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Armed Forces Pensions

Volume 456: debated on Wednesday 31 January 2007

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

I am grateful to have this opportunity to raise the issue of armed forces pensions in this debate. It follows the launch of my early-day motion 67, which has now been signed by well over 100 hon. Members.

I have been contacted by constituents who served in the armed forces before April 1975. They feel aggrieved at being denied a service pension, even though they had as many as 21 years’ service in the forces. The rules have since been changed to allow servicemen and women with fewer than 22 years’ service who retired after April 1975 to obtain a pension.

Many of the former members of the armed forces who have contacted me are now at retirement age and feel bitter that they have got nothing to show for their often dangerous occupation. I have a letter from my constituent, Mr. Hutchinson of Morley, who wrote to me and said:

“I joined the Royal Navy as a boy second class in December 1927 and served until after the end of the 2nd World War, being released on December 1st 1945 as a Chief Yeoman of Signals. The reasons for my not continuing to serve for the full man’s time of 22 years were the protracted periods away from home and the fact that I did not see my baby daughter until the war was over and she was then 17 months old.”

Another constituent, Mr. Sid West, told me of his 17 years in the Army. If he had retired with 22 years’ service he would have left in 1978. It is strange indeed that had he been prescient or lucky enough to remain for even 20 years, he would have received a service pension. There are thousands in that position.

I should declare a minor interest, as if the rules were changed again even my three years’ service in the RAF until 1974 might qualify me for a penny or two. However, if my right hon. Friend the Minister of State responds positively to all my requests this evening, I shall gladly donate to charity whatever comes my way.

From the response to a parliamentary question in March 2002, I understand that it has not been the policy of successive Governments to make retrospective changes to pension provision. The reason given is usually the enormous cost. However, there is no hard and fast rule that the policy should remain. What is the Government’s estimate of the cost? Would not agreeing to a change build on the work of a previous Labour Government?

In the difficult economic times of the mid-1970s the Labour Government made the first progressive rule change to lower the qualifying period. We had inherited a crumbling economy from Ted Heath, with balance of payments deficits, sky-high inflation and public spending that caused concern—at least to the International Monetary Fund. However, let us look at the economy now; we may still have balance of payments deficits, but that is about the only comparison with 30 years ago, and we no longer seem to think that they are a problem. We are the fifth richest country in the world.

We must find out what it would cost us to do better for veterans who retired before 1975 with fewer than 22 years’ service. Previous answers to my parliamentary questions have shown that we keep detailed records about those who served and their length of service, although pay records are destroyed after seven years so it would be difficult to ascertain some of the facts, but we should try to address the issue.

It is true that veterans with nine or more years’ service were paid a gratuity in lieu of further entitlements, which would naturally have to be factored into the calculation and would reduce the amount of pension paid. However, to be candid, at a time when we seem determined to build a replacement for the Trident system, with an estimated cost of anything between £16 billion and £70 billion, we should recast our priorities.

It is often said that the mark of a civilised society is how it treats its elderly. I have never heard it said that the mark of a civilised society is that it should spend huge sums of money on weapons of mass destruction. In the 1970s when the Government spent billions on the Chevaline nuclear upgrade system, many people probably thought that with the cold war in full swing it was money well spent, but now we are faced with a more complex world, and we should behave differently in response to it. The morale of our forces would be boosted tremendously by the knowledge that we were prepared to look favourably on their forebears’ claims. Many servicemen and women have older relatives who could benefit from a service pension; it would be phase 2 of a Labour Government delivering for our armed forces.

I acknowledge that there are arguments that might deflect attention away from the demands of this campaign. Perhaps the most significant is that this Labour Government introduced the pension credit, which has lifted many poor pensioners out of poverty. I bet that many of those to whom the pension credit has been paid are veterans, who because of the parsimony of earlier Governments may have worked for a generation in the forces with nothing to show for it in their later years. If the campaign succeeded, there is no doubt that the structure of the pension credit would mean that veterans who received a service pension on the one hand would lose pension credit on the other. However, I know which I would prefer—not a means-tested benefit that required much form filling, information gathering and perhaps even a loss of pride, but an as-of-right pension in recognition of service rendered.

