Clause 1 - Pension and compensation schemes: armed and reserve forces

Armed Forces(Pensions and Compensation) Bill – in a Public Bill Committee on 10th February 2004.

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Amendment proposed [this day]: No. 4, in

clause 1, page 1, line 9, after 'establish', insert

'in accordance with the provisions of Schedule [Armed Forces Compensation Scheme].'.—[Mr. Gerald Howarth.]

Question again proposed, That the amendment be made.

Photo of Mr Bill O'Brien Mr Bill O'Brien Labour, Normanton 2:30 pm, 10th February 2004

I remind the Committee that with this we are discussing the following:

New clause 16—Report to parliament—

'The Secretary of State shall report to Parliament on the operation of any tariff-based compensation schemes not later than five years after the introduction of such a scheme or three years after any amendment to such a scheme.'.

New clause 23—Time limits

'(1) No time limit shall apply for the submission of claims for compensation, but after seven years of leaving the Armed Forces a claimant will only succeed if he/she can prove beyond reasonable doubt that the condition or disability for which he/she is claiming is due to service in the Armed Forces.

(2) Prior to the seven years limit it will be for the Secretary of State for Defence to prove beyond reasonable doubt that the condition or disability is not due to service in the Armed Forces.'.

New schedule 4—Armed Forces Compensation Scheme Eligibility/Time Limits—

Introduction

1 The Armed Forces Compensation Scheme (AFCS) is a no-fault compensation scheme which will cover death, illnesses or injuries attributable to or significantly aggravated by service where the illness first presented or incident occurred on or after the date of implementation of this scheme. The scheme will provide lump sum payments for pain and suffering based on a graduated system of tariffs and, where appropriate, income to compensate for loss of earnings capacity. For those disablements which arise before the new scheme comes into force or for deaths which are attributable to events predating this scheme, provision will remain under the current War Pension Scheme and Armed Forces Pension Scheme attributable arrangements.

2 The determination of claims will be evidence-based and decision will be taken using the modern ''balance of probabilities'' standard of proof, which will apply a double test to compensation cases to ensure that the burden of proof does not unfairly discriminate against service personnel. Under such a system, a claim for compensation would only fail where both: (a) the claimant is unable to prove on the balance of probabilities that a condition is due to service, and (b) the MoD is able to prove on the same standard of proof that the condition is not due to service. The Department is required to support any claim by releasing any relevant information, such as medical records to assist the claimant.

Eligibility

3 The AFCS will cover regular members of the Royal Navy, Royal Marines, Royal Air Force, Army and members of the Reserve Forces as defined in the Reserve Forces Act 1996.

Negligence

4 Any payment made under this scheme would not disqualify Service personnel from making civil negligence claims against the Department. However, any such compensation payment would be taken into account in settling any civil negligence claim, on the basis that loss, for example of earnings, should not be compensated for twice. Abatement of awards would be made where appropriate.

Eligibility Criteria

5 The eligibility criteria are intended to provide compensation for disablement or death due to:

(1) Incidents which were the direct consequence of a person's duties in the Armed Forces, on from following a legitimate order;

(2) Terrorism and warlike activities;

(3) Negligence by the MoD as an employer.

6 The scheme is not designed to provide compensation for every illness or injury experienced by a member of the Armed Forces during his or her career. It will not cover:

(1) Illness which could not be demonstrated on the balance of probabilities to be the result of an individual's duties in the Armed Forces;

(2) Injuries arising from incidents not directly related to duties in the Armed Forces;

(3) Injury or illness arising from culpable negligence or misconduct on the part of the individual.

7 Personnel or their dependants can claim compensation for death, injury or disease in the following situations:

(1) Attributable death in service;

(2) Attributable injury or illness in service leading to medical discharge;

(3) Attributable injury or illness in service not leading to medical discharge;

(4) Attributable conditions or death developing after leaving Service but claimed before five years (if not linked to a specific incident);

(5) Attributable conditions or death which are recognised to have a late onset (such as some cancers) with no time limit;

(6) Conditions having onset before or during Service which are subsequently significantly aggravated by Service.

Time Limits

8 The circumstances giving rise to admissible claims fall into six broad categories:

(1) injury or illness arising in service and causing immediate disablement;

(2) injury or illness arising before or in service and significantly aggravated by service;

(3) death in service;

(4) injury or illness in service claimed to be the cause of disablement arising in the longer term;

(5) illness which arises after retirement;

(6) death in retirement.

9 For each category, we have considered eligibility to claim and the period of time within which a claim must be submitted. In the first three categories there is no doubt that individuals, or their survivors, should be eligible for benefits. The position is more difficult for the other three categories, where the objective should be to permit claims for conditions clearly attributable to service but to exclude claims where a causal link is unlikely.

10 The qualifying period for claiming for disablement/death for the majority of conditions is as follows:

(1) Five-year time limit to claim from the specific incident that caused the injury, or from first medical presentation of the illness;

(2) Within five years of service termination where there is no specific incident, but the disorder is due to ongoing repeated activities.

11 In addition, there should be a time limit of one year after medical diagnosis has been confirmed. This practice is common in

insurance-related schemes and social security benefits. An open-ended system would have the disadvantage that where claims were submitted very late, it could be very difficult properly to assess evidence. There will, however, be safeguards to protect the position of a person who was genuinely unable to claim within the year on account of his condition and unable to instruct another person or organisation to act on his or her behalf, or perhaps in some circumstances because his condition had not stabilised.

Claiming Outside the Time Limit

12 While for the majority of conditions it is reasonable to impose a time limit to claim, there are some conditions which medical opinion accepts can have a possible service causal link but, by nature, present clinically only after years or decades. Claims for listed exempt conditions, such as some cancers linked to occupational exposures, asbestos related diseases and some psychiatric illnesses, would be accepted outside the normal time limit.

13 The Secretary of State will publish an exceptions list of illnesses based on expert medical advice from the appropriate specialities. The list will retain a degree of flexibility. It will be reviewed annually to take account of medical understanding and additional conditions may be added (and others removed) on the basis of new medical evidence and understanding of causation of the disorder. Eligibility for claims for illnesses subsequently added to the list will include those whose illness relates to service prior to the date of the changes to the exemptions list.

Deterioration/Interim Awards and Consequential Disorders

Introduction

(1) Assessment of disablement and quantification of awards is not a matter of consensus or exact science. While treatment for the disabilities seen in 1917 at the outset of the War Pensions Scheme was limited, with strong risk of increase in disabling effects with time from the injury, modern medical management means that most disabling disorders (particularly the less serious injuries) will now improve quickly to cure or steady state. For the majority of successful claimants, in line with civil awards and the insurance industry, the initial award will be full and final and there will be no routine review mechanism. This also means that once an award is made, if the Service person's (or ex-Service person's) condition improves any Guaranteed Income Stream (GIS) in payment will not be withdrawn or reduced. Awards in the compensation scheme are for service-related disablement only and do not reflect age-related disablement.

Interim Awards

14 There are some situations where, from the outset, it is not possible to predict with confidence the long-term prognosis for an individual. In such cases, an interim award will be made with an agreed interval before a review to assess the condition and either the original award will be confirmed or revised.

Deterioration

15 The tariff levels are designed to take account of expected average degree of deterioration for any given condition based on generally accepted medical understanding. To cater for exceptional circumstances, where deterioration is significantly greater than would be either expected or accounted for in the tariff level, the arrangements will offer re-opening of cases. Evidence of significant material change in the person's condition will be required.

Consequential Disorders

16 The tariff levels take account of the average prognosis of the core disorder including, in the case of some serious traumatic physical injuries, the high likelihood of subsequent osteoarthritis in relevant joints. The provisions of the new scheme consider such disablement as an extension of the original injury.

17 Review of the case will be permitted where from the outset the nature of the accepted disablement means that there is a recognised risk that some consequential disorder could develop at some indefinite time in the future, eg head injury followed by traumatic epilepsy. In contradistinction to 2.4 the risk here is possible, not probable. This approach will not be applicable to the majority of disorders claimed in the Scheme. The majority of claims

in the Scheme will settle completely or to a stable condition within a short time.

Lump Sum

General

18 The Scheme awards lump sum payments as compensation for pain and suffering according to a comprehensive graduated tariff. This delivers consistent awards for the same disability. This lists injuries, mental and physical conditions (in line with their nature and severity) and corresponding monetary award levels.

19 The published award levels are informed by medical understanding and the approach of the Judicial Studies Board. Definitions used in the tariff descriptors, adjudication guidance and supporting policy are being developed and will be published. Following scheme implementation, the tariff levels will be reviewed in line with emerging medical knowledge and changed approaches by the Judicial Studies Board.

20 Lump sum awards are payable for those able to remain in Service despite an attributable injury. It is likely that such awards will be below tariff level 11 where no GIS is payable. However, while the Service person remains in the Armed Forces, regardless of the type of injury and relevant tariff level, there would normally be no GIS as no compensation for loss of earnings would be required. For further details on GIS see Section 4 below.

Multiple Disablements

21 The scheme will consider multiple disablements arising from the same incident. While the exact details have not yet been finalised, it is likely that up to three conditions might be covered and that the total value of lump sum payment would not exceed tariff level 1.

Aggravation

22 The Scheme will make awards on the basis of significant service aggravation of disorders. Disorders will have had origin pre or during service and must have been aggravated significantly by service with aggravation remaining at service termination. If the disorder is no worse than before service or than it would have been had a person not served, service aggravation does not remain and there is no entitlement. The above will apply for determining GIS awards. The position for lump sum awards where service has aggravated rather than caused the condition is the subject of further detailed work.

23 If a condition is aggravated, the award paid will be the percentage of the tariff award (to the nearest centile) which represents Service aggravation.

Guaranteed Income Stream (GIS)

GIS

24 For those attributable injuries or illnesses that are in tariff levels 1 to 11 a Guaranteed Income Stream (GIS) is payable for life as compensation for loss of earnings. The formula used to calculate the GIS is at Annex B.

25 The GIS formula is based on the salary in payment at the time of retirement and the remaining years left until the normal pension age (which for the Armed Forces is age 55), plus the period of time for which on average a pension is drawn in retirement. The calculation produces an annual income that is paid for life. The percentage of lost earnings included in the compensation income depends on the severity of disability, as expressed by the tariff.

26 The percentages are:

(1) Tariffs 1–4: 100 per cent.

(2) Tariffs 5, 6: 75 per cent.

(3) Tariffs 7, 8: 50 per cent.

(4) Tariffs 9–11: 30 per cent.

(5) Tariffs 12–15: None

Once the GIS has been calculated, the income is abated by any AFPS invaliding pension in payment to ensure that the Service person is not compensated twice.

27 Where there are multiple injuries, a maximum of 100 per cent. GIS will be paid, but will apply only to conditions where there is a significant multiplier effect on earnings capacity.

