New clause 27 - Extension of benefits to members of

Armed Forces (Pensions and Compensation) Bill – in a Public Bill Committee at 11:00 am on 26th February 2004.

Alert me about debates like this

'Within one year of the coming into force of this Act, the Secretary of State shall by regulations extend the benefits of the Armed Forces Pension Scheme to members of the reserve forces.'.—[Mr. Swayne.]

Brought up, and read the First time.

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

I beg to move, That the clause be read a Second time.

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend

With this it will be convenient to discuss new clause 29—Compensation arrangements for reservists—

'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 shall not be abated.'.

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

New clause 27 would place a duty on the Minister to extend the benefits of the scheme to reserve forces within one year. As a member of the reserve forces, I clearly have an interest to declare, although I must say that I had never given a second thought to the matter, probably because I was a contributor to the teachers' pension scheme, and then to the Royal Bank scheme. Then, I found our own scheme so attractive that I paid the amounts accrued to those schemes into ours when I came to the House. I have been able to tidy away my pension arrangements, paying almost 10 per cent. of my income into it. However, we have to be careful about the requirements and needs of those people who are not so generously provided for.

I intervened during the Secretary of State's speech on Second Reading on the question of pension entitlement for reservists. I was going to leave it at that, but I received representations of such force that I tabled the new clause. Many people feel very strongly about the issue. Reservists' pay is abated in the same way as that of the regular forces, but they do not have the benefit that arises from that abatement. It is true that when a reservist is mobilised, the Ministry of Defence makes the payments to their own contributory pension scheme. I do not see that as an issue at all. My concern is for those people who do not have pension schemes to contribute to, and those who are unemployed, who typically tend to serve a larger number of days as a result.

Typically, in my career as a member of the Territorial Army I have served between 30 and 35 to 40 days—that is, about a month—a year. However, paragraph 3.3 in essay No. 3, supporting the recent White Paper, which is on developing the reserves, says:

''This policy sees the Reserves providing an integrated, ready and capable component of Defence, capable of being mobilised for any type and scale of operation.''

Low-intensity peace support operations might imply a much more frequent use of reservists. That provides an opportunity for the Ministry to introduce the means by which those who do not have pension arrangements can be included in the armed forces pension scheme arrangements. It is only equitable that that should be so.

In his response to my intervention, the Secretary of State said, ''Well, yes, we've looked at this, and the amounts involved are just so small as not to make it worth while.'' I wonder whether the Minister can give the Committee some illustrative figures—or write to us if he is not able to do so today—showing what that would imply. Although my service has typically been some 35 to 40 days a year, there will be many members of the reserve forces who will typically have served between 60 and 100 days a year, which is rather more substantial. It would be interesting to hear what that would imply.

There is a minority of serial mobilisers who want to go on operations whenever they get the opportunity, and those people are now likely to serve a much larger number of days. It would be wrong not to examine thoroughly what that implies. An illustrative figure would be very helpful for the Committee, perhaps as a tool for Report.

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

I offer a quick echo of my hon. Friend's eloquent words. Such a scheme exists for the American national guard, and now that the Government are moving in the direction of the national guard in so many other areas—in mobilisation policy and so on—I counsel the Minister, who I know is well disposed towards reserve forces, and takes considerable personal interest in them, to look at what the national guard does. It has an inexpensive scheme because it has one absolute rule, which is, from memory, that nobody gets a penny if they serve for less than 20 years.

The vast majority of people who go through the national guard get no benefit from it. However, it provides a degree of benefit for the small proportion of people who are the absolute heart of any reservist unit and who serve for long periods. It is calculated on the basis of their total number of serving days during their total accrued service. It involves some detailed record keeping, but in the era of the computer that should not be a huge problem.

It is not expensive and it is for that small proportion of people who really make the reserve forces tick. They are not so much the serial mobilisers, who get pension rights when they are mobilised, but the people who go all the way up through the ranks. One friend of mine who served for 30 years ended up as a company commander, having started as a private. Another example would be the man who commands his regiment having started as a young officer and gone up through the officer ranks. Those people who may be mobilised only once or even not at all in their long service benefit, and it is a relatively inexpensive scheme.

I want now to focus on new clause 29. I hope that the Committee will bear with me if I tell two brief stories from my reserve service. Approximately 25 years ago, on a road in Norfolk, an 18-year-old soldier who was serving under me was struck on a night patrol by an extremely drunk driver, who was subsequently successfully prosecuted by the police. The soldier's left leg was fractured in a large number of places and he was off work for a long time while he made his recovery. The first thing that happened was that we had a charming phone call from his employer. He wanted to be sure that he was looked after in the best possible way and said that on top of whatever the Army gave him he would make him a generous payment.

