Veterans’ Pensions: 16th March 2015

The Minister of State, Ministry of Defence (Anna Soubry)
It is a pleasure to serve under your chairmanship for the first time, Mr Davies. I thank you for the way in which you have chaired this extremely short but nevertheless important debate. I congratulate the hon. Member for North Ayrshire and Arran (Katy Clark) on securing this debate and on raising this important matter. It is only right and fair that I, too, begin by honouring the great debt that we all owe to all those who have served and, indeed, their families.

Through the covenant, the Government have set up a way of recognising the unique service made by all those who served in the past and those who continue to serve. Many of them would have been unable to serve without ​the support of their families, which we also recognise. In short, all those who serve are prepared to make the ultimate sacrifice of laying down their life on behalf of their country. It is right and fair that we have the covenant because it recognises the particular contribution, service and sacrifice made by all those who serve.

It is timely that I remind everyone of what the covenant actually confers in law. The covenant states that there should be “no disadvantage” for anyone who has served or is serving, which extends to their families—their fathers and mothers, their sons and daughters—by virtue of their service. The second part of the covenant states that, in certain circumstances, most notably for those who have been bereaved or who have been particularly seriously injured—there is the caveat that clinical need must always take precedence—the covenant may confer an advantage because of the sacrifice that that individual or his or her family have made and suffered accordingly.

As the hon. Member for Wrexham (Ian Lucas) agrees, it is important to recognise the principle of non-retrospection. In short, departing from that principle would break the long-standing and essential principle of public service pensions policy, and it would lead to widespread, long-term and unmanageable consequences for both this Government and future Governments. As he said, retrospection would cause not only legal difficulties but enormous financial difficulties. The principle of non-retrospection means that no retrospective improvement can be made to pension benefits for those who are no longer active members of a pension scheme. That principle has been upheld by successive Governments, and I am confident he is saying that, should there be a Labour Government or a Labour-led Government after 7 May, the principle would remain intact and there would be no retrospection. For this particular group of people who have served, the principle has been repeatedly tested and supported by court decisions at all levels. It is a principle that we must defend, for three good, solid reasons.

First, breaking the principle would open the floodgates for a raft of unaffordable claims from across the public sector. As we know, before the Social Security Act 1973, there was no entitlement to a preserved pension for any public servant; members of the armed forces were treated exactly the same as anyone else in the public sector. If someone had not served the necessary length of time and reached the right age, whatever their job was and whether they were in the armed forces or not, they were not entitled to a pension. Thus, any change for the armed forces would be used as a precedent for other groups to benefit. Despite the great service of all those who have served and despite their willingness to lay down their lives for their country, the cry would go up, “If we do it for them, why not for everybody else?”

An interesting comment was made—I think Members on both sides of this House would agree—that it is astonishing to look back at how workers were treated. My own mother worked as a radiotherapist, although not in the armed forces. She worked in the NHS, and for part of her working life she was paid less than a man doing exactly the same job. At the time, eyebrows were not even raised. Now, of course, we find it astonishing that someone should receive less money for doing the ​same work, for no other reason than that they are a woman. Likewise, when we look back at the pension policies of the past, we all raise our eyebrows in shock that members of the armed forces had to serve 16 years as an officer or 22 years as a non-commissioned member before they could receive a pension. It was the same in other public sector jobs; people had to work long stretches before they got a penny piece.

Katy Clark
Does the Minister not accept that the position of the armed services is unique, and that their relationship with the state is unique? Does she not therefore think that if an injustice has been recognised, her Government should be doing what they can to recognise the contribution of the armed services in the way that I described when I presented the petition?