WGIS (Widow(er)s' Guaranteed Income Stream)

28 For the first time widows/widowers and substantial registered partners are to be treated equally for compensation purposes. The compensatory income would be derived by calculating the size of the capital sum required to compensate the widow/widower for the financial penalty of the loss of the spouse's earnings. This sum will then be structured to provide a regular income in the form of a Guaranteed Income Stream for Widow(er)s (GISW).The GISW would be payable for life, and would equate to 60 per cent. of the GIS calculation minus 75 per cent. of any non-attributable pension benefits that have been awarded. It would be inappropriate to provide compensation equal to or more than the full value of the spouse's lost earnings because this would clearly exceed a widow(er)'s actual financial loss. It is not possible to assess the true extent of financial loss for widow(er)s, and there is no single formula that will match all circumstances, but we consider that 60 per cent. of the spouse's lost earnings capacity (abated by the widow(er)'s ill-health pension to avoid double counting), should represent a reasonable solution.

Children's Benefits

29 No major changes are proposed to the value of benefits payable to children of those whose death was attributable to service, but the structure will be adjusted to reflect the GIS approach. The benefits are not intended to provide financial support for life, but only until the age when children would normally cease to be financially dependent on their parents. A child's GIS may cease when the child reaches 17. However, it may continue, or be restored, whilst the child is in full-time education. It may also continue, or be restored, whilst the child is in full-time education. It may also

continue if it is determined that the child is incapable of earning his or her own living due to mental or bodily infirmity and where the condition was diagnosed before the child reached the age of 17. Decisions will be at the discretion of the scheme administrator. Children's benefits will be awarded as follows:

(1) Where there is a widow(er):

(a) 12.5 per cent. of the sum for the lost earnings capacity of the deceased (abated by the illhealth pension to avoid double counting) will be made available for each of the first two children, and 7.5 per cent. for each of the next two. If there are more than four children, 40 per cent. of lost earnings will be divided equally.

(b) Subject to the provision of abatement above, an only child will also receive 25 per cent. of the ill-health pension. If there are two or more children, 37.5 per cent. of the ill-health pension will be divided equally.

(2) Where there is no widow(er):

(a) 25 per cent. of the sum for the lost earnings capacity of the deceased (abated by the ill-health pension to avoid double counting) will be made available to each child, up to a maximum of four children. If there are more than four children, 100 per cent. of lost earnings will be divided equally.

(b) Subject to the provision on abatement above, an only child will receive 33.33 per cent. of the ill-health pension, two surviving children will share 66.67 per cent. of the ill-health pension, and if there are three or more children, the full ill-health pension will be divided equally.

Benefits Payable on Attributable Injury or Illness

Armed Forces Non-Attributable Ill-Health Benefits

Attributable Compensation Scheme Benefits
Benefits payable if member of new AFPSBenefits payable if member of current AFPSLump SumGIS
Remaining in ServiceNoneNoneLump sum payable for pain and suffering (see section 3)No GIS appropriate as there is no loss of earnings (see section 4)
Medically dischargedIll-health award dependent on severity of condition based on three tiersService Non-Attributable Invaliding PensionLump sum payable for pain and suffering (see section 3)For injuries at tariff levels 1-11 a GIS will be payable to compensate for loss of earnings (see section 4) but abated by benefits payable under the AFPS and Early Departure Scheme.

Benefits Payable on Attributable Injury or Illness

Benefits Payable on Death


AFPS Non-Attributable Benefits
Compensation Scheme Benefits
Benefits payable if member of new AFPS

Benefits payable if member of current AFPS

Lump Sum

GIS

Attributable death in ServiceNon-attributable Widow's Pension based on 2/3 of member's highest tier ill-health pension

Death-in-service lump sum of four times pensionable pay

Children's pension

Benefits payalbe to substantial registered unmarried partners

Non-attributable Widow's Pension based on 1/2 of member's ill-health pension

Death-in-service lump sum of approx. 1 1/2 times pensionable pay

Children's pension

Bereavement Grant guarantee for widow(er)s or registered unmarried partners: currently set so that if 3 times pensionable pay plus £20,000 is greater than the AFPS death-in-service lump sum, the compensation scheme will pay the balance

Widow(er)'s GIS

Children's GIS

Benefits payable to registered unmarried partners

Attributable death in retirement

Non-attributable Widow's Pension based on 2/3 of the member's pension in receipt at the date of death

Children's pension

5 year pension guarantee

Benefits payable to registered unmarried partners

Non-attributable Widow's Pension based on 1/2 of member's pension in receipt at the date of death

Children's pension

Bereavement Grant, currently set at £20,000 to widow(er)'s or registered unmarried partners

Widow(er)'s GIS

Children's GIS

Benefits payable to registered unmarried partners

 

Benefits Payable on Death

Death-in-service lump sum of four times pensionable pay

Children's pension

Benefits payalbe to substantial registered unmarried partners

Death-in-service lump sum of approx. 1 1/2 times pensionable pay

Children's pension

Children's GIS

Benefits payable to registered unmarried partners

Children's pension

5 year pension guarantee

Benefits payable to registered unmarried partners

Children's pension

Children's GIS

Benefits payable to registered unmarried partners

Home to Duty and Physical Development Injuries/Deaths

Home to Duty

32 Compensation will be provided for limited home-to-duty travel to cover emergency callout (to duty only), travel to/from operations/exercises overseas (in accordance with Joint Service Publications guidelines) and other detached duty travel.

33 Exceptionally, if Service Families Accommodation (SFA) is unavailable within 50 miles radius of the workplace then compensation will be provided in the event of an injury or death whilst travelling between home and work. Individuals who choose to live more than 50 miles from work in SFA will not be covered under the scheme.

Physical Development Activities

34 Compensation will be provided for injury arising from all publicly funded fitness, sports and adventurous training activities that would qualify as ''on duty'' as laid down in Service Regulations.

35 Defined fitness activities (regulations as laid down in the Armed Forces Physical Development Policy document) are also eligible for compensation in the event of injury. These must be part of a formal training or fitness programme agreed by the Service authority as necessary to meet Service fitness requirements.

36 Injuries incurred in the above activities will generally be admissible for compensation only if they are reported, recorded and subject to medical examination when incurred. This should generally take place within 24 hours of the event. However, the scheme will have discretion to accept attributability where under the specific circumstances the reporting timescale is not practicable or where the injury cannot be attributed to a single incident. This will be subject to the existence of reasonable evidence, including within service medical records, to support the case for attributability.

37 Injuries incurred during or in support of sporting commitments undertaken in a professional capacity or for a national team will not qualify for compensation under the new scheme. It is considered reasonable that these will be covered by separate provisions.

38 Travel to sports competitions and other activities as classed as ''on-duty'' within the Service regulations will be covered under the Compensation Scheme provided that this travel is publicly funded.

39 Injuries incurred in leisure or social activities will not be eligible for compensation under the new arrangements. It will be for individuals themselves to consider whether they need to make arrangements for appropriate cover for such activities.

Reservists

40 All members of the Reserves as defined under the 1996 Reserves Forces Act will be covered under the AFCS. This replaces the benefits they currently receive under the Attributable Benefits for Reservists Scheme (ABRS). As with the current ABRS, this scheme is designed to give Reservists the same attributable benefits as regular Service personnel. However, where a Reservist is in receipt of benefits from elsewhere, such as a personal pension or an occupational pension, benefits under the new Compensation Scheme would be abated.

Time limits

41 This will be the same as for regular Armed Forces personnel. Eligibility for compensation for disorders that develop after service termination will be subject to a time limit of five years, apart from certain listed late-onset conditions, such as some cancers.

Guaranteed Income Stream

42 In many cases, assessing lost earnings for Reservists will not be straightforward, however, as military service will not be their only occupation. The assessment of lost earnings will not be based on a Reservist's pay in his/her civilian occupation as this is not the financial basis on which he/she is employed, would be complex to administer, and would raise issues of equity between reservists.

43 Lost earnings will therefore be assessed on the basics of the Reservist's military salary, which is in most cases the salary of a regular counterpart of equal rank. This will ensure consistency of approach with the regular Armed Forces. So that those in a high-

earning civilian occupation will not be disadvantaged, full account will be taken of pay supplements that some Reservists earn (to compensate for those whose gross civilian earnings are higher than their gross service pay).

Physical Development Activities

44 Reservists will be covered under broadly the same criteria, but when the detailed scheme rules are being developed due account will be taken of their particular circumstances and specific guidelines will be provided.

Disputes and Appeals Process

Internal Appeals Process

45 Precise details of the appeal procedures are not yet finalised. However, a claimant will have the opportunity to challenge decisions taken by the scheme administrators. This will start with a single or twin stage Internal Dispute Resolution Process (IDRP) which will be followed by the right of appeal to the Pensions Appeal Tribunal (PAT), and at second stage to the Social Security Commissioners. Both are ECHR compliant, independent appeals bodies.

46 Claimants will be notified of decisions in the Scheme and provided with reasons for decisions. The points on which a claimant can challenge decisions include:

(1) decision to award/not to award;

(2) level of award;

(3) decision not to waive time limits;

(4) decisions on application of exceptional review on grounds of deterioration.

47 Individuals will have a period of, say [90 days] following the date of the initial decision notification, when they can dispute the decision and apply for review. They will need to provide grounds and present such additional information as they judge appropriate to support their case. There will be some discretion to waive the time limit for internal review where there is good cause, such as claimant being overseas, illness etc.

Independent Appeals Process

48 If the grounds for the appeal are accepted as legitimate, the case will be reviewed and again the outcome notified with reasons. The claimant can then further challenge the review decision within a defined period [30 days], to the independent appeals authority, the Pensions Appeal Tribunal (PAT).

Pensions Appeal Tribunal

49 The PAT is the existing point of appeal from decisions of the current scheme. It is intended the PAT will concurrently hear appeals under both the old and new schemes, until claims under the old scheme have phased out over time.

50 The PAT rehears cases in full, considering issues of fact and law. The Tribunal is headed by a legally qualified President, supported by a panel of part-time Legal Chairmen, Medical Members and Service Members.

Further Appeals: Social Security Commissioners and Court of Appeal/Court of Session

51 Under the new scheme decisions of the PAT may be appealed on a point of law to the Social Security Commissioners. This is a change to the present situation, where the High Court is currently the first point of appeal from PAT. Changing the path of appeal will bring the appeal route into line with modern tribunals policy and provide better customer service for appellants.

52 The Commissioners currently hear appeals from a wide range of tribunals. They are experienced judges, well qualified to judge on difficult points of law, and provide a low-cost, user-friendly forum that is far more accessible than the High Court.

53 It is intended Commissioners with appropriate experience in armed force pension matters be assigned to these appeals. It is also intended they be named ''Pensions Appeal Commissioners'' during the hearing, to signify the special status given to veterans' issues.

54 Decisions of the Social Security Commissioners may in turn be appealed to the Court of Appeal (or the Court of Session in Scotland) on a point of law. In some cases it may be appropriate for particularly difficult points of law to have final resolution in a Court.