When we looked into the rules, we discovered that under the system that the Ministry was then operating everything that his employer gave him would be deducted, pound for pound, from the Territorial Army pay to which he was entitled while he was serving. In other words, the employer either carried the whole burden or paid nothing at all. That young man's military equivalent rank payment was roughly what

his employer would have paid him, so his employer reluctantly backed off and left it to the Army. That was not good for relations with employers.

The much more serious case happened by sheer chance when I was serving with the home service force when we were just about to make our first deployment for a generation of substantial numbers of Territorials in the first Gulf war in 1990. This was a much more typical situation. It involved a reservist who was much older than his regular counterparts and was therefore on a much higher civilian salary than they were. He was nearly 50 and a deputy factory manager serving as a lance corporal. He fell off an assault course and broke his arm. He was off work for three or four months.

His employers tried to do exactly what the other employer tried to do. They said that they could not pay him the full rate but would give him his basic salary without the overtime to which he would normally be entitled and the Army could make up the difference. Not a bit of it: under the abatement rules, the MOD paid him nothing. He did not get a penny. A few months later, with the assistance of the now Secretary of State for Health, who was then shadow Secretary of State for Defence, we held an Adjournment debate, which was the last debate before the Christmas recess. Together with three or four colleagues, we stayed behind to press the Conservative Government on this matter. We got the rule changed.

The TA regulations currently state:

''With effect from 1 July 1991,''—

it took a few months to get this through—

''all payments from public bodies and corporations (including DSS Disability Allowance or War Disability Pension received in respect of the same injury or illness) will be deducted from Reserve Forces Disability Allowance, but not payments funded by private employers.''

We all accept that someone in the reserve forces who is already a Government employee—for example, a civil servant or a state school teacher—can receive only the higher of the two rates and not both. However, the Government's proposal is that we return to the abatement of the pre-July 1991 arrangements.

I do not wish to insult my hon. Friend the Member for New Forest, West, but as a major of 47 he is older than the average major in the Regular Army. Most Territorials and other reservists who are mobilised are older than their civilian counterparts, so they are often on a higher rate of entitlement. It is not even a question of the individual receiving both rates: the civilian employer cannot even top it up to the civilian rate because that extra will be deducted pound for pound in abatement from the military rate. We return to the same problem: either the employer or the individual's pension fund carries the whole burden and the Ministry pays nothing, or the employee receives the lower rate.

I know that the Minister is well disposed towards reserve forces and takes considerable interest in them. The issue cannot be about funding, because we are

dealing with a tiny number of cases. I cannot believe that employers will welcome the measure, in fact I am certain that most, if not all, know nothing about it. It is grossly unfair on reservists. Given that reservists get no benefit, as my hon. Friend said, from the abatement that they are paying, to deny them even this entitlement is extraordinary. A small group of us worked hard with the co-operation of the now Health Secretary to change that 13 years ago, and I urge the Minister not to change it back.

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

First, on reserve matters, I am sure that the Committee will want to welcome the appointment of the new Assistant Chief of Defence Staff (Reserves and Cadets), the Duke of Westminster. That appointment is more than deserved; he and I were at Chilwell last week, and I was pleased to make that announcement.

The hon. Gentleman has been most kind in his comments on my support for reservists.

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

I was waiting to see the appointment announced in the London Gazette but was told that it was still under wraps. I congratulate the Minister not only on choosing an excellent individual but on making an appointment for which many members of the reserve forces have been calling for years. It was outrageous that we were the only major English-speaking country without such an appointment, and I congratulate him on grasping the nettle.

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

I am grateful for that endorsement, although I am aware that it has nothing to do with new clauses 27 or 29. It is an important appointment for our reserve forces. The appointment is public knowledge and is effective from 1 April. I know from responses from reservists that they value the appointment.

I strongly welcome the role of our reserve forces. The hon. Member for New Forest, West raised the issue of the essay, and this is the first time that we have had a singular essay on the reserve forces in a White Paper and have made clear the role that they will play. They are more deployable now than they were 10 years ago. They are a skilled outfit and we must ensure that we continue supporting them.

On new clause 27, volunteer reserve service is shorter than the hon. Member for New Forest, West suggested: according to our figures, the average is 29 days a year. That would produce a small pension under any occupational pension scheme such as the armed forces pension scheme. When volunteers are called up, as the hon. Gentleman acknowledges, to meet any mobilisation, they are entitled to have the employer cost element of their occupational or personal pension met by the Ministry of Defence.

