Examination of Witnesses (Questions 180
- 199)
WEDNESDAY 13 MARCH 2002
RT HON
ADAM INGRAM
AND MR
BARRY MILLER
Chairman
180. It will be done by autumn, I presume?
(Mr Miller) That is our intention, yes.
Mr Crausby
181. I suppose the question of the definition
of what an unmarried partner is is enormous. Is your consideration
about, for instance, same sex partners, or different sex partners,
or what type of partners? Have you done any thinking on that issue
before you do the costings?
(Mr Miller) We are told by our lawyers that if we
accept unmarried partners we cannot differentiate between same
sex partnerships and heterosexual partnerships, so clearly we
would have to include them. We have been looking at definitions
and there are quite a number about. I think from my personal point
of view the one that appeals most is the one adopted by the Australian
forces, which is a combination of length of time for which a couple
are together and some evidence of financial interdependence, but
there are clearly quite a number of possibilities one could look
at here in order to demonstrate that a partnership is reasonably
enduring.
182. You have already said that the Government
proposes to consider changes if the members want such changes
and are prepared to meet the full cost of the improvement. We
have already talked about winners and losers already and about
the question of cost neutrality, but how could you do that in
a situation where this is not a funded scheme and there are no
contributions to the scheme? How might you look at contributions
paid effectively by some people who were not in receipt of the
benefits for other people who would be in receipt of the benefits?
(Mr Ingram) In terms of how we assess this, we are
doing it through focus groups to try and get the feel for the
debate within the Services. I think you have recognised it is
not an easy process because it touches on a whole lot of sensitive
issues, and therefore we are having to do this in a very structured
way. Part of the assessment would obviously be then how is this
to be met? Is it met from within the existing total funding package
or as a contribution to be made to meet that? Now, we have not
concluded any of those lines of inquiry or examination at the
present time but, given the timescale to which we are working,
we have to do it within the next few months so we can meet the
deadline.
183. Will you consult Service personnel about
the issues, and how will you consult Service personnel about the
complex issues of whether some people will have to contribute
either by way of a benefit or a loss of benefit for the issue
of same sex partners, for instance? How will that go down with
Service people?
(Mr Miller) We intend to use focus groups which we
used as part of the consultation process in the earlier stages
of the work, so we would tackle that in this way. It is clearly
going to be an issue, and in one sense the final element, the
final judgment, will be individuals' decision whether or not to
transfer to the new scheme. This would be against the background
of us introducing a new scheme, so individuals will be able to
choose whether or not they transfer to it.
184. We are already in the midst of this to
some extent with the Anna Homsi case. What have you learned from
that? Her unmarried partner was killed in Sierra Leone.
(Mr Miller) What we have learned is, if I may say
so, the obvious: that unmarried partners are an increasing problem.
The fact is that the existing scheme makes no provision at all
for unmarried partners and that was the root of the difficulty
in the Anna Homsi case.
185. It is reported that there is a quarter
of a million pound payment been offered to Anna Homsi—
(Mr Miller) So I believe.
186.—I am sure you could say without precedent,
but there are bound to be implications from this. What would you
like to say about those? Is it clearly not the case that, once
you settle with one individual, that is bound to set a long-term
precedent?
(Mr Ingram) I would not want to deal with the specifics
of this in that particular way because an offer has been made
to Miss Homsi and she is considering whether to accept that or
not so it is in that process of consideration and it would be
wrong to examine that in any detail or put values to it. Clearly
that particular incident and all that flowed from it stimulates
a debate. The debate was here anyway but it became more sharply
focused as a consequence. That means we then have to consider
what we do as a consequence of all of that, and is why unentitled
partners are now becoming part of an overall examination. Of itself
it was not the trigger but it stimulated the debate, and this
was an issue I would have judged would have had to have been addressed
at some stage anyway because of the changing nature within general
society. We could not ignore the debate and by addressing it in
this way we are dealing with all the sensitivities which surround
it and then trying to find a way forward on this. It is not without
its complications, and hopefully we can find a way through it
which will find acceptance within the wider community.
Mr Howarth: Very quickly: is this review
inspired by the insatiable demands of the European Court of Human
Rights? Secondly, if this scheme is to be extended to unmarried
people, will the cost of it be borne by those who are married
and, if that were to be the case, would then that not simply constitute
yet another Government assault on the institution of marriage
in our country?