General Administration

Administration of the Scheme

55 Administrative arrangements are not yet developed in detail, however some key points have been established as follows:

(1) A claim will be considered automatically where there is a medical discharge from service or a death in service.

(2) Decisions in the scheme will be evidence-based, dependent on case-specific facts, the standard of proof and in line with contemporary medical understanding of causes of the disorders.

(3) Guidance and instructions for decison-makers, and policy underpinning the Scheme will be published and regularly reviewed.

(4) There will be a statutory internal dispute resolution procedure followed by a right of appeal to the PAT which provides an independent ECHR-compliant appeals procedure.

56 The details will be developed by a working group, with tri-Service representation and input from agencies such as the Veterans' Agency and the Armed Forces Pay and Administration Agency. Interested veterans organisations will also be consulted.

57 The administrative process will be subject to the usual government financial controls and arrangements will need to ensure the integrity of the scheme and make it fraud resistant. Comprehensive management information will be required and the administrators and medical advisers will be provided with adequate training, published guidance and supervision. Suitable quality assurance processes will be included. The details of these processes are still to be developed.

Adjudication of Claims and the Role of the Doctor

58 Decisions will not be medically certified but made by administrators with access to medical advice. Designed on the tariff system and with the time limits for claiming, it has been the aim to make the new scheme's decisions relatively simple and to reduce to a minimum the scope for discretion.

59 To ensure high quality decsions medical input is needed in the new scheme. Three main areas are as follows:

(1) scheme design (including review and updating of tariff and exceptions list);

(2) provision of medical evidence;

(3) provision of medical advice to the decision-maker where required.

60 Service medical evidence is key to the new arrangements and emphasis will be on the importance of detailed, accurate service records fully documenting incidents, events and health information. This will be supported by the work done since the 1991 Gulf crisis to improve the medical records of Service personnel including the introduction of the Operation Medical Record (FMed 965). In the longer term it is proposed to link electronic and paper records for both peace-time and operations. The system will be compatible with NHS systems and in line with the Government information strategy on electronic medical records. The Compensation Scheme will be introduced at a time when there have been significant improvements in the management of medical records. The resultant Service medical records will allow administrative staff broadly to establish the presence and nature of disablement and eligibility. Analysis of in service data and war pensions claims confirms that the majority of claims will be for musculoskeletal injuries and conditions which are well suited to a tariff approach.

61 More complex claims will benefit from easily accessible medical advice for administrative decision-makers. Particular issues may be:

(1) Where the claimed disablement does not quite fit the tariff;

(2) There is no clearly appropriate tariff level;

(3) Whether cases falling outside the 5 year time limit for submitting claims should be accepted for consideration on the basis that they should fall within the ''excepted'' list;

(4) Medical disorders where there is no consensus understanding, eg psychological injury.

62 Where necessary and, as now, with permission, post-service evidence from the claimant's clinicians or by examination will be obtained. Advice to adjudicators will be provided by trained dedicated doctors who have knowledge of the Scheme, law and

policy as well as a background in disability analysis or occupational health.

Welfare

63 The War Pensioners Welfare Service (WPWS) will remain for those who are already in receipt of a War Pension. With a different client base and setting, we will consider the particular nature of the support required for the new compensation scheme, avoiding duplication of existing related services. Support around service termination will be paramount. Long term follow-up is likely to be appropriate only for the most seriously disabled. The Veterans Agency will play an important role in advising on the development of proposals for a support mechanism and we will consult as appropriate with ex-Service organisations.

Provision of Medical Treatment for Disablement Leading to Medical Discharge

64 As with the present provisions, the assumption is that in-service care will be provided by the Defence Medical Service, while post-service responsibility for service-related disablements will fall to the NHS. We will be consulting with the Department of Health about the continuance of current arrangements for priority NHS medical treatment for compensated conditions.

Transition

65 Although claims for injuries through the new Compensation Scheme will be made for injuries and illnesses whose cause occurs after the date of implementation, we recognise there may be less clear cut cases and will be developing mechanisms to ensure that no claims will fall between the gaps of the new and old schemes.'.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

If I may welcome you back to the Chair, Mr. O'Brien, on my behalf and the Minister's—[Interruption.] I also welcome the members of the Committee who have timed their arrival very finely indeed.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

Fine, I would say, rather than perfect, but no doubt the Whip will be able to elaborate on the distinction between those two.

We had a useful debate earlier today on the compensation provisions of the Bill and I want to pick up on some of the Minister's points. I start on a note of agreement by saying that the Minister is right to draw attention to one of the pluses in the new scheme, which is that compensation will be payable to those who continue to serve. That is to be encouraged.

I also sympathise with the Minister as he tries to deal with the burgeoning cost of compensation claims. I referred earlier to the compensation culture that is alive and well, and flourishing in some quarters. To give some idea of it, I remind members of the Committee who might have forgotten—I know that they knew originally—that the compensation paid by the Ministry of Defence in 1997–98 was £70 million, whereas in 2002–03 the amount was £104 million. That is a huge figure. I understand from that excellent magazine Soldier, which I am sure all hon. Members read—

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

So says my hon. and gallant Friend, and, as Soldier is published in Aldershot, I am perfectly prepared to accept that description. I am sure that the Minister has seen the article in this month's edition, in which the Ministry's chief claims officer Jef Mitchell says:

''The hidden costs of settling claims is estimated to be roughly six times the value of the actual compensation paid'',

when one adds the on-costs—the costs of repairing broken equipment, recruiting and training new staff, and so on. We are talking about a figure of roughly £600 million. Those of us who have an interest in the successful operation of the armed forces are concerned that when £600 million is spent on compensation and associated costs, it will not be available, for example, to order another couple of Eurofighters, or Typhoons, as we now call them.

The article is interesting, because it illustrates the extent to which compensation is now claimed and is now payable. It says:

''Statistics indicate that within the past five years more than £6 million has been paid to those injured through lifting and handling, slips and trips have cost £4.3 million and accidents on steps and stairs have led to £2 million in pay-outs.''

That indicates the range of the injuries that we are discussing. According to the article, the Ministry has been

''billed £283,000 for bad-fitting boots, £172,000 for paintball injuries, £60,000 for animal attacks, £51,000 by those injured after falling out of bed and £46,000 for food poisoning.''—

[Interruption.] Would the hon. Member for Cleethorpes (Shona McIsaac) like to intervene? Does she have examples to which I have not alluded?

My hon. Friend the Member for Faversham and Mid-Kent (Hugh Robertson) has helpfully pointed to another detail in Soldier magazine—perhaps I should have a word with the editor, because he has provided us with some very interesting facts and not a little entertainment. Apparently, a

''parrot, startled by a low-flying military aircraft, fell of a perch and broke both legs. The parrot's owner sued the MoD and received compensation to cover veterinary bills including the cost of two splints.''

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

Does the hon. Gentleman want to provide another example, perhaps involving a dead parrot falling off its perch?

Photo of Mr Bill O'Brien Mr Bill O'Brien Labour, Normanton

Order. We cannot talk about compensation for animals and birds under this clause. We are talking about compensation for military personnel.

Photo of Paul Keetch Paul Keetch Shadow Secretary of State for Defence, Defence

I was not going to talk about compensation for animals and birds, but there is a serious point. Low-flying aircraft occasionally cause livestock real distress, and the MOD has been very careful to prevent that at certain times of year, particularly during lambing. I represent an agricultural constituency, and my constituents are aware of the issues. I am sure that the hon. Gentleman accepts that these are serious matters, not something to joke about.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I thank the hon. Gentleman.

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

Like the hon. Member for Aldershot (Mr. Howarth), I admire the work of Soldier magazine, although I note your strictures on

mentioning parrots, Mr. O'Brien. I should point out, however, that the £104 million represents the compensation paid by the whole Ministry in one year. As the hon. Member for Hereford (Mr. Keetch) rightly said, we have a system of paying compensation to home owners and farmers who are affected by low flying and many other issues, but we are talking about only a small part of that system, which relates to serving military personnel.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

The Minister makes an entirely fair point. However, he only emphasises the fact that the Ministry must pay out substantial sums. In a sense, that money is going down the drain, because it is not buying a single musket or a single pair of desert boots.

Photo of Desmond Turner Desmond Turner Labour, Brighton, Kemptown

Does the hon. Gentleman want to bring back the musket?

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

You never know—chaps who did not have the correct kit might have welcomed a musket or two. However, I shall leave that issue to one side because I do not want to disturb the good-natured atmosphere in the Committee.

I raise these issues because it is important to recognise the responsibility that rests on the Minister's shoulders in seeking to meet our demands, those of the Royal British Legion and, indeed, those that he sets himself. In that respect, I know that he is an honourable man and that he wants to do the best he can by those who have suffered as a result of injuries sustained while training or serving. At the same time, however, we must get the balance right by ensuring that we do not simply pay out to undeserving people. That is the difficulty.

People who have suffered an injury that has impaired them for life are receiving pay-outs of millions of pounds from the courts so that they can live a reasonable life and pay for the care that they need. None of us would want to be niggardly about that, because those who join up and are injured deserve the best.

Photo of Julian Brazier Julian Brazier Shadow Minister (Foreign and Commonwealth Affairs)

My hon. Friend is making his points in his usual courteous fashion. The paradox that we face is surely that raised by my hon. Friend the Member for Faversham and Mid-Kent in his very able Second Reading speech. He noted that we would have fewer court cases if the Ministry's internal systems, as the first port of call, were properly organised and seen to be fair. I suspect that, in the long term, the proposals will result not only in a lot more grief for those with genuine cases but in a higher bill for the MOD, as angry service people take their cases to the courts.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

That intervention is not only apposite but timely. I agree with my hon. Friend. The risk that the Government run, in the tariff system and in changing the burden of proof, is that those who feel aggrieved will be driven into the courts.

I have a case of a fellow called Richard Holmes—no relation to the author—who is a constituent of mine. He had an on-going dispute with the Ministry of Defence that he wanted to settle through the usual channels in the Department, but the process was so

slow that he was advised that, unless he served notice that he wanted to go to court, he risked running out of time in the courts. Therefore, he was in a Catch-22 position. He wanted to continue to negotiate with the Ministry of Defence, but it was incredibly slow and awkward. Had he gone on and placed his faith in the system, and the system had failed to deliver, he would then have had no recourse to the courts. Not having much confidence in the system, he served notice that he intended to have recourse to the courts. The result was that the MOD shutters came down, bang: it will not talk to him; that is it.

I had a one-to-one meeting on this case—I seldom trouble Ministers with such matters—with the Minister's predecessor. He was sympathetic to the case, but felt unable to do anything about it. Therefore, I echo what my hon. Friend the Member for Canterbury (Mr. Brazier) said and urge the Minister to consider the matter seriously, not only because the difficulty could arise that my hon. Friend mentioned, but because it is a continuing problem. As he said, the new arrangements will not click in for some time, so the current scheme will be operated for a while.