The argument has also been made that to accede to the demand would be to acknowledge the demands of others in the public sector in similar situations—a costly precedent indeed. However, it was only a few weeks ago that I first heard of the so-called covenant between members of the armed forces, society and the Government. From my time in the forces I do not recollect ever seeing, being told of or signing such a covenant, which apparently defines the relationship between those who pledge to die for their country, if need be, and their country.

I remember walking into the RAF recruitment office in Hull in 1971. I signed a form and swore an oath in front of an officer that I would be willing to make the ultimate sacrifice. I have to admit that I never anticipated that that eventuality would come to pass. But when we are told that members of the armed forces are just like any other public sector work force, I seriously question that. Were all public sector workers asked to take an oath to say that they would lay down their lives in the course of duty? No, they were not. The armed forces were treated differently then and they should be treated differently now.

Another excuse that has been thrown back in the faces of veterans in the course of the campaign is that they should have known all along that their terms and conditions did not allow for a pension when their service was less than 22 years. Indeed they did not. However, the terms and conditions were changed beneficially for many of those people by a Labour Government in 1975. Of course, when changes are introduced there is always a publicity campaign, but I suspect that one could easily wonder how effective the campaign was in the forces at that time. It has been alleged to me that many of the veterans who make up the group of people who were coming close to 22 years’ service in 1974-75 were shunted out of the forces on all sorts of pretexts so that they would not qualify. They were encouraged to leave, while dissemination of information on personnel issues was not always efficient or accurate.

I wonder how many men and women walked away with exemplary certificates of discharge, where the reason for discharge was “premature voluntary release” —after being pressurised to go. Those people may have been led to believe that their service would contribute towards a pension. I have in my possession a copy of a Royal Marines certificate of discharge, dated 6 June 1972, which tells the recipient that he has accumulated

“five years and 218 days towards pension.”

That was on the piece of paper that the discharged serviceman left with. It is misleading and inaccurate, as far as it goes. He may not have thought any more of it until he came to collect his pension and found that there was nothing there to collect.

I do not blame the Labour Government for the way in which they handled the matter in 1975. They acted in the better interests of working people, in the way they thought that they could afford to at the time. However, what I am saying now is that we have to revisit the issue, otherwise it will go away only when all the veterans that we are talking about are dead—and many have died already. Let us remember that we are still talking about veterans of the second world war, Korea, Suez, Palestine and many other conflicts around the world.

What am I asking the Government to do? Revisiting the issue means that the Secretary of State for Defence should meet a representative delegation of those affected. It means the Government should say what they think some kind of recompense would cost. It means acknowledging that these veterans do have a grievance and it means that they will no longer, as they see it themselves, be forgotten heroes. At every Remembrance Sunday service we say,

“They shall not grow old as we grow old”

and, “We will remember them,” and we do. Now, in the democracy—the wealthy democracy—that those people died for, let us also remember those who have grown old.

I will conclude with the words of my constituent, Mr. Hutchinson:

“It does seem somewhat unfair that servicemen such as myself do not receive any recognition of the years spent in defence of our country. Reading the Royal Navy’s publication ‘Navy News’ I am given to understand that it is possible for a naval rating to receive a pension after serving as little as 18 months. This does appear a little unjust”.

I have to say that Mr. Hutchinson is a master of understatement. He says that it is somewhat unfair and a little unjust. It is that humble, almost apologetic, entreaty that underscores the strength of his case. I urge my right hon. Friend to heed this campaign and respond accordingly.

My hon. Friend the Member for Morley and Rothwell (Colin Challen) has done well to secure a debate on equal pension provision for service personnel, regardless of when they served in Her Majesty’s armed forces. Although the subject of British armed forces pensions has a long history that stretches back to the time of Elizabeth I, it is better that I start nearer the present day.