The hon. Gentleman was concerned about what will happen if the volunteers do not have any form of pension. We must, and do, encourage people to have their own personal pension if they do not have an occupational pension. If they have a personal pension,

the same criteria for payment of that provision during their mobilisation will apply.

Members of the Volunteer Reserve are eligible for compensation by the Ministry of Defence for injuries caused or aggravated by, or deaths caused by, armed forces service, whether during call-out or while undertaking voluntary training duties. That system guarantees minimum compensation equivalent to that available to a regular of the same rank, and works by topping up any provision from other personal or occupational schemes. Members on full or part-time reserve commitments are pensionable under the current pension scheme, and it is intended that their future pension provisions will be similar to the new armed forces pension scheme that we are discussing.

The hon. Member for Canterbury (Mr. Brazier) raised the matter of the US regular guard. If my memory serves me right, I believe that the scheme for the regular guard in the US is separate from the main pension scheme for the US armed forces, so the situation is slightly different.

With regard to new clause 29, the compensation scheme as it applies to regular service personnel will abate any guaranteed income stream by the income paid under the pension or early departure scheme. That is because it is a loss-of-earnings payment, and without abatement would mean double compensation, which no one has ever supported. The current Reserve Forces (Attributable Benefits Etc.) Regulations 2001 provide attributable benefits as a minimum income guarantee to the level of attributable benefits paid to regulars. That approach will be adopted in the new compensation scheme.

Photo of Julian Brazier Julian Brazier Shadow Minister (Foreign and Commonwealth Affairs) 11:15 am, 26th February 2004

I have just read out—I think that the Minister was talking to one of his colleagues when I read it—the passage from the reserve forces regulations. In July 1991, we changed that so that it was not abated. The Minister said that it would be a minimum amount equivalent to the regular level. However, the point is that the abatement means that a person cannot receive more than the regular level unless the employer carries the whole balance. Given that most reservists are older than their military counterparts, and are therefore likely to be on a higher salary level, that means that the employer is either faced with picking up the whole bill or seeing the person go through at a lower level. I gave an example of a deputy warehouse manager, who was on two and a half times his lance-corporal salary. In that, case the employer picked up the whole bill and the Ministry paid nothing.

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

I shall clarify that matter. Under the new scheme, the income stream would be abated, but the lump sum would not, which has considerable value to some individuals. My understanding is that if the new clause were adopted, reservists who were injured would receive a greater overall compensation package than regulars, because the package would be made up of compensation scheme benefits and other occupational benefits. That would be unacceptable.

Mr. Brazier rose—

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

I must get on, because time is pressing and we have already had a reasonable debate on the matter.

The scheme will ensure that if a reservist has no cover from his civilian life, payments will be made in full without abatement, but if other benefits are paid for the same condition from arrangements such as occupational or personal pensions, it is reasonable that the award from the armed forces compensation scheme guaranteed income stream should be abated.

I recognise that, since 1991, war pensions paid to reservists have not been abated—the hon. Gentleman rightly made that point. Under the new scheme, in the case of injury, there will similarly be no abatement of the lump sum award and the pain and suffering awards because of personal or occupational scheme provisions. Those awards are particularly valuable in cases of serious disablement. That may not take into account all the criteria that he mentioned, but our compensation arrangements are fair and ensure that those who are most disabled receive the support and benefit that they want.

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

The Minister has still not responded to my central point: that most reservists are older than their military counterparts. He said that it is unacceptable for reservists to get a higher rate than their military counterparts, but we want people in their late 40s and early 50s, as many reservists are, to come back and do jobs that are done by people in the Regular Army who are in their 30s. Of course many reservists are on higher civilian rates, but they get the higher rate now only if the employer pays the whole lot and the Ministry of Defence makes no contribution. To whom is it unacceptable that they should get the higher rate?

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

The hon. Gentleman is picking up an individual case, which is regrettable. The 1991 provision applies only to war pension scheme pensions, not to occupational pensions paid under the armed forces pension scheme that we are debating. The proposed pension and compensation scheme arrangements would not be enhanced by new clauses 27 and 29, which I hope would not find favour with my hon. Friends.

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

The Minister has come up with an interesting idea with respect to personal pension plans, which merits further consideration, possibly on Report.

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

I am disappointed by the Minister's response and I urge him to think further about the matter. I know that he is well disposed towards reserve forces, but I do not think he has been fully briefed. I hope we will return to the issue on Report, or in another place.