If I urge the Minister to get a grip, that is not to suggest that there is widespread incompetence in the Department. I said earlier that, in his relatively short term in post, the Minister has gripped the question of the review. I see certain smiles around the Committee Room, but I am not at liberty to divulge the source of those smiles. However, there is a recognition that the Minister has gripped that issue. I suggest that it is in his interests to grip this one as well, because it is not satisfactory that people should be driven to the courts. I ask him to consider the point made by my hon. Friend well in advance of Third Reading, to see whether this issue can be addressed on that occasion.

Photo of Julian Brazier Julian Brazier Shadow Minister (Foreign and Commonwealth Affairs)

There is another parallel point, which relates to the time limits. In the old days the typical serviceman or woman, who developed what appeared to be a minor condition and was not greedy, would be disinclined to chase it through the war pensions arrangements. Now, given that there are time limits, and word will get round that there are time limits, people will often rush to pursue the matter to ensure that they are not time barred. The irony is that those who will lose most are those who are least greedy, because they may get caught by the time limit, which encourages people to rush in at the earliest possible moment.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence) 2:45 pm, 10th February 2004

That is a good point, and I cannot add to it, save to reinforce it. The Minister heard it, and I hope will respond.

As I said earlier, I heard late last night that the Home Secretary had made suggestions regarding the burden of proof in criminal cases, particularly those involving people who are regarded as serial and serious offenders. Since then, I have been fortunate enough to obtain a copy of The Daily Telegraph, which, I am pleased to say, is the newspaper one can trust. The relevant headline reads, ''Burden of proof could change to convict gangsters''. The burden of the

article is that the Home Secretary and the Prime Minister himself have suggested that one could get round the problem of convicting serious organised criminals by lowering

''the burden of proof in organised crime cases to the 'balance of probabilities' benchmark that applies in civil cases.''

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I would be delighted to give way to the hon. Gentleman, who served on the Defence Committee with me.

Photo of Mr Syd Rapson Mr Syd Rapson Labour, Portsmouth North

If the Home Secretary thinks that lowering the standard of proof to the balance of probabilities would make it easier to get a conviction, why would it not also make it easier for a serviceman to prove his case?

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

Because matters are the other way round. It is for the Ministry to prove beyond reasonable doubt that the injury that the serviceman suffered was not attributable to his service. I have checked that carefully.

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

The hon. Gentleman knows that he is comparing chalk and cheese in trying to make a point. He talks about yesterday's launch of the national strategy on organised crime by the Prime Minister and the Home Secretary, but such comparisons do not take our discussions much further.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I am trying to point out that the Government have reduced the burden of proof in two very different cases to get their own way. I accept that we are talking about chalk and cheese and that the circumstances surrounding the armed forces compensation scheme and the other example that I gave are different, but the point remains that the Government are trying to use the burden of proof issue to their advantage in both cases.

Speaking of the tariff, the Minister again said that the Government were modernising. Incidentally, I have now left the burden of proof issue, and I hope that he understands the force of the argument that has been made by the Defence Committee, the Royal British Legion and Opposition Members. The proposed change will be challenged all the way along, because we do not believe that it will, either on its own or when taken with other changes, benefit those who are subject to injury as a result of their service in the armed forces. My hon. Friend the Member for Canterbury reinforced the point that the change may well drive people to seek redress through the courts rather than the Ministry's own arrangements. That puts the issue to bed as far as I am concerned.

We have raised three issues: the burden of proof, time limits and the tariff. The hon. Member for Hereford intervened on the issue of time limits, and I think that we agree on this side of the Committee that they are not fair. The Government are making a mistake in imposing them.

The Minister drew to my attention the discrepancy between new clause 16 and new clause 23. New clause 23 was tabled in a probing spirit and I do not intend to press it. New clause 16 I do. The Minister made a very

good speech promoting my proposals. That is how my hon. Friends and I read it. Some of his colleagues were pretty persuaded by some of his arguments, too. [Interruption.] I think that they may support us when we press this to a Division.

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

I want to be clear about what I said. I chose my words very carefully under probing from the hon. Member for Hereford. What I said was that the spirit, the essence, of new clause 16 is about reporting to Parliament. The hon. Member for Aldershot puts in the words

''not later than five years'',

but I was saying—and this was a commitment that I gave this morning—that I want to be able to report to Parliament more frequently. It may be necessary to do so, and I do not want the restrictions that new clause 16 places. That is why I say to my hon. Friends that we will also resist new clause 16. I hope that on the basis of what I have now said twice the hon. Gentleman might wish to withdraw the motion.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

Far from it. Unfortunately for the Minister, the new clause does not impose any limitations on him at all save that he must make one of these reports he is so anxious to make within five years. As he has been telling us that he is most anxious to make them well in advance of five years, I can see that he does not have a problem. I see that my hon. and gallant Friend wishes to assist.

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

Has it occurred to the Minister that his office may in the future be occupied by someone not nearly so keen to report to Parliament, in which case my hon. Friend's proposal is entirely appropriate?

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I thank my hon. Friend for that intervention. It is quite important when we are considering the detail of legislation to cast our minds forward and subject the proposals to a kind of fatigue test—to use an analogy that the hon. Member for Crosby (Mrs. Curtis-Thomas) would understand, mechanical engineer as I know she is. We would welcome her thoughts on fatigue testing.

It is important to consider legislation with a view to what might happen in the future. Whilst the Minister gives us assurances, which we warmly welcome, I think that it could be that he will so excel himself in this post that he is moved swiftly to higher things, and who knows what might follow. Of course, it will be no problem if I were to follow.

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

Let me be absolutely clear. I will not comment on the other points that the hon. Gentleman is making. I have committed the Government to making reports on tariff changes, as and when we need to do so. That is why I want to resist new clause 16, which I think imposes impositions on my ministerial post, whoever occupies it. While this Government are in, we want to make statements to the House of Commons when it is necessary.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

There is a saying, ''If you're in a hole, stop digging.'' Of course, I am not suggesting that the Minister is in a hole. It is a small point and I do not

want to press it to an extent, but we will press it to a vote.

Photo of Paul Keetch Paul Keetch Shadow Secretary of State for Defence, Defence

I have listened carefully to the Minister and I am sure that we would all accept what he says. I support the hon. Member for Aldershot. Can he confirm that there is nothing in the new clause that would prevent the Minister from coming to the House annually or even monthly—

Photo of Paul Keetch Paul Keetch Shadow Secretary of State for Defence, Defence

Indeed, daily if necessary, and responding to changes. The new clause seeks merely to ensure that such a report to Parliament is made at least every five years. That seems pretty sensible.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I am grateful for the hon. Gentleman's support. He calls it a sensible proposal and I could not possibly disagree. It is a shame that, because we have to stick to form in Committees, the Minister does not accept that. No matter how clever or worthy are the amendments and new clauses tabled by the Opposition, they are never acceptable to the Government. The myriad amendments produced by Ministers during the passage of a Bill—that is not the case here, admittedly—are always essential to make the Bill better, whereas nothing suggested by Opposition Members could possibly do that. That is one of the failings of this place: we are less constructive in our debates than we might be—but that is a matter for another day.

Talking of tariffs, one of our proposed changes to the Minister's framework scheme was on that point. At paragraph 13 of new schedule 4, we suggested that

''The Secretary of State will publish an exceptions list of illnesses based on expert medical advice from the appropriate specialities. The list will retain a degree of flexibility. It will be reviewed annually to take account of medical understanding and additional conditions may be added''.

That is a good, sensible and flexible way in which to proceed, and achieves exactly what the Minister wants to do anyway, so I hope that he will accept it.

There are valid reasons why we should press some of the amendments to a vote. I therefore propose to insist on amendment No. 4, which would introduce the compensation scheme; new clause 16, which we have discussed at some length and would introduce the report to Parliament on the tariff-based compensation scheme; and new schedule 4, which sets out compensation arrangements. I would insist on those in order to make it clear that we want to see them incorporated into the Bill. However, I do not intend to press new clause 23.

Photo of Mr Bill O'Brien Mr Bill O'Brien Labour, Normanton

Let me point out the procedure. We will vote on amendment No. 4. New clause 16 and new schedule 4 will join the list of remaining new clauses and when we come to remaining new clauses they will be moved formally and voted on. We are now voting on amendment No. 4. The other proposals will be taken when we reach the appropriate point.

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 9.

Division number 2 Adults Abused in Childhood — Clause 1 - Pension and compensation schemes: armed and reserve forces

Aye: 5 MPs

No: 9 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I beg to move amendment No. 5, in

clause 1, page 1, line 14, at end insert—

'(2A) The Secretary of State shall not alter or amend the guaranteed defined pensions benefits or the compensation benefits without the agreement of Parliament.'.

Photo of Mr Bill O'Brien Mr Bill O'Brien Labour, Normanton

With this it will be convenient to discuss the following:

Government amendment No. 14.

Amendment No. 10, in

clause 10, page 3, line 38, at end insert—

'(2A) Authority vested in the Secretary of State to vary the schemes set out in section 1 may only be made by the authority under this section.'.

Amendment No. 11, in

clause 10, page 4, line 3, leave out from 'Act' to 'is' in line 6.

Amendment No. 13, in

clause 10, page 4, line 5, after 'which', insert

'modifies the working of the scheme or which'.

Amendment No. 12, in

clause 10, page 4, line 8, leave out from 'Parliament' to end.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

The amendment is designed to give expression to the concern that there should be better parliamentary scrutiny, which has been raised across the piece by the Defence Committee and various other organisations that have been lobbying on the issue. Together with the next group of amendments, which deals with the establishment of a board of representative trustees, the purpose of the amendment is to try to provide for greater accountability. Government amendment No. 14 goes in the opposite direction to the amendment, however, and says:

''An order under this Act may make different provision for different purposes.''

That seems to be another blank cheque for the Government and I look forward to hearing what the Minister can say by way of justification for it.

I accept the Minister's earlier challenge, which was that subjecting every jot and tittle of the schemes to parliamentary review and scrutiny would be unworkable. That does not happen now, and I quite accept that. We are not in principle trying to hamper the Government's tweaking and adjusting of the scheme to suit different circumstances. We are however saying that, since the measures in the Bill

are completely new, the Government should set in stone certain things that can be changed by coming to the House and seeking permission. The Committee is not considering amendments specifically about defined benefits or the classes of people who will benefit today. However, I offer those issues as examples to the Minister, whose officials are well versed in the black arts of parliamentary draftsmanship and could therefore turn my rough-hewn words into fine prose that would pass scrutiny by the lawyers.

I invite the Government to give their views on what they would be prepared to have in the Bill. They are in a rather unenviable position, as they are on a number of fronts, which is causing concern among the public. They are asking for a completely blank cheque, yet their only amendment gives them an even blanker blank cheque. The public are increasingly concerned that the Government are arrogating to themselves increasing powers of centralisation and powers to order this, that and the other. People are concerned that the Government can get away with more or less what they want because they have a large majority.