In the early 1970s, the Ministry of Defence introduced an armed forces pension scheme following the introduction of the military salary in 1970, which replaced the system of basic pay and allowances. The military salary meant that the MOD could link pensions to pay for the first time, and in April 1972, representative pay rates were introduced on which pensions for members of the armed forces pension scheme were based. That meant that under that scheme, members of the armed forces with the same rank and same number of years’ reckonable service were awarded the same pension, regardless of their actual pay on leaving service. Those pension arrangements are actually made up of three separate schemes that were established under a range of prerogative and statutory powers. The current arrangements are found in the Naval and Marine Pay and Pensions (Non-Effective Benefits and Family Pensions) Order 2001, the Army Pensions Warrant 1977 and the Queen’s regulations for the Royal Air Force. The enabling legislative powers are to be found respectively in the Naval and Marine Pay and Pensions Act 1865, the Pensions and Yeomanry Pay Act 1884 and the Air Force (Constitution) Act 1917.

In the early 1970s, members of the schemes were awarded a pension only if they had completed at least 16 years’ reckonable service as an officer, or 22 years’ reckonable service in another rank. Engagements for shorter periods were on non-pensionable terms. However, gratuities were awarded to those who left without qualifying for a pension, but who had completed nine years’ reckonable service as an officer, or 12 years’ reckonable service in another rank. The definition of reckonable service is all paid service after the age of 21 for officers, or after the age of 18 for other ranks.

Before the introduction of the Social Security Act 1973, there were no rights to preserved pensions in any public or private pension schemes. Most schemes had very restricted qualifying criteria for the award of pensions. For instance, to qualify for a pension under the civil service arrangements, an individual had to be over 50 and to have served for 10 or more years. Individuals who left voluntarily before meeting both these criteria lost their rights to pensions. The 1973 Act brought about changes by requiring all pension schemes to preserve pension rights for those who left service after 6 April 1975 and had completed at least five years’ qualifying service and attained the age of 26. Subsequent Social Security Acts reduced the qualifying period from five years to two years and removed the age qualification requirement. The armed forces pension scheme incorporated those changes from the operative date of 6 April 1975. It is for that reason, and to differentiate that scheme from the new pension scheme introduced in 2005, that we now call the scheme AFPS 75.

As my hon. Friend said, those changes were not retrospective. It is a legal principle that individuals receive benefits in accordance with the scheme rules that were in place at the time of their retirement. It is a principle of public service pensions policy, and one that has been upheld by successive Governments, that improvements to pension schemes are not made retrospective. If the changes were made retrospective, it would add significantly to the cost to the taxpayer, not least because the issue is common to other public service schemes, not just that for the armed forces.

My hon. Friend asks me to distinguish between members of the armed forces and others who serve as public servants, such as teachers and members of the emergency services, but that would be a legally untenable position. He also asked me to estimate the costs involved. We have not made a specific estimate of the cost of backdating armed forces preserved pensions to prior to 1975, and my hon. Friend alluded to some of the difficulties that would prevent us from achieving that.

We have made a general examination, and the numbers affected are very large, so the costs, whether for the armed forces or more widely, would be considerable and would run into billions of pounds. I fully recognise that a number of individuals who have no occupational pension rights for their time in the armed forces—

It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.

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

I recognise that a number of individuals who have no occupational pension rights for their time in the armed forces are aggrieved that improvements to pension provisions since the mid-1970s were not applied retrospectively, but that does not mean that the work and commitment of those who served in the armed forces before 1975 is not valued. We value their contribution in many other ways, but I have set out the context in which judgments have to be made. I urge my hon. Friend to accept that his campaign would not apply to the armed forces alone, and it would have to apply to all public sector schemes. The costs for the armed forces would be prohibitive, and the wider costs, too, would be of considerable magnitude and would be simply unaffordable.