Chairman: I wish I had not allowed you
to ask that!
Mr Howarth
187. Those are just two simple questions.
(Mr Ingram) They may be simple to you but I am not
a social scientist and I am also conscious of the fact that any
change by a major Government Department could be seen as a bit
of social engineering and, therefore, can be subject to that type
of attack but remembering there is also an attitude out there
within society where a change has taken place so we have to be
mindful of that as well. If the world was only as black and white
as you make it, Mr Howarth, it would be an easier place for ministers,
but it is not and we have to deal with realities as well as all
the other aspects to it. It is why we say that, by consulting
the Armed Forces themselves through focus groups, we get a feel
for that debate, and we do not know the extent of the problem;
we do not have a measure of the scale of this other than we know
it is a reality. I put it to you also that, if it becomes a recruitment
and retention issue, then it would be wrong for to us ignore that.
If large numbers of young people were saying, "I am not joining
the Armed Forces from the communities from which we previously
recruited because I do not want to be married; I want to live
in a different type of relationship", that would be something
I think we would ignore at our peril. So we have at all times
to be alert to society's changes and if we can be ahead of it
to the betterment of the Armed Forces then that I think is the
responsibility that rests on us.
188. And the answer to my first question?
(Mr Ingram) Is it driven by the European Courts? No.
Syd Rapson
189. My question was very similar but along
much more sympathetic lines, of course. The award of the claimant
was in response to a very popular line taken in the media, and
I am not criticising that decision but it was taken, I understand,
by the Prime Minister. Was it welcomed, under this cost neutrality
review for pensions, when a separate person in the shape of the
Prime Minister made a decision to alter the whole financial structure
within that cost neutrality band? Did you cheer and say "Well
done"?
(Mr Ingram) Do I welcome Prime Ministers' decisions?
Every one of them! But it was a much more subtle process than
all of that. Clearly, given the prominence that particular case
had and the pressure we were on, for a Prime Minister or any minister
to ignore it would have been wrong. I am not saying that it was
by diktat and that all of a sudden that had to happen. All of
these things are debated within the Government, along with the
flow of that debate and what it means if we make that decision
and what does it read across elsewhere, and I would rather not
get into the detail of this individual case because sensitivity
of the individual has to be taken into account. I think I had
better rest there, because we have not settled with Miss Homsi
on this particular point.
Chairman: We must now move on to compensation.
Jim Knight
190. In your earlier exchange on cost neutrality
with the Opposition front bench, Mr Howarth used some language
which you described as "emotive" in talking about people
laying down their lives for the country and so on, but I think
in this case Mr Howarth has a point in the special status of the
Armed Services. It has been put strongly to us by the Royal British
Legion, by the Forces Pension Society and so on that we have to
account for that special status. I know when we were in Washington
last month we were all impressed at the special status that the
Armed Forces and veterans are offered in the USA, and I think
we have something to learn from them in terms of the regard that
we hold people who are willing potentially to make that sacrifice.
Do you agree that this is an important factor? When you are going
around trying to explain these new proposals to people and they
start to become aware of issues of abatement and terminal grants,
where they thought they were going to get a nice handout and they
are paying for that through other losses on the pension scheme,
do you think that we are paying due regard to the special status,
and specifically in compensation are the proposals properly recognising
the unique commitment which Service personnel make?