Anna Soubry
The difficulty is that although the hon. Lady takes the view that there has been an injustice, I do not think her party takes that view. I think that we all take the view that an unfortunate set of circumstances prevailed right across the public sector. In considering the “no disadvantage” principle in the covenant, we would have to consider whether that particular group of people have suffered a disadvantage by virtue of their service. I am afraid that the answer comes back that they have not suffered any disadvantage by virtue of their service relative to any other members of the public sector, because effectively the same set of rules worked across the sector. Of course, should her own party come into Government, it will not go behind the principle of no retrospection—it has not done so in the past—so it is not proposing anything special in the way of legislation for the armed forces over and above any other part of the public sector. It is important that that point is made clear.

I will come to the money, but although no cost estimate has been made, given the number of former public sector employees who would be affected—if it were done for one group, it would have to be done for all—it would run to tens of billions of pounds. It would cost an astonishing amount of money. Even if an objective argument could be made to limit provision to the armed forces, and I am not convinced that it could be, it would still cost defence several billion pounds, which we know we simply do not have. The second reason why we cannot do it is that breaking the principle would prevent future Governments from making any further meaningful improvements to existing pensions, because the prospect of extending those benefits to former as well as current employees would simply be untenable.

Thirdly and perhaps more prosaically, it is a question of practicality. On top of prohibitively large costs, breaking the principle would entail a raft of potentially insuperable practical, administrative and legal problems. For example, it would require creating precise service and pay records and calculating pension awards for people who served up to 50 years ago, or for their surviving dependants. Furthermore, creating a modernised but retrospective entitlement now would in all likelihood involve revisiting the pensions already awarded to those who met the criteria for getting a pension at the time.

Having spoken of the practical imperatives at play, I now turn to our moral and legal obligations under the covenant—

Katy Clark
The Minister says that she has addressed the practical issues, but she has presented responses to a range of scenarios that I did not put to her. I asked her to come forward with proposals for recognising this group, yet she seems to have failed to do so. Surely that is the practical proposal that she should be making. It is not as though the Government have not been asked previously. They have been asked in writing on many occasions.

Anna Soubry
I am grateful to the hon. Lady for that intervention, but I have not finished my speech. I am explaining why. She may take the view that it need not be done retrospectively; she may and does take the view—I think that it is the view of the Opposition—that there should be some special arrangement involving application to the LIBOR fund. I will come to that, but there are others who do not share her view, and who do not take the view that an individual should have to go cap in hand to a Government fund. Some argue that it should be done retrospectively, so it is only right and fair, given the terms of the debate, that I respond to their arguments as well as to the arguments quite properly advanced by the hon. Lady, as I shall do in due course.

I have dealt with the covenant and what it does. The two key principles are no disadvantage and, in some instances, an advantage. This is why I do not believe the covenant applies to that group of our former servicemen and women. Before the Social Security Act 1973, there was no entitlement to a preserved pension for any public servant. Officers in the armed forces who had not served for 16 years from the age of 21, and soldiers who had not served for 22 years from the age of 18, were not entitled to a pension.

As I said, it sounds astonishing, but those were the rules then. They are stringent terms compared with today’s status quo, but although it sounds perverse, they compared favourably with other public sector schemes at that time; they were not that onerous. A civil servant, for instance, had to serve for at least 10 years and be over 50 to be eligible for a pension. Furthermore, members of the armed forces had access to other benefits. Although it did not constitute a pension, officers leaving after nine years and other ranks leaving after 12 years qualified for a gratuity to ease their transition from service to civilian life. Additionally, veterans who suffered illness or injury as a result of their service were entitled to what was called a war pension, although I am not sure that “pension” was ever the right word. It matters not—the point is that they were rightly and properly entitled to a sum of money that they received for life, no matter how long they had served.

One common misunderstanding is that the veterans we are discussing today somehow paid for their pensions but never received them. That is not right. Armed forces pensions are non-contributory. That was true of the armed forces pension scheme 75 and remains so for our new scheme, which will be introduced later this year. The Armed Forces Pay Review Body takes the pension provision into account as one of a range of factors when considering broad pay comparability for the armed forces, but armed forces pay is not abated as a direct consequence.