Successive Governments have taken the same view. There is no realistic prospect that this or any other Government could afford the many billions of pounds that would need to be found to address the issue. That is an easy statement to make, but the real test is the legal one. The issue has been legally tested, and a claim for pre-1975 pension entitlement for the armed forces failed in the High Court in 2003, in the House of Lords in 2004, and in the European Court of Human Rights in 2006. There are other legacy issues, in addition to the pre-1975 pension entitlement that arose from Government economic policies and other improvements to AFPS 75, which did not cover those who served before the changes were made. Issues such as pension troughs, widows’ and widowers’ pensions for life, widows’ post-retirement entitlement, and widows’ third-rate and half-rate pensions are not unique to the armed forces, as there is a read-across to other public sector schemes. As I have said, making retrospective changes to pension schemes would have financial implications across the wider public sector.

My hon. Friend said that we are proposing to spend money on nuclear defence, and I accept that that is the case. He urged us not to spend that money and to give it to the pensioners instead. Everyone wants a say in how that money is spent but, interestingly, when the public considered the matter, it wanted to retain the country’s nuclear defences. They will have another opportunity to consider the issue as the debate develops in the coming weeks before we make a decision. It is easy for my hon. Friend to make that equation, but he would have to queue up with everyone else who is campaigning for us not to go down that road and who has their own ideas about how that money should be disbursed. He should take into account, too, the public mood on that specific aspect of our national defence. I suspect, however, that we will find ourselves on different sides of the debate.

Since the 1970s there have been a number of improvements to pension provisions. For example, since the mid-1980s, individuals have had to serve for only two years to be entitled to preserved pension benefits and, from 1978, widows’ pension provisions were extended to widowers. AFPS 75 incorporated those improvements to the spirit and letter of the legislation that required their introduction. The Government recognise the importance of proper pension provision for the armed forces. Since 2000, attributable death benefits for widows and widowers have continued on remarriage. Since March 2003, pension benefits have been made available to eligible unmarried partners for service deaths related to conflict. In September 2003, the concession was extended to cover deaths attributable to service. Since April 2005, death-in-service lump sums have risen to three or four times pensionable salary, depending on whether the member belonged to AFPS 75 or the newly introduced armed forces pension scheme 2005.

The introduction of the new pension and compensation schemes in April 2005 was a considerable achievement, given that it came at a time when outside schemes were under pressure to move away from defined benefit arrangements. The scheme benefits compare favourably with other public service schemes and with schemes in the private sector. They reflect modern best practice and provide for a significant increase in family benefits. I am confident that our new schemes are designed to meet the needs of the armed forces in the 21st century.

My hon. Friend said that he had a small interest to declare, but I know that it is not the prospect of financial gain that prompted him to raise the subject, and I fully recognise the kind offer that he made. We have to set the arguments that he advances against the major developments that the Government brought about to improve the pensions of those who serve in Her Majesty’s armed forces. I appreciate the concerns that have been raised, but I set out to explain the reason for the current position and to put it in context. I fully recognise that my hon. Friend’s early-day motion has attracted support. I just hope that those who signed it will read this debate, understand the logic of my argument, and reflect on their support for that motion.

My hon. Friend asked for a meeting between representatives from his campaign and the Secretary of State. As ever, that would be a matter for the Secretary of State, but I will certainly draw my right hon. Friend’s attention to the request. I said at the beginning of my remarks that I would not refer back to the time of Queen Elizabeth I, and although I notice that we have a considerable amount of time left, I do not intend to fill it by talking about what happened in that period of history. We must consider the considerable progress made in the way in which we look after people. As my hon. Friend generally recognised, there was a change for the better in 1975. That decision goes back to 1973, although it was implemented in 1975, and it was delivered by the Governments of the time.

The changes that my hon. Friend asks for would have an immense impact on public expenditure, and that is the why successive Governments did not revisit the decision; it was not from a lack of recognition of those who serve in Her Majesty’s armed forces, or elsewhere in public services. I think that that is a solid argument, and I ask my hon. Friend to reflect on his campaign.

Question put and agreed to.

Adjourned accordingly at seven minutes past Seven o’clock.