(Mr Ingram) When I used the emotive language, I could
share in that type of argument but I think we also have to set
against that—and hopefully this is not misinterpreted—the
clinical judgment. There have to be hard judgments taken at all
times against anything we ask of all the Armed Forces. I would
share the views within the Committee about the enormous job they
are doing and we could spend a long time playing out the language
of this, but we are dealing here with the specifics of how then
we deliver in terms of the remuneration package. The same argument
could be advanced in terms of pay and conditions and a whole lot
of other aspects to it as well, and I think we have as a Government
begun to address many of those issues, and I do believe it is
one of those processes that will never end because the argument
is out there and at the present time, given the focus that is
on the Armed Forces, there is a greater awareness of what we ask
of them. I do not detect a large demand, however, within the wider
community for more to be done. That may be hard to say in one
sense but, where the public demand is, there is not a huge demand
to do more in this area. We then, from the Department's point
of view, have to constantly take that argument forward, constantly
remind people of the importance of what we ask of the members
of our Armed Forces, and make sure there is a greater public awareness
and alertness to this, and we have many strategies by which we
approach all of that. You then refer to your experience in the
States and we have learned lessons from there, which is why we
now have a minister in the shape of Dr Moonie responsible for
veterans' affairs. It is a new approach but it is one which we
are attending to with vigour, trying to find ways in which we
can step up our support—again, across the reach of the veterans'
community as well as the existing Service community. Alongside
that, there is a way in which we are tackling the needs of the
families as well—the way in which we have sought to put
in place new welfare packages. All of these things are developing
all the time and are part of our overall strategy, of trying to
act as the very best employers do against all the other constraints
out there. I do not think the Department can be found wanting
in terms of our awareness of the issue and the way in which we
are beginning to tackle it. We are at the beginning of tackling
this; these are issues which have not been addressed at all, probably,
and now we are having to address them because of some of the pressure
points, and because of the recruitment and retention needs we
are having to look at a wide range of strategies to tackle all
of this. What I would say about the US and perhaps other countries
is that, when we look at the benefits which can be paid to veterans,
there is a situation arising where you have to compare it with
what else is given in this country with what is not given in those
countries—ie, a National Health Service. They have to make
huge commitments because they do not have that type of support,
a Health Service, there, and that could be replicated across a
number of other delivery systems we have within this country.
So it is not like-for-like in all of that. It is easy to say,
"Well, veterans there get a particular reward", but
they do not get rewards elsewhere in the society because of the
structure of that particular society. So that is why we have to
look at this in a global way. We have to learn lessons at all
times; we have to be alert to the enormity of the issue; and I
would share with you your view and Mr Howarth's view and others
within the Committee about the importance of what we ask of our
Armed Forces personnel, and never to lose sight of that.
191. I accept a lot of what you say and I know,
for example, in the massive increase—the $34 billion or
whatever it is in the Department of Defence budget—?
(Mr Ingram) $48 billion.
192.—Well, there you go. A substantial
part of that is increase in pay and conditions benefits for Armed
Forces and their dependants, and a substantial part of that in
turn is the Tricare health system, but it is certainly not cost
neutral. They are putting more money in, in order to give better
benefits for their Armed Services. They are providing leadership
in terms of the general public being able to place a value on
their Armed Forces and veterans and, without wanting to re-rehearse
the arguments you had with Gerald about cost neutrality, I would
have a fear perhaps that many of our Armed Forces do not go around
thinking every day about their pension entitlement, they do not
join up because of it, but when this debate is put to them with
the comparators between the existing scheme and the old one they
will look more closely at these issues which are very current
in public debate about final salary schemes going and all of that,
and they may not feel as valued as they do now. They are not thinking
so much about it, and that in turn may lead to one or two retention
problems in some areas for you and then you may regret the cost
neutrality decision you make?
(Mr Ingram) I think we entered this with our eyes
open. What I have said all along is that, if the assessment was
one of those neuralgic issues, then we would be much more exercised
on that particular front. We are exercising other areas—air
crew retention, for example. That is a very demonstrable case
that has to be addressed and we address it in a specific way.
Hopefully, of itself, that will not stimulate everyone saying,
"This is now the biggest issue under the sun and I am going
to leave the Forces and I am not going to join up because the
pension policy is not sufficient"—it will not quite
work that way, but if it was the case that we had detected this
then our approach, by definition, would have been different, and
that has to be part of our consideration. There is no point hiding
that or saying that this is done in a different way; that is part
of the priority approach which has to be developed within the
Department. Insofar as the total value placed upon the Armed Forces
is concerned, we are currently in the process of negotiations
with the Treasury in terms of our budgets. I cannot even begin
to touch upon those subjects today.
(Mr Miller) We may well have chosen not to increase
the amount we spend on the pension scheme but we have in recent
years put substantial extra money into, for example, the operational
welfare package, the new pay system, this year's pay settlement,
the air crew retention review, deployment allowances and a number
of others. So we are spending extra money on people.
193. Good. To be more specific about compensation,
did you consider the possibility of a scheme which distinguishes
between injuries sustained during active service and those which
occur in everyday occupations, more comparable to civilian work?
For example, in other evidence sessions