Taking into account all of the above, I think that it is clear that in terms of preserved pensions, members of the armed forces who left before 1975 were not ​disadvantaged compared with other groups of the time. So there is no case to answer under the terms of the armed forces covenant.

That said, the hon. Lady can rest assured that where we find clear disadvantage, we act. Of course, a recent high-profile example of that was the issue of pensions for life for surviving spouses and civil partners of personnel—a subject that she, like Members from all parties, has shown considerable interest in and campaigned on for many years. In that case, given the unique nature of service life, the widow or widower would have been prevented from earning an occupational pension of their own, which would have put them at a distinct disadvantage when compared with the rest of society. It has to be said that we are talking primarily about women, especially with regard to that generation. Service life meant that they married not only the man, but whichever part of the armed forces he served in, and often followed them around the world. They went from place to place. It was just often the way that they did not have a job of their own, and therefore were not able to build up their own pension pot or contribute to any pension scheme. We rightly identified that as a clear distinction that put them at a clear disadvantage, compared with others.

Consequently, from 1 April this year, all war pension scheme and AFPS75 widows and widowers will be able to retain their partner’s pension for life, and rightly so. That is one of the great achievements of this Government.

Jason McCartney (Colne Valley) (Con)
I must declare an interest: I have a preserved pension, having served in the Royal Air Force as an officer.

I commend the Government for the work they have done on war widows’ pensions. However, on veterans’ pensions, the Minister talked about the billions of pounds that a change to the system could cost. Have actual costs been calculated, and are there any firm proposals about giving some kind of due acceptance and acknowledgement of the service that these veterans gave to our nation, at home and abroad, pre-1975?

Anna Soubry
I am grateful to my hon. Friend for his intervention. I hope that he will forgive me; I had not realised that he had served in the RAF, and under a scheme that means he receives no pension because of the rule that pertained at that time.

My officials will provide me with any details during this debate, but it is my understanding that no costings have been made for the proposed change. However, I said earlier that we believe that it would require an astonishing amount of money; some say that up to billions of pounds would have to be found if we were to set up any new scheme. [Interruption.] I am right that there is no firm figure, but it is thought that it would cost billions of pounds if we were to make good on this—if I can use that expression—in the way that my hon. Friend, and indeed the hon. Member for North Ayrshire and Arran, have suggested.

Let us now look at the idea that is being advanced of using LIBOR funding, so that people can apply directly. A lot of money has been recovered by way of LIBOR fines. We have been able to allocate £10 million each year, in perpetuity, to fund military charities and to continue the work to advance the armed forces covenant, but I stress that it is only £10 million each year, which, ​frankly, would be a drop in the ocean compared with the sums we have talked about today. I am also slightly confused as to whether or not the idea is that individuals would be able to apply to some fund that would be funded from the LIBOR funds, on an individual basis. I would be grateful for any assistance on that.
 
Katy Clark
I did not advance that argument; my hon. Friend the Member for Wrexham (Ian Lucas), who is our Front-Bench spokesperson, did. What I asked the Minister to do is come forward with proposals for how she would provide some kind of recognition of this group. I am still waiting to hear any proposals from her. All she says is that there is no serious work being done, and that there are no serious costings; nevertheless, she says it would cost a huge amount of money, and she advances the case that there would be all sorts of repercussions for other groups. I ask her to focus on the group that I have talked about, which is a unique group.

Anna Soubry
I am grateful to the hon. Lady for that intervention. It always helps when one has some advance notice of exactly what will be put forward; that would have been helpful. I am more than happy to write to her if somebody can come up with suggestions, but I have to say that she is really whistling in the wind on this one. That is because any group of people who have served and who then find themselves in dire straits are always a concern to any Minister in the Ministry of Defence. However, the idea that we can suddenly rustle up some scheme that would enable people to apply on some ad hoc basis, and can find some magic pot of money, is very difficult. No doubt that is why her party, in its 13 years in power, did not do something similar to what she is proposing, because the argument was just as strong then; it is difficult to see how such a scheme could exist.

