees of it.

Photo of Rachel Squire Rachel Squire Labour, Dunfermline West 5:31 pm, 6th May 2004

I shall be brief because many hon. Members wish to speak.

The Bill has been the focus of much attention from hon. Members and constituents, who have a commitment to and high regard for the standards and professionalism of our armed forces. They are also committed to providing one of the best possible schemes for pensions and compensation for former and current personnel.

From the Bill's publication, my response has been mixed. I want to touch on the areas that I have always welcomed, the areas of continuing concern and the areas in which welcome progress has been made. First, I have always welcomed aspects of the Bill such as the effort to modernise pension and compensation arrangements in the armed forces, rather than never considering them at all, and the decision to put officers and other ranks on an equal footing so that all will be able to start accruing a pension as soon as they enlist and claim early departure benefits at the same age and after the same period of service.

I also welcomed the improved provision for widows and other dependants, especially when the serviceperson has been killed in action; the introduction of benefits for unmarried partners; the focus of compensation payments on the most severely injured and disabled; and the establishment of an independent appeals system for contribution claims.

That leads me on to mentioning some areas of continuing concern. The first is the cost-neutrality issue. I and others have deep reservations about a scheme that makes some improvements but seems to do so at the cost of others—improvements that appear to be paid for by armed services personnel. Many of us do not think that cost-neutrality should have set the framework for the scheme, leading to no more than a reshuffling of the pack. The scheme should not have been formulated on that basis. Rather, it should have been formulated on the basis of what our armed forces deserve.

The second issue of concern is consultation and how it has been carried out with Parliament and with serving and retired personnel, their widows and families. The review of the scheme was announced in 1997. It started in 1998, yet here we are, six or seven years later, being asked to approve an enabling Bill.

The time scale for implementation of the new schemes is very short: we are less than a year from new members and serving personnel having to make a complex choice between the existing scheme and the new scheme that the Bill will introduce by April 2007 at the latest.

The Government have said that they will produce individual benefit statements for service personnel—I welcome the Minister's comments on that today—to enable them to make a choice. But we are still waiting for the computer system that will produce such statements. We do not know when that will happen and how we can ensure that all personnel are fully informed and able to get the best possible independent information on the new proposals before they are forced to make a choice. The third area of continuing concern regards the compensation payment scheme, changes to the burden of proof and the introduction of the time limit.

In terms of progress made, I welcome the way in which the Government have listened to the concerns raised on both sides of the House, the information that we have had so far on the early departure scheme and the review by the Armed Forces Pay Review Body. I hope that the Minister's and the Ministry of Defence's continuing discussions with the chairman of the Armed Forces Pay Review Body will lead to improvements in those areas. I hope that the Minister and all involved will continue to listen and make further improvements. I and many others intend to continue to examine closely what is happening. I owe that commitment to former and current service personnel, their widows and their families.

The pressures on our service personnel increase, as they continue to provide a core part of this country's and this Government's global influence. We all hope that they will live to have a long, healthy and happy retirement, but some die in the service of their country and others develop illness and injury. The Bill should recognise and reward their service, their sacrifice and that of their families, but it still only does so in part.

Photo of Colin Breed Colin Breed Shadow Minister, Defence 5:37 pm, 6th May 2004

May I put on record on behalf of Liberal Democrat Members our admiration and gratitude for all the services that the armed forces provide, especially at this time? As we discuss these issues there is recognition across the House that they are very much a special case. Their commitment to us and to the country deserves an appropriate commitment to them.

Although some welcome benefits have been included in the Bill, such as the increase in death-in-service benefits and the extension of dependants' benefits more widely and on more equal grounds, inevitably, there are a number of concerns, which Rachel Squire has just mentioned, which we had hoped would have been grappled with in Committee. Although we welcome the slight improvement in respect of the wider remit of the pay review body, it is a great disappointment that some of the real substance of our concerns has not been met.

What lies at the heart of that is the decision about cost neutrality, which has cast a shadow over almost all our concerns. I said on Second Reading, and it was reiterated in Committee, that it was an unnecessary straitjacket to apply cost neutrality to the costs and budgets of the pension scheme rather than to extend it to the whole remuneration budget. The provisions for pay and pensions are inextricably linked, and it is unnecessary to impose such a tight constraint, which has a considerable effect in not being able to deal with some relatively small financial issues.

I was interested when the Minister added up quickly the cost of the legacy issue. I had asked him for some figures previously, which could not be made available, but fairly instantaneously it became possible to work out precisely what next year and subsequent years were going to cost. I do not think that bandying such figures about is particularly helpful.