In the present case, there is common ground between the Minister and us. We are not engaging in trench warfare and there is no great divide between us on this issue. We are all on the same side. We have differences of view, it is true, but there is no fundamental difference in principle when it comes to what we are trying to do. We are trying to do the best as we see it—individually and collectively, on each side—for those fantastic guys and girls in our armed forces.

However, there is a difference of view in that the Government want complete freedom of movement and action, and will not offer any concession or any idea as to which cardinal principles of their schemes they would be prepared to see incorporated in the Bill to give protection and to ensure that there is parliamentary oversight. As I have pointed out before, there are no independent trustees. There are no powerful voices, as I think I described them in this morning's sitting. Those powerful voices speak up in support of other public servants, whether they be firemen, who are represented by—I suppose I have to say it—the Fire Brigades Union, or members of the police force, who are represented by the Police Federation or the various more senior staff officers' associations.

Those powerful voices speak up in Departments in respect of those groups of public servants who work at the sharp end. In the case of the armed forces, there is nobody. As parliamentarians, we are the trustees. We have tabled amendments that would set up a body of trustees. If the Minister were to give way on that—I am asking him not to endorse every word of our proposal but to accept the principle that there should be a body of advisers to give him advice while acting on behalf of the armed forces—that would be a modern and sensible thing to do. It would also obviate the need for us to keep banging on about making any changes subject to parliamentary review. Ideally, I think that Parliament would like to be kept informed on the basic principles, but at the very least we would feel a lot happier and more comfortable if he were to

accept the principle that there should be a body of advisers. It would also be to the benefit of Ministers if they were to consider the merit of the case for introducing some kind of representative—whether we call them trustees or something else.

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

That is an important point. The two terms that the hon. Gentleman has used are both important in relation to pension policy. I am sure that he will understand that the word ''trustee'' refers to an independent trustee of a pension scheme. Usually, as I said on Second Reading, that equates to the managing of funds and the payment of benefits. That is not the case in the pension scheme that we are discussing. The term ''body of advisers'' involves a wholly different issue. I presume that we would be talking about determining whether a Minister, or the Prime Minister, accepted that advice. It would be helpful for the hon. Gentleman to clarify his thinking on the matter.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I am happy to do that. I have spoken to my hon. Friend the Member for Bournemouth, West (Sir John Butterfill), the chairman of the parliamentary pension fund, who spoke on Second Reading and brought his considerable wisdom to our deliberations. He has made it absolutely clear to me that ''trustee'' has a meaning in law. I understand that. I am not a parliamentary draftsman. I cut the rough stone and leave others to finish it off: that is the way this place operates, and there is nothing new in that. The analogy that comes to mind is the Armed Forces Pay Review Body. It is a body—it could not have another name.

It seems to me that the Minister is asking for a blank cheque. There is no provision for Parliament to be consulted on any changes, but it is taking a very much closer interest in our armed forces today. The armed forces parliamentary scheme, which the hon. Member for Glasgow, Anniesland (John Robertson) mentioned on Second Reading, and other Committee members have been on, has greatly extended parliamentarians' understanding of the role played by our armed forces. Quite a few scales dropped from quite a few eyes in that process. My hon. Friend the Member for Faversham and Mid-Kent and my other hon. Friends have served in the armed forces and even I have worn a uniform, but of a pretty low rank, as an acting pilot officer in the Royal Air Force Volunteer Reserve, which I am fond of saying is Britain's last hope. I would advise hon. Members to make for the exit if I am called up, although as I get older, the likelihood of that becomes less.

We have moved away from the cold war with two great blocs facing each other in an awful, terrible stalemate as both sides ratcheted up the power of their weapons. We have moved to a new era in which the Government use our troops to put out bush fires around the world, a concept with which I do not have a problem. Our armed forces are being used more, so we are getting more casualties, and the schemes to which the Bill refers are being extensively taken up. The idea that Parliament is prepared to say to Ministers, ''Fine, carry on; no one is speaking up for those guys but we will raise a point of order on the

Floor of the House if there is a problem,'' is not the modern way of doing such things. We should seize the opportunity presented to us by the Bill to set out specifically that Parliament will be consulted. If not, and if, as my hon. Friend the Member for Canterbury darkly warned, it all goes to worms, there will be pressure for more parliamentary oversight.

I know that you do not take part in our proceedings, Mr. O'Brien, but you are a decent and honourable chap and I hope that you at least can be persuaded to see the merits of our case and that the amendments would strengthen parliamentary scrutiny, of which there is none at present. We believe that the Bill provides an opportunity for such oversight to be created. I shall in due course invite the Committee to support my reasonable proposition.

Photo of Julian Brazier Julian Brazier Shadow Minister (Foreign and Commonwealth Affairs)

It seems to me that the position of the armed forces is unique. Although I accept the comments of Labour Members that members of the armed forces are theoretically able to join trade unions, no member of the armed forces is allowed to be active in a trade union and no trade union or other professional body is allowed to speak for the armed forces. That puts them in a different position.

I am particularly concerned at the suggestion that the main focus for advice is the personnel staff in the armed forces. Their job is to consider the manning requirements of the armed forces, not the welfare of people who are coming up to the end of their service, nor do they necessarily reflect opinion throughout the armed forces as a whole—by definition they are all senior military officers. They will not necessarily take the same view on matters as junior officers or other ranks.

As was pointed out on Second Reading, the current position is that there is no system of independent trustees. It is time that there was one: we need proper oversight of the matter. A system of the sort outlined by my hon. Friend the Member for Aldershot would provide Parliament with a proper oversight through the use of affirmative resolutions. I cannot see any reason why the Government should object to that unless they have something to hide. The armed forces command the affections of the people—they are popular on both sides of the House—and I would have thought that the Government would welcome an opportunity for the two Houses of Parliament to discuss important matters affecting their pension arrangements. I urge the Minister and the Committee to support the amendment tabled by my hon. Friend the Member for Aldershot.

Photo of Mr Ivor Caplin Mr Ivor Caplin Parliamentary Under-Secretary, Ministry of Defence 3:15 pm, 10th February 2004

I welcome you back to the Chair, Mr. O'Brien. I thank the hon. Member for Aldershot for the way in which he has outlined his amendment.

I should introduce Government amendment No. 14 to the proceedings, which has attracted more attention and excitement than I though would be the case. I thought it was a fairly routine amendment that we would be able to avoid debating, but we cannot. I think that I can put the Committee's mind at rest. The amendment says

''at end insert—

'( ) An order under this Act may make different provision for different purposes.' ''

That will allow different provisions to be introduced by order at different times reflecting the needs of different policies. I shall give an example that I hope will be helpful.

The Under-Secretary of State for Constitutional Affairs, my hon. Friend the Member for Tottenham (Mr. Lammy), will go into further detail about the changes to the independent appeals process that will be made under clause 5 and schedule 1. Those changes will have to be introduced on a different date from the new charitable vehicle that the Bill sets up for the Royal Patriotic Fund Corporation. The hon. Member for Faversham and Mid-Kent should get some credit for being the only person, apart from the Secretary of State, to raise that matter on Second Reading. That is the purpose of the Government amendment. I can assure the Committee that there is nothing more to it than that.

Photo of Julian Brazier Julian Brazier Shadow Minister (Foreign and Commonwealth Affairs)

I am grateful to the Minister for his elucidation, but it surely must be a matter of concern that the Government will arbitrarily be able to introduce certain proposals in isolation. Might it be the case that some proposals that save money end up being introduced ahead of those that improve conditions?

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

I can put the hon. Gentleman's mind at rest. That is a conspiracy theory too far, even for him, and I know he enjoys such theories. The explanation that I have given for the Government amendment is clear, open and transparent.

I do not intend to speak to the Opposition proposals for long, and I shall ask my hon. Friends to resist them for reasons I will give. I shall deal with amendment No. 5, which is the key amendment spoken to by the hon. Member for Aldershot. I accept what he says about his amendments—they are sometimes a bit imprecise. That is an interesting word, which I would use about this amendment. I hope that the hon. Gentleman will not take that personally, although I struggle to understand what the amendment means. It uses the phrase

''without the agreement of Parliament.''

However, there is already provision in the Bill for changes to be subject to parliamentary scrutiny. I can reassure hon. Members that that is the case.

I made the point on Second Reading, and I make it again this afternoon, that we are keen for there to be proper scrutiny of the armed forces pension scheme. For the second time, I draw attention to paragraph 38 on page 15 of the Government response to the Select Committee report, which concludes with these words:

''We accept that Parliament will continue to take a keen interest in the Armed Forces Pension and Compensation Schemes and the Government welcomes that continuing scrutiny.''

That is a clear phrase about the Government's role in providing for and ensuring that there is proper and effective scrutiny.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

That is the Minister's response to the Select Committee. The Select Committee's concern was this:

''When it comes to negotiating pension and compensation entitlements, it seems to us that the Armed Forces are disadvantaged, because they have no-one to negotiate on their behalf as employees. Parliament therefore has a vital role to play in ensuring that the Armed Forces get the pension and compensation schemes that they deserve.''

The Minister is saying that the Government assert that they will continue to ensure that there is scrutiny, but I invite him to take us through precisely how he, as a Minister, will make changes to the scheme. Once the Bill is banked, will he, for example, table a statutory instrument that sets out the pension scheme and the compensation scheme? Will that statutory instrument be subject to the affirmative procedure? Will it be debateable? I seek guidance from him, which I am getting vicariously. He knows the concerns: the Committee is going through the Bill line by line, so I invite him to spell out where the parliamentary scrutiny will be and what form it will take.

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

The negative procedure is well known to the hon. Gentleman and to all hon. Members. Surely I do not need to take an experienced Committee such as this through the negative procedure line by line. The negative procedure offers the continuing scrutiny that we propose in paragraph 38 of our response. I said that that was our response to the Select Committee report; I did not pretend that it was the Select Committee's work.

There will, of course, be opportunities to scrutinise pensions and compensation. We talked at length this morning about whether, and how often, statements should be made on tariffs. I doubt that the Defence Committee, having produced reports on pensions and compensation, will simply let the matter lie on the table. I expect it to be fully engaged in the process. We are providing good and effective parliamentary scrutiny using the negative procedure. I hope the hon. Gentleman will think about that and that he might consider withdrawing the amendment on the basis of that explanation.

I talked at length about the difference between the primary, enabling legislation and the secondary legislation. Setting out the scheme rules in secondary legislation subject to the negative procedure will give Parliament the ability to undertake greater scrutiny of future changes to scheme rules than it has under the Bill. On that basis, I say again that I hope that the hon. Gentleman feels able to withdraw the amendment. That also deals with amendments Nos. 5, 10, 11, 13 and 12, which I hope my hon. Friends will resist if necessary. I have the pleasure of inviting them to support Government amendment No. 14, which I explained.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I understand the Minister's position and that different schemes might need to be introduced by statutory instrument at different times. Nevertheless, despite his soothing reassurances about Government amendment No. 14, he must accept that it is very much a blank cheque—on top of a load of other blank cheques. By way of reassurance for us, and by way of protection for the armed forces, he is

offering a 90-minute debate in a Committee Room, should a Member pray against a statutory instrument. In all honesty, the provision will have a hard time in another place if he thinks that that is adequate scrutiny.

The Minister will get whatever he wants in this place, because the Government have a large majority. We have stayed our hand, because we want to give him the benefit of the doubt. He came to the debate on Second Reading without much of the detail. I shall rephrase that—he came without some of the detail. I do not want over-sex the case—no, that was the Americans. I mean ''sex up''.

Perhaps I should make my point this way: I do not want to over-egg my case, but 90 minutes is our lot. I am not clear what amendments will be involved in the tabling of a statutory instrument. The Minister might like to take advice on that from one of his hon. Friends or from elsewhere. The initial scheme will obviously be dealt with by way of resolution, but I am not clear what amendments may subsequently be introduced by fiat—at the stroke of the Minister's pen, as he implied has been done in the past—or what is involved for Parliament in respect of the negative resolution procedure and a 90-minute debate, should a Member pray against a measure.

The best that I can do is to say that I shall not press the amendment to a Division. On Government amendment No. 14, we will let the Minister have his catch-all additional provision, but only on the basis that on Third Reading we shall want a much more explicit case to be made on how amendments to the initial schemes will be presented to Parliament for scrutiny. We should bear it in mind that parliamentary scrutiny will be the only scrutiny that such amendments will receive, there being no independent trustees—an issue to which I think we may be turning in a few moments.

On that basis, I am prepared to invite my hon. Friends not to insist on the amendment, but to seek the Committee's leave to withdraw it. However, I wonder whether the Minister is prepared to come to the House on Third Reading armed with a little more clarity on how the schemes will be subjected to parliamentary scrutiny. He may not be clear about that himself, but I hold that against him no more than I hold against him the fact that we are debating an incomplete Bill. I do not want to be unreasonable; in fact, I am bending over backwards to be reasonable. I invite the Minister to intervene.

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

Let me say two things. First, in answer to the hon. Gentleman's allegation, I do not consider the Bill incomplete. We may not agree about the process in respect of enabling secondary legislation to be made—I accept that—but the Bill is not incomplete. Secondly, I shall certainly consider carefully before Third Reading the points that he has raised.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I am grateful to the Minister, and I look forward to consideration on Third Reading to see whether we can improve matters before the Bill leaves the House for the other place. With those

observations, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence) 3:30 pm, 10th February 2004

I beg to move amendment No. 6, in

clause 1, page 1, line 16, at end insert

'and shall appoint a body to be known as Representative Trustees with the duties and responsibilities set out in section [Representative Trustees].'.

Photo of Mr Bill O'Brien Mr Bill O'Brien Labour, Normanton

With this it will be convenient to discuss the following:

New clause 3—Representative Trustees—

'(1) The Secretary of State shall appoint not less than seven and not more than nine persons to serve as Representative Trustees in respect of the two schemes taken together (''the Trustees'').

(2) Persons so appointed may be appointed for between three and seven years in the first instance and thereafter for periods of three years which shall be renewable.

(3) Persons so appointed shall include—

(a) not less than five persons who have served in the armed forces, of whom at least two shall have served in non-commissioned rank;

(b) at least one beneficiary under the compensation scheme;

(c) at least two who are expert in pensions matters;

(d) at least two who are concurrently members of the Armed Forces Pay Review Body; and

(e) a person appointed by the Secretary of State to serve as Chairman of the Trustees (''the Chairman'').

(4) The categories listed in subsection (3) are not mutually exclusive.

(5) The Secretary of State in consultation with the Chairman shall appoint a suitably qualified person to serve as Secretary to the Trustees (''the Secretary'') and shall provide the Secretary and Trustees with all the facilities necessary for their work.

(6) The Secretary of State must consult with the Trustees on proposals to modify the scheme in accordance with section 3(1)(b).

(7) The Trustees shall keep the Schemes under regular review and shall report at least annually to the Secretary of State and may so report more frequently if they believe that to be necessary.

(8) The Secretary of State shall cause any report to him by the Trustees to be published if the Trustees so request.

(9) The Trustees may make to the Secretary of State recommendations for variations in the Scheme.

(10) The Secretary of State may, at his discretion, reject, vary or accept and apply such recommendations. In either case he shall make a written statement to Parliament setting out the recommendation, the reasons of the Trustees for making it, his decision and his reasons for that.'.

New clause 4—Representative Trustees (No.2)—

'(1) The Secretary of State shall appoint not less than seven and not more than nine persons to serve as Representative Trustees in respect of the two schemes taken together (''the Trustees'').

(2) Persons so appointed may be appointed for between three and seven years in the first instance and thereafter for periods of three years which shall be renewable.

(3) Persons so appointed shall include—

(a) not less than five persons who have served in the armed forces whom of at least two shall have served in non-commissioned rank;

(b) at least one beneficiary under the compensation scheme;

(c) at least two who are expert in pensions matters;

(d) at least two who are concurrently members of the Armed Forces Pay Review Body; and

(e) a person appointed by the Secretary of State to serve as Chairman of the Trustees (''the Chairman'').

(4) The categories listed in subsection (3) are not mutually exclusive.

(5) The Secretary of State after consultation with the Chairman shall appoint a suitably qualified person to serve as Secretary to the Trustees (''the Secretary'') and shall provide the Secretary and the Trustees with all the facilities necessary for their work.

(6) The Trustees shall keep the schemes and their management under regular review, shall report at least annually to the Secretary of State, and may so report more frequently if they believe that to be necessary.

(7) The Secretary of State shall give notice to the Trustees of any modification in the schemes he is minded to make and shall invite the observations of the Trustees in respect of such proposed modification.

(8) The Trustees shall have a special duty to review and advise on arrangements for the provision of competent independent advice to participants in the schemes and any predecessor schemes and for access to such advice.

(9) The Secretary of State shall cause any report to him by the Trustees to be published if the Trustees so request.

(10) The Trustees may make to the Secretary of State recommendations for modification to the schemes and in relation to the general conduct of the schemes.

(11) The Secretary of State may, at his discretion, reject, vary or accept and apply such recommendations. In any case he shall make a written statement to Parliament setting out the recommendation, the reasons of the Trustees for making it, his decision and his reasons for that.'.

New clause 17—Coming into force—

'No new scheme shall be introduced under this Bill until April 2007 or until such time as the representative trustees referred to in section [Representative Trustees] shall have approved.'.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

The issue of represented trustees, which is how we have described new clause 17, is a natural evolution from our previous discussions, on representation for members of the armed forces scheme. If there is to be no greater parliamentary oversight than that offered by the Minister, we suggest that it is the appropriate time to give some alternative oversight by way of trustees.

As I have said, we fully acknowledge that ''trustees'' is probably the wrong word to use because of the legal connotations surrounding its use in respect of pension funds; so long as it is an unfunded scheme, ''trustees'' would clearly not be an appropriate name for people who are not administering a fund. However, if the Minister will forgive me for using the word loosely, under new clauses 3 and 4 we propose an independent board of appointed trustees to provide oversight.

These trustees would also have other responsibilities. First, they could monitor the effect of the Government's proposed new schemes on retention and recruitment. I quoted earlier from the Government's response to the Select Committee report, where the Government explained that they did not feel any improvement of pension schemes was justified in recruitment and retention terms. If there was an independent body that could provide advice on whether there was cause for concern over the effect of the schemes on retention or recruitment, that would be advantageous.

Secondly, these trustees would have a very valuable role to play in the administration of the scheme. There have been a number of pretty shocking cases—I will

resist the temptation to use the word ''scandals''—not the least of which was the case of Major Perry. This is not an attack on the Minister. I believe that such problems have existed since 1954. One hell of a lot of Ministers have been involved.

I understand that Ministers cannot be expected to have responsibility for every pay clerk in the business, but there would be benefits to having some independent oversight or audit to try to avoid cases such as that of Major Perry, who was taxed on his pension and eventually had to go to court. He won the case, thanks to his own dogged determination—the kind of dogged determination, of course, that ensured that we were never trapped in Nazi slavery like some of our European partners. He brought to civilian life those qualities that he demonstrated in military life. The body that we are advocating should be included in the Bill could undertake oversight of the administration of the pension scheme.

A third function of the trustees would be to analyse best practice. Given that they would be the kind of people that we describe in our proposals—people with relevant experience—they would be in a position to say whether the schemes were appropriate, not only for recruitment and retention, which I mentioned at the outset, but in comparison with other public sector organisations. Before any of my hon. Friends leaps on me and says that this is not another public sector organisation, I have been saying that all along. Nevertheless, the Forces Pension Society has made a strong case not only that the armed forces are unique but that they are actually not doing as well as some other public services in terms of pension compensation arrangements. The body of trustees would be able to monitor best practice and compare schemes now being submitted by the Government to ensure that the armed forces do not lag behind, as we all agree they have in recent years.

The fourth area in which the trustees could make a valuable contribution is in monitoring the success or otherwise of the appeals procedures. It is a fact that many cases that hit the headlines succeed after prolonged appeal. The Royal British Legion has given me several examples of cases that have been rejected out of hand by the Ministry of Defence, even with its magnificent new veterans department. Only when they have gone to court and then to appeal have the veterans won, whether by getting a concession on their right to compensation at all or by getting an improvement in that compensation. It is strange that, of the many constituents who bring their cases to me, the Ministry of Defence finds that such a large proportion have just 19 per cent. hearing loss. It is never quite 20 per cent. but just 19 per cent.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

Was my hon. Friend a gunner? I cannot remember.

Getting appropriate compensation for an ailment is done through the appeal procedure. That is the fourth way in which the proposed body of trustees could provide the Minister and the armed services with valuable assistance.

The fifth role would be to liaise with the Armed Forces Pay Review Body, which is widely acclaimed. I think that the armed forces feel that, so long as they have that independent pay review body, somebody out there is looking after their interests. We know that they have no trade union representation. The hon. Member for Hornchurch (John Cryer) and one or two others may be keen to change that, but they do not have it at the moment, and we would resist it. I believe that the armed forces derive confidence from having the pay review body. They would also derive confidence if they knew that there was a body on which they were represented, so ex-service personnel and current beneficiaries would be there. I shall run through some of those whom we propose to put on the body in a moment.

The body of trustees, or whatever one calls it, could carry out five clear functions. I believe that it would assist the Government, because increasingly people look at the overall remuneration package before they decide to embark on a career; that applies to the armed forces as much as anywhere else. I repeat that I do not want to see young men turning up at recruiting offices at the age of 17 wanting to join the Colours and then saying, ''And what about my pension?'' That is not the sort of person we want. Nevertheless, young people are encouraged by Governments of all persuasions to think about prudent financial planning and the long term.

I do not know whether my hon. Friends ever thought about their pensions when they joined up. They probably do now, but I hope they did not at the time. However, it will be of merit to have this body, which will be able to monitor progress and changes in the concerns felt by the armed forces. Above all, it will give them enhanced confidence that they are not subject simply to the whim of the Government of the day, but will have an independent body to speak on their behalf in the highest councils of the land.

Members of the Committee will note that two new clauses, which are similar, have been tabled on the composition of these representative trustee bodies. New clause 4 provides for an additional duty that is not in new clause 3. I shall come to that in a moment.

The proposal in new clause 4 closely follows the principle established in the Armed Forces Pay Review Body, which has nine members, by suggesting that there should be no fewer than seven members and no more than nine. We believe that no fewer than five people should have served in the armed forces, two in non-commissioned ranks, so that there is representation across officers and non-commissioned ranks. There should be at least one beneficiary of the compensation scheme, for obvious reasons, and at least two who are expert in pension matters. We also suggest that two should concurrently be members of the Armed Forces Pay Review Body. That ties in with the fifth role that we foresee the body having, which is to liaise with the pay review body. Therefore, there would be some synergy, which we believe would be of merit. The final person would be the chairman appointed by the Secretary of State. We have no

wish to determine who that should be, but believe that it should be the Secretary of State's responsibility. We are happy to leave him with the duty to choose someone who he is content should serve in that role.

A body of seven to nine people with that sort of background would send a clear message to the armed forces that they are serious people who understand the business in which they are engaged, who have suffered, as they have been a beneficiary of the compensation scheme, and who are expert in pension matters. We would have a very colourful and useful body to advise the Secretary of State and speak up for the members of our armed forces.

As I said a moment ago, there is one difference in the two new clauses. Under new clause 4(8) we have suggested an additional duty whereby the trustees shall have a special duty

''to review and advise on the arrangements on the provision of competence independent advice to participants in the schemes and any predecessor schemes and for access to such advice.''

I do not want to trespass on items that we will come to under new clause 22, so I will do no more than say that, particularly in the circumstances where there are two schemes on offer for people to elect, we believe that the trustees would be in a position to provide very useful advice.

Photo of Paul Keetch Paul Keetch Shadow Secretary of State for Defence, Defence 3:45 pm, 10th February 2004

The hon. Gentleman will recall the speech by my hon. Friend the Member for South-East Cornwall (Mr. Breed) on Second Reading. Can I take it from new clause 4(8) and the point that he makes about the provision of independent advice, that the trustees body would license independent financial advisers in major garrison towns who could advise members of an existing scheme on whether to transfer to a new scheme? I would welcome that.

My constituents want to take advice on whether to transfer from the old to the new scheme when it is introduced. If I understand what the hon. Gentleman is saying, such trustees could license advisers in the major garrison towns to provide that advice.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

The hon. Gentleman makes an interesting observation, and he is foreshadowing remarks that I will make about new clause 22. The Minister will have heard his intervention and we will have a couple of weeks in which to mull over the matter. Government Members all have servicemen and women in their constituencies who will be faced with some serious choices, and I ask those hon. Members, where will service personnel go for advice? I will leave that thought hanging in the air for contemplation during the recess.

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

The hon. Gentleman knows what I am going to say. The Financial Services and Markets Act 2000 makes it very clear: one has to be licensed to provide financial advice. The Act was quite rightly introduced by the Government because of many issues that occurred in the previous 15 years in the finance sector—some of them aided by Government. That is why for individuals in the current scheme, it is about a choice of whether to transfer to a new scheme. We have to allow them to make that choice themselves.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I understand only too well the dilemma that those guys are going to face. The time to choose whether to transfer will suddenly hit, and they are going to wake up and realise that they have to make a choice. They will say, ''What the—am I going to do?'' They are not going to know. Where are they to go? Are they to go to the high street, to an independent financial adviser?

Photo of John Cryer John Cryer Labour, Hornchurch

As I mentioned in our last sitting but one, much of what Opposition Members have said—and I include the hon. Gentleman's comments in the past few minutes—leads to the conclusion that the members of the armed forces could do with membership of a trade union, or at least some form of federation. That would fulfil the dream of Ernie Bevin who, in 1945, wanted to recruit members of the armed forces into his own union, the Transport and General Workers Union—so he did have a vested interest. Membership of a trade union or federation would enable them to receive such advice from that source.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I am looking at the Minister to see how enthusiastically he is supporting the hon. Gentleman's intervention. The hon. Gentleman is a stalwart Member, who speaks up on the things about which he feels strongly, and I know that he feels strongly that trade union representation should be available in the armed forces. I happen to disagree with him. In view of what I have just been saying, I recognise that there is a need for some kind of solution to the problem. I do not believe that trade union membership would be the answer. We have found on too many occasions that groups of workers have faced a conflict of interest. The Fire Brigades Union strike recently is an example—the internecine warfare between the Fire Brigades Union and the retained firefighters. These are all issues from which one wants to insulate the armed forces.

Photo of Eric Joyce Eric Joyce Labour, Falkirk West

May I make a brief comment on that? In the armed forces, as the hon. Gentleman may well know, the professional bodies of which officers are members very often have comments on professional issues—engineering issues and so forth—which may have an impact on them and their professional lives. In a way, trade union membership would be a corollary to that. I suspect that the most potent reason for the issue not being raised as often as it could be by people such as my hon. Friend the Member for Hornchurch is that the trade unions themselves would rather not become involved, because it is a tricky issue. It has always been a difficult issue, for the trade union movement as much as for anyone else. While much of what the hon. Member for Aldershot said about representation is true, it is simply not practicable and, sadly, the trade union leadership itself has, time after time, shied away from the issue.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

The hon. Gentleman and the hon. Member for Hornchurch could have a very interesting debate between themselves on how they take this forward. However, I must say that the idea that an officer who is a member of the Institution of Mechanical Engineers is somehow subject to the same potential conflicts of interest as might be faced by a squaddie who is a member of some trade union of

the ilk of the Fire Brigades Union, or the one that Bob Crow runs, the RMT. There are enough old trade union hands on the other side to know exactly what I am talking about. They are perfectly aware of the difficulties that might arise. I am rather enjoying this, so I might continue, although I am not sure it is helpful.

Photo of Paul Keetch Paul Keetch Shadow Secretary of State for Defence, Defence

The discussion about trade unions is a red herring. Surely what the hon. Gentleman is suggesting is that the trustees of this body would give advice to servicemen on existing financial service advisers who have specialist knowledge in the existing and new parliamentary pensions schemes. Surely that is the point of his new clause, which I totally support. Whether trade unions would want to apply to the trustees to be able to give such advice would be up to the individual trade unions. More likely, it would be specialist firms of financial advisers, who already have close relationships with regiments in our constituencies.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I am grateful to the hon. Gentleman, because I think we are on the same wavelength on this. If the Government are intent on introducing this scheme—which, as we know, is not yet complete—with effect from April 2005, with a two-year transition period, there will be many people who will feel the need to take advice on what to do. Should they stick with the present scheme, or go into the new one?

We should remember the commitments to which our armed forces are being subjected. The average tour interval is down from 24 months to nine, and it can be as low as three, particularly for specialists units. I simply invite hon. Members to consider the practicalities. Let us leave the officers aside and consider only the junior warrant officers. They are the backbone of the armed forces, and a lot of squaddies will be coming up to them, saying, ''Tell me, Sarge, what am I supposed to do? I haven't a clue.'' There will be a lot of barrack-room advice. There will also be training and deployments. Will people have time to go off and see financial advisers in the high street? Will units be encouraged to make plans to bring in financial advisers to advise each individual serviceman? Let us be clear about this: every single serviceman and woman will face the choice of whether to stay in the existing scheme or move to the new one.

Mr. Caplin rose—

Mrs. Claire Curtis-Thomas (Crosby) (Lab) rose—

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

If the Minister will allow me, I will do the hon. Lady the courtesy of giving way to her first. I always believe in letting ladies go first.

Photo of Claire Curtis-Thomas Claire Curtis-Thomas Labour, Crosby

I have been listening intently to the hon. Gentleman, but I am beginning to wonder whether he thinks that people in the armed forces live on another planet. Over the past year, I have spent some time on the armed forces parliamentary scheme, and I have been immensely impressed by the way in which the Army and many of the other services have embraced information technology. Does the hon. Gentleman not agree that members of the armed services, wherever they are in the world, could use the internet to seek advice? If they have inquiries about their pensions or other financial matters, they will go

straight on to the net for advice, just as millions of other people do, and the Financial Services Authority will be there to answer their queries.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I thank the hon. Lady for that very constructive intervention. My late friend, Colonel Geoff Simmonds, had a lot to do with implementing the Army's IT system—sadly, he died of cancer last summer. He was keen to beat the drum for IT access for all units around the world. In that respect, the hon. Lady makes a good point, but there will still be practical difficulties, and it will not be sufficient for people simply to go on the net. Furthermore, the Minister has the role of an employer and therefore a duty of care towards his nearly 200,000 staff.

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

First, the hon. Gentleman mentioned the compensation culture. If I were to accept the principle suggested by him and by the hon. Member for Hereford that the MOD could license a body of trustees—let us call them that—to select people, the liability would, under the compensation culture, still land at the Ministry's door. I intend to resist that for reasons that were made clear this morning.

Secondly, as part of our preparations for the transition, we are obviously considering how to provide and facilitate access to independent financial advice. That is the responsibility of a good employer, which is what the Ministry is.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

As it happens, I agree on both counts. I have been considering what the hon. Member for Hereford said about giving a body of trustees the power to license financial advisers, and I have to say that I think the Minister is right that it would be tricky to go down that road.

I am encouraged that the Ministry, as an employer that owes a duty of care to its employees, is thinking carefully about the matter. That is why new clause 17 states:

''No new scheme shall be introduced under this Bill until April 2007''—

that is two years later than the Government propose, but it is not an unreasonable delay—

''or until such time as the representative trustees . . . shall have approved.''

Sitting suspended for a Division in the House.

On resuming—

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence) 4:18 pm, 10th February 2004

When we broke for the Division, I was dealing with new clause 17. I suggested that it would be beneficial for all parties concerned if we were to postpone implementation of the scheme

''until April 2007 or . . . such time as the representative trustees referred to''

in the appropriate section ''shall have approved.'' There would be merit in holding off a bit. I think that we all agree that advice needs to be obtained by those members of the armed forces who will continue to serve at the time that the new scheme comes in, and that waiting would be worth while.

The principal argument that I was seeking to advance was that we should have a group of representative trustees. It has been suggested to me by an anonymous source that, in trying to deal with the wording, ''pension advocates'' might be an idea. The Minister will be winding up soon, but I have the impression that he is not wholly hostile to my suggestion. I am sure that we can find some common ground. If he looks at the membership of the Armed Forces Pay Review Body, he will see that it has an international economist, a doctor and an asset manager—I think that that is what John Davies is. I looked up John Davies, and there are three, so I took a punt at which one it might be. I am trying to work out whether it is John Davies of the Insurance Information Institute or some other John Davies. We all know people whom we could trust to do an independent job, and a pensions advocate is in the spirit of what we are trying to do for our armed forces.

I return to the common ground that we want to ensure that our armed forces feel confident that their interests are being looked after. The Bill presents us with an opportunity to provide a system of independent oversight—it will be no more than oversight, although new clause 4 would require the Secretary to State to

''give notice to the Trustees of any modification in the schemes he is minded to make and shall invite the observations of the Trustees in respect of such proposed modification'',

which is not unreasonable. The extra confidence that it would give and the additional advice that would be available to Ministers would be valuable.

The Armed Forces Pay Review Body has worked well. It is respected all round, and that is as good a template as any on which the Minister could base a new representative body to act as a friend to the armed forces in respect of pensions and compensation.

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby

We are concerned here with the representation that beneficiaries of the pension scheme will have for their pensions. We discussed representation briefly and the idea that members of the armed forces should be allowed to join trade unions. I entirely disagree with that, because during operations there is chain of command and that is important. I am probably not the only person in the Room who is old enough to remember the National Union of Seamen's strike in 1966, which was considered by the then Labour Government to be a threat to national security, as it was, because so much was imported by sea, as it still is. Ports were picketed, and that led the then Prime Minister, Harold Wilson, to refer to

''a small group of politically motivated men'',

which happened to include the current Deputy Prime Minister. Be that as it may, it would be wrong to have representation from trade unions.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I cannot allow history to be adjusted in that way. It was

''a tightly knit group of politically motivated people''.

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby

I am grateful to my hon. Friend, and acknowledge his correction.

It is inconceivable that discipline can run well during operations if advice is being taken from a trade union representative, political commissar or whomsoever it may be. However, that is entirely different from looking after the interests of people's pensions, whether they are in the future or are already being paid. I know what the Minister will say: that the chain of command represents all those in the chain of command, senior officers do a magnificent job looking after the pensions of people in the armed forces, and they approve of everything in the Bill. I am sure that the he will say that—or perhaps not.

Having served in the armed forces—I am sorry that the hon. Member for Falkirk, West (Mr. Joyce) is leaving, because I was just going to mention him—I know that there are some excellent senior officers. The way in which senior officers generally look after the interests of those in the chain of command is first class. It has to be said that in peacetime, senior officers consider their own careers of greater importance than the interests of those beneath them. As a middle-ranking officer, I fell out consistently with senior officers—rather like the leadership of the Conservative party—and I know that the hon. Gentleman similarly fell out with the chain of command when he was an officer.

Whatever the rights or wrongs of both groups of people, the truth is that the chain of command does not always represent the needs and interests of those junior servicemen as it might. That is not an enormous criticism, just a statement of fact. I welcome the proposal of my hon. Friend the Member for Aldershot because the composition of the board of trustees would give a particular focus to those who would look after the interests of people's pensions while they are serving and after they have retired. I do not necessarily think that the current senior officers in the Army will always do so. I am sure that they do their best, but I am not sure that it is their particular focus.

Trustees would be appointed, including those who have served as non-commissioned ranks, who would focus on the good of those who are in receipt or will be in receipt of a pension. That is an important principle, which will have a lot of resonance with all parties in the House, and I think that the Minister will have some sympathy with it. I look forward to hearing him address that point.

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

We have discussed already the technical inaccuracy of the word ''trustees''. On that basis, on behalf of the Government, I intend to ensure that the amendment cannot proceed further. I am sure that Committee members will understand that.

I was interested to hear the debate developing—not on the subject of trade unionism, on which I share the view of the hon. Member for Hereford when he said that it is rather a red herring, but on the subject of this body of people. ''Pension advocates'' is the latest terminology that we have been offered this afternoon. That is the third piece of terminology in two hours.

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

I anticipate that. The hon. Gentleman suggested an idea of how the committee could be developed. The Nolan rules on the selection of

committees, which ensure that any committee clearly follows the rules, would be absolutely relevant to the Armed Forces Pay Review Body.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I cannot see that the Nolan rules would have any adverse effect on selecting a group of people who would be more than qualified to do this job.

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

In the example that the hon. Gentleman gave, he specified that a certain number would have to come from this background or that background. The Nolan rules move away from that and require the selection of the best people to serve on certain boards depending on their experience at the time. As an example, one could not say, as he did, that five of the nine members must be serving officers.

I want to repeat the important point that I made about the Financial Services and Markets Act 2000, on which we have some consensus. It would not be possible for the Ministry of Defence to ''license'' the trustees, as has been suggested, because it would still leave a significant liability. We are certainly looking at how we facilitate the issue of independent financial advice. I have no doubt that we will come on to that, as issues about communications and transition will arise later in the proceedings.

The pension scheme is administered at RAF Innsworth. I have visited the staff there and I think that they do a good job, which deserves our congratulations. It is always difficult to be a pension scheme adminstrator in any walk of life, but I was impressed when I met those staff a few months ago.

I recognise the intent behind the amendment and the new clauses. The Select Committee on Defence made a similar point in its recent report, showing concern about such issues. I hope that the hon. Gentleman will withdraw the amendment, as I think that we accept that it is legally and technically incorrect on the basis of what a pension trustee actually is in legal terms.

On Second Reading, my right hon. Friend the Secretary of State made it absolutely clear that it is a long-established practice that the interests of service personnel are represented by the chain of command, as the hon. Member for Blaby (Mr. Robathan) said. That is true, particularly of the three principal personnel officers who, in ministerial terms, are responsible to me for the personnel policies that we undertake. They have been closely involved in the development of all parts of the pension and compensation arrangements. The matter has not been dealt with in a vacuum at the Ministry of Defence—far from it.

We have been criticised by the Select Committee and others for taking too long over the consultation. If one is going to consult and do so properly, such things take time. We have involved a lot of people in the consultations, and they have had a direct impact on the shape of the scheme. I accept, as we come to the conclusion of clause 1, that it is a very important clause.

We have worked with the ex-service organisations and we continue to do so. I am more than happy to do

that. Only last week in Committee, I said not only that we would send information on the early departure plan to all members of the Committee but that we had made it available to the Forces Pension Society, the British Legion and the War Widows Association. We have also actively discussed the arrangements with the Confederation of British Service and Ex-service Organisations, the British Limbless Ex-Servicemen's Association and Combat Stress, as well as the British Legion, on a regular basis. Overall, their views on the issue have been taken in to account.

The amendment and new clauses are technically flawed. I certainly recognise that it has been worth our while to debate the intent behind them, but I have to come to the conclusion that the Committee should reject them.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence) 4:30 pm, 10th February 2004

First, we accept the technical deficiencies in our proposals. I am slightly disappointed that the Minister has made no concession at all to the argument; indeed he has fallen back on the chain of command to support his case. Frankly, if the chain of command was that good, there would be no need for the Armed Forces Pay Review Body. As the body is not only accepted but welcomed, mutatis mutandis, as the lawyers say, it seems that the same ought to apply to the pension and compensation arrangements.

I am in two minds over whether to press the amendment now or to recognise the intrinsically defective nature of the proposal, seek leave to withdraw the amendment and introduce something else on Report. Would the Minister be interested in introducing some proposals on Report, or does he reject the idea out of hand? I suspect that the Ministry will not budge, but some comment would be helpful.

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

Perhaps I can help. I said that I recognised the intent behind the amendment. I cannot give a commitment on anything further, but if the hon. Gentleman wants to continue pursuing the matter, there is clearly an area of discussion that can be had, although I am not giving a hint about how that might end on Report and Third Reading.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

That tortuous language was extremely helpful—it sounded a bit like an episode of ''Yes, Minister''. I appreciate that there are constraints under which the Minister must operate. As a parenthesis, I do not know if you saw ''Yes, Minister'' the other night, Mr. O'Brien, but it was a wonderful series, well worth watching, and showed how admirably the system of government works. I think that the Minister's language shows that he is sympathetic to the idea.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

Yes, if my hon. Friend is about to give me some useful advice.

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby

I do not think that that anyone genuinely doubts the good faith of the Minister on this occasion, although one sometimes doubts the Government's good faith, nor does anyone doubt the good faith of the staff officers to whom reference has

been made. However, who will look after the interests of the beneficiaries of the pension schemes, be they pension advocates or whosoever, is an important question. It is quite easy to say, ''Well, perhaps we won't increase quite as much as we might there, because we need money to spend on other things.'' That is revealed by the cost-neutral nature of the Bill.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

My hon. Friend makes a good point. However, I do not want to close whatever slight avenue remains open for exploration. I should like the Minister to go away and think about the issue. On the ground that I shall raise the matter on Report, I am prepared to recommend to my hon. Friends that we not press the amendment.

I am not sure whether we can vote on new clause 17 now. Perhaps you could give some technical guidance, Mr. O'Brien.

Photo of Mr Bill O'Brien Mr Bill O'Brien Labour, Normanton

We shall be voting on the new clause when we get to the relevant point.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I am minded to stick to a determination to press new clause 17 at the appropriate moment, for all the reasons that I have given. It would delay the coming into force of the new schemes until April 2007.

After this sitting, I should like the Minister to consider the fact that serious issues are as yet unresolved. There are discussions to be had, whether through the chain of command, through the internet, as the hon. Member for Crosby has suggested, or through an independent financial adviser. There are lots of issues, but the Government are trying to cram too much into too small a period, particularly given the extensive operations that our armed forces are currently undertaking.

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

I am between a rock and a hard place. On the one hand, the Defence Committee and others, including the hon. Gentleman, criticise my Ministry for taking too long. I think that he said today that the process had taken longer than the second world war. On the other hand, he suggests that we delay the scheme for another two years. As we are debating a new scheme for new entrants in 2005, another two years' delay would not be helpful.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I see the Minister's point, but the date when the new scheme kicks in determines the window of choice available to today's servicemen and women. If the scheme kicks in next April, they have a restricted period in which to make their choice. We shall see how things go on Report. When the Bill returns from the other place, if changes have been made to it there, we shall be further down the track, as they say. We will be able to see what progress has been made on the detail of the Bill and on giving advice to servicemen, and we shall be in a better position to judge. There is also an argument there that I am prepared to accept, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the

Question, pursuant to Standing Orders Nos. 68 and 89, That the clause stand part of the Bill.

Question agreed to.

Clause 1 ordered to stand part of the Bill.

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

On a point of order, Mr. O'Brien. You seemingly missed the fact that I wanted to make one brief comment on clause 1 stand part, which I think I have now missed the chance to do.

Photo of Mr Bill O'Brien Mr Bill O'Brien Labour, Normanton

We have been discussing clause 1 since the start of the Committee, and I believe that we have covered everything that we can. Therefore, I am using the Chairman's prerogative.