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend

I must tell the Committee that there are three minutes of the proceedings left. As Chair, I can invoke Standing Order No. 88(2)(i) to allow the debate to continue for 15 minutes, provided that we

can complete all the business. I will use the high-risk strategy of invoking that measure.

Question proposed, That the Chairman do report the Bill, as amended, to the House.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

On a point of order, Mr. Griffiths. I thank you for agreeing to extend the sitting by 15 minutes, which will be to the benefit of all members of the Committee if it enables us to conclude our proceedings this morning. I am happy to concur with your decision. In the circumstances, I did not move new clause 30, which I hope I may return to on Report.

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

Further to that point of order, Mr. Griffiths. I do not need to respond in detail and I shall save my remarks on new clause 30 for another day. As our proceedings are drawing to a conclusion, I pay tribute to hon. Members on both sides of the Committee for the way in which they have dealt with the rigours of our debates in the past few weeks. In particular, I thank you, Mr. Griffiths, and your fellow Chairman, Mr. O'Brien, for keeping us in order. I look forward to discussing the Bill on Report.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

Further to that point of order, Mr. Griffiths. I thank you for having chaired the Committee so well. Through you, may I extend the thanks of the entire Committee to Mr. O'Brien for sharing the work as Chairman? This is a job share, which is not a Labour Government scheme, but it has enabled you both to share the pleasure of listening to our discussions on important matters relating to the armed forces. I thank all members of the Committee who have contributed. My hon. Friends have been particularly helpful in making valuable contributions, but I also thank Government Members, who made some helpful—albeit infrequent—contributions that informed our debate. Whether they helped to fashion a better Bill is another question. I fear that they were not able to do so, any more than the Opposition were.

Although we extensively debated a number of critical issues that will affect the choice made by our armed forces about whether to stay within the existing scheme or move to the new scheme, it is an enabling Bill and we were unable to add anything to it. It still suffers from the overall deficiency to which the Defence Committee drew attention and about which it was very angry: there is a lack of detail in the Bill, and when the Government place before the House the orders implementing the schemes, they will be debated for a maximum of one and a half hours. Given the extensive issues that all of us accept are implicit in the arrangements, that remains a disappointment.

It also remains the case that the Bill is not an altruistic measure designed to produce the very best for our armed forces. Of course, it is designed to produce the best, but within the constraints of cost-neutrality. The result is that although there are some welcome improvements to the current schemes, they will nevertheless be paid for by a reduction in benefits elsewhere. That will be felt most notably by those who

leave early, by electing or being required to leave the armed forces at the early departure point. They will be far less well-off than under the current immediate pension scheme. An early test of how successful the Government are will be how many people decide to opt for the improved death-in-service benefits available under the new scheme with the substantially reduced benefits of early departure. The full effect of replacing the immediate pension with the early departure payment scheme will not be felt for many years to come, so we cannot foresee what effect the principal change brought about by the change will have on retention of and manning in our armed forces.

On compensation, substantial disagreements remain about changing the burden of proof and the limitation of time. Those issues have not gone away. The Minister did not allay during our proceedings concerns expressed by others outside, such as the Royal British Legion, but we shall reflect over the next few days or weeks before the Bill is considered on Report on the Floor of the House. When—

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend 11:30 am, 26th February 2004

Order. The purpose of final proceedings is not to go over points of outstanding concern. They can be briefly alluded to, but not in the extended way in which we are debating now. I ask the hon. Gentleman to wind up his remarks.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

I am grateful to you, Mr. Griffiths, and I was proposing to do precisely that. I merely wanted to encompass what has happened in the past few weeks, and to report on what we on the Conservative Benches feel about the progress made. I should also like to thank Government Members for their contributions. I should like, finally, to say to the Minister and the rest of the Committee, that there is still huge doubt—it was expressed by hon. Members of all parties—about transitional arrangements. The Minister has a huge amount of work to do on that.

If you will allow me, Mr. Griffiths, I should like to quote from an email that I received from somebody in the Royal Navy who read the report of our proceedings on 22 January. He said that

''the Hansard report . . . fills me with even more horror. Apart from the fact that it confirms my worst fears I am finding it impossible to get a satisfactory explanation (at the moment) from any corner of the Navy.''

The Minister gave us today that helpful document, and we look forward to reading and judging it in due course.

These have been useful proceedings, and I hope that they will spark a wider public debate, will draw attention to the changes made by the Government, and will be noted by the other place when the Bill proceeds there. Thank you, Mr. Griffiths, for chairing our proceedings so well.

Question put and agreed to.

Bill, as amended, to be reported.

Committee rose at twenty-nine minutes to Twelve o'clock.