We have outstanding military charities that are always there to help and support those in particular need. There is the work of the Royal British Legion, SSAFA, and a whole raft of military charities, especially as that work relates to those who served some time ago, to help them as they move into the autumn and winter of their life, if I can put it that way. We should not underestimate the work those charities do, much of which is long-standing.

Also, we should not underestimate the resources that we have made available through LIBOR funding to help a number of those charities, including the Royal Hospital Chelsea. That is an outstanding example of the assistance and support provided to those who have served, often many years ago, and who are coming towards the end of their life. Such charities do great work and I am very proud of the fact that we have managed to make so much funding available. By way of example, veterans’ accommodation received somewhere in the region of £40 million last year. There were a series of projects to improve such accommodation. In some instances, there was brand new accommodation; in other instances, charities—such as the one just outside Brighton for servicemen and women who have lost their sight or had it damaged—were helped to improve the accommodation that they provide.

Again, a large amount of money has been provided, but it delivered huge benefit for all those who have served in the past, from the older veterans right through ​to those who have served in more recent times. I would say—with some passion, if I may—that this coalition Government should be extremely proud; I say that as I see that the hon. Member for Colchester (Sir Bob Russell) has appeared in Westminster Hall. This coalition Government have really made a significant improvement to the welfare of all those who have served, and their families, because of the way that the Chancellor has taken the LIBOR funding and put it to great use.

Sir Bob Russell (Colchester) (LD)
I am grateful to the Minister for allowing me to intervene on her. I should explain that I have been on a Statutory Instrument Committee, and then I had to discuss road safety in the main Chamber. Even I cannot be in three places at the same time. Nevertheless, I certainly support the thrust of this debate, and I recognise what the Minister has said about this Government; they have contributed significantly, not least in taking forward the armed forces covenant. However, I hope that the Minister will agree that some of the pieces still need to be put into the jigsaw of military life for those who have served.

Anna Soubry
The hon. Gentleman is absolutely right; we are far from being in a perfect world, and there is a great deal more that can be done.

Let us turn our attention to mental health. We know that the rates of incidence of poor mental health among veterans are no greater than for the rest of society. Equally, however, we know that for each individual who has served, suffering in any way from mental health issues is an absolute tragedy, for them and their families. Too many slip through the net.

Katy Clark
On a point of order, Mr Davies. This debate is on veterans’ pensions, but the Minister does not seem willing to address the issues that have been put forward. Could you make a ruling?
 
Philip Davies (in the Chair)
As far as I am concerned, the Minister is within the scope of the debate. I confess that I have given her a bit of latitude to talk about accommodation and things like that, but given that we have had plenty of time on our hands I did not think that was too much. As far as I am concerned, the Minister’s comments have addressed the subject of the debate. Whether they have been to the taste of the hon. Member for North Ayrshire and Arran is a different issue altogether. If the Minister goes out of order, the hon. Lady can be assured that I will bring her back to order.
 
Anna Soubry
I must say, Mr Davies, whether or not I was out of order, I thought that identifying certain matters might assist colleagues. In fact, I was saying that there is always more to be done. If I am not allowed to talk about mental health in relation to all those who have served, then so be it.

I conclude by saying that the Government take this matter seriously. Military charities do an outstanding job and we have made funds available. I am not convinced that a separate scheme should be set up. I think it would be fraught with complexities. Goodness knows on what basis people could make their applications. The bureaucracy that would be needed and that would be involved would be extensive. It would cost an enormous amount of ​money and, at the end of the day, the money has to come from somewhere. Although we have been successful in ensuring that the LIBOR funding is going where it should go, not even that funding would be able to satisfy a fund that is thought at the moment to be somewhere in the region of billions of pounds.