The Minister then went further, saying that he was going to knock out single-person accommodation. That extends the whole issue of cost neutrality. Either cost neutrality means precisely that, or it affects the whole budget. What the Minister said did not exactly align itself with what he has said before. If the total budget were involved, we could presumably take money from that to deal with some of the legacy issues that a number of Members have mentioned. I hope that those issues will be re-examined in another place. Perhaps by that time actuarial figures will be available, so that a more comprehensive discussion can take place about the real costs in the cost-neutral straitjacket that the Government have imposed on themselves.

I am also concerned about the burden of proof and medical records. I think that the two issues are linked. Although the Standing Committee did not discuss medical records in detail, I mentioned then that one of my other responsibilities was lay membership of the General Medical Council. The GMC is often confronted with a lack of medical records, illegible medical records or incomplete medical records, but such records are a vital part of any case for compensation, whether or not the MOD is involved.

I welcome the Minister's assurance that if the MOD cannot find the medical records and the claim seems reasonable it will accept the claim, but that does not exempt the MOD from ensuring that the best possible systems are there to ensure that all medical records are readily available and up to date. Given the proposed changes in the burden of proof, about which many of us are worried, the ability to put a proper case will depend much more on the medical records. Notwithstanding what the Minister has said, if the MOD is to help claimants to make a proper case—and we should bear in mind all the other problems with which it will have to deal—this matter will need proper attention.

Nevertheless, Liberal Democrats welcome many of the benefits conferred by the Bill, particularly the compensation for unmarried partners. We have called for that and other measures for some time. We are prepared to support the Bill overall, but in the hope that further debate in the other place and further reflection by the MOD will deal with some of the long-standing legacy issues. I do not believe that that would cost anything near what the Minister has suggested, and I think that it would right wrongs that have existed for far too long.

Photo of Hugh Robertson Hugh Robertson Opposition Whip (Commons) 5:43 pm, 6th May 2004

One of the remarkable aspects of our debates on the Bill has been the degree of cross-party consensus. Let me record, in particular, my appreciation of the work of the Select Committee, which has enabled us to have a much more informed debate than we could have had otherwise.

Much of the Bill is welcome. I am especially pleased about the commitment in the explanatory notes to the continuation of the final salary defined benefits scheme, which I think particularly appropriate to service in the armed forces. I also welcome the equal treatment afforded to officers and other ranks, while adding the caveat that it can only go so far, as the two groups have different levels of responsibility and exposure. I also greatly welcome the increase in death-in-service benefits, the increase in widows' benefits and the Minister's movement on the AFPRB. However, as I said earlier, I wish that he had gone further.

As several hon. Members have said, it is fair to make the point that a number of issues remain of serious concern. The first is the fact that the Bill is only an enabling measure, but there is also the fact that the payment of pensions will be deferred from the age of 60 to 65. That is unfair when the retirement age remains at 55 and given that the increase in longevity is not yet five years.

There is a lack of opportunity for anyone to earn a full career pension. If one serves until the age of 55, one will accrue 35/70ths and, if one adds on the lump sum, one can get only 62.5 per cent. of one's salary. That, of course, is in the best-case scenario.

As other hon. Members have remarked, the impression runs through the Bill that it has been drawn up on a cost-neutral basis and not on the basis of what the armed forces deserve. As we heard earlier, there are also changes to the proof of entitlement to compensation. That is particularly damaging, because it is bound to encourage a compensation culture when the guiding principle should be that the United Kingdom owes a strict duty of care to those injured in the service of their country.

I am afraid the impression remains that the one certain winner from all this will be the Treasury. It will benefit from cost neutrality, the deferment of the payment of pensions and, on top of that, the overall decrease in service numbers, which means that fewer pensions overall will have to be paid. Elements of the Bill have attracted adverse comment from bodies as diverse as the Defence Committee, the Forces Pension Society, to which we all owe a particular debt of gratitude, the Royal British Legion and a number of other veterans' organisations, including the widows who presented a petition in Committee Room 14 yesterday.

The House has a special duty of care to the armed forces. Cost neutrality should not have been the basis of the review, because improvements in some areas are inevitably matched by savings elsewhere. At a time when our armed forces are so widely deployed and in so much danger, I believe that that is an entirely inappropriate message to send. On that basis, we shall vote against the Bill on Third Reading.

Photo of Angus Robertson Angus Robertson Shadow SNP Spokesperson (Defence), Shadow SNP Spokesperson (Foreign and Commonwealth Office) 5:47 pm, 6th May 2004

I express the appreciation of the Scottish National party and Plaid Cymru for the work done by our servicemen and women. I also wish to put on record our commendation of the Government for certain changes in the Bill, not least the death-in-service lump sum, the widows' or widowers' pensions and what are known more generally as equality issues. Those are major improvements.

It is disappointing, however, that improvements to the Armed Forces Pay Review Body, the burden of proof, full career pensions and widows' and partners' pensions that have been discussed in the context of the new clauses have not been taken on board. Any one of those reasons, or all of them collectively, would be enough for me to vote against Third Reading. However, I shall vote against Third Reading because of an issue that I raised on Second Reading and in discussion with Ministers. It relates to the impact of the early departure scheme.

Ministers and other Members are aware that certain parts of the country, which have low-wage economies and which are dependent on the contribution that retired service personnel make, are underpinned by the current pension arrangements. Not long ago, I caught first sight of the figures. They were shared with the spokespeople for the Conservative party and the Liberal Democrats, but not with the major opposition parties in Scotland or Wales or any of the political parties from Northern Ireland. I hope that the MOD will take that point on board when other important information is made available.

In the letter to the Chairman of the Defence Committee, it was pointed out that, under the new scheme, annual payments to retired personnel under the early departure scheme would be halved. That will have a detrimental impact in my constituency and in many others. The Minister said earlier that no detailed work had been done on the question, and that fact alone is enough for me to vote against the Bill on Third Reading.

Photo of Mike Hancock Mike Hancock Liberal Democrat, Portsmouth South 5:50 pm, 6th May 2004

Every Member who has spoken has paid tribute to the men and women of our armed forces, and rightly so. We recognise the debt that the nation currently and historically owes to them. Today's debate has touched on many of the issues that this House has neglected to deal with in the past. We had an opportunity today to put right a number of wrongs, but we have chosen not to do so.

Like others, I welcome the improvements made in respect of equality—long and hard have they been fought for—but we missed the opportunity to take the initiative, and to offer pension benefits to members of the Territorial Army who, in some cases, have been deployed on active service as frequently as three times in two years. That issue could and should have been recognised, and the Minister could have responded positively this afternoon. I regret the fact that we were unable to vote on it. It was worthy of voting on, so that the Government could measure the depth of feeling.

This legislation is supposed to be complimentary to the men and women of our armed forces, and it is on compensation and the burden of proof that I draw a line in the sand. It is already extraordinarily difficult to fight the Ministry of Defence successfully in compensation cases: the burden of proof is already stacked against the individual concerned. The Minister suggested that the situation will improve, because medical records will be better kept and readily available, but in response to an intervention from my hon. Friend Mr. Breed, he said that he was talking about the future, and that the many servicemen and women affected by Gulf War syndrome will not be covered. Their medical records do not exist, and they have no clear way forward in proving that the burden of proof lies with the MOD. We are going to make it incredibly difficult for people to fight cases in future. Even the Minister suggested that fewer claims for compensation will be made because of the way in which the burden of proof is being shifted. That must be reason enough not to vote for this legislation.

I hope that there will be a significant vote against the Bill on Third Reading, and I shall join those Members who do so. I cannot possibly vote for the Bill, given that many of my constituents and others are already proving unsuccessful in making their compensation cases. Such claims should not be made even more difficult to make.

We also missed an opportunity to put right the obvious mistake that was made with the widow's pension; indeed, we missed such opportunities in the 1970s, the 1980s and the early 1990s. Sad to say, despite the fact that every Member probably recognises the justice of the widows' and widowers' case, this Government have again failed to recognise the mood of the country, which is that the House should support such people, and that they should get what most reasonable people believe that they deserve.

In common with other hon. Members, I welcome the movement that has been made, but sadly, there has been far too little of it for us to accept that the legislation is worthy of the men and women whom we have praised so highly here today. The measure of our support for them is not how often we pat them on the back when they are fighting on our behalf, but the way that we treat them throughout their careers and afterwards. It is also the way that we respect and treat their families when, tragically, our servicemen and women do not return from the actions that we have sent them on. I ask hon. Members to reject the Government's position and to put down a big marker by saying that the Bill is simply not good enough.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 267, Noes 113.

Division number 163 Orders of the Day — Armed Forces (Pensions and Compensation) Bill — Schedule 3 — Repeals

Aye: 267 MPs

No: 113 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Question accordingly agreed to.

Bill read the Third time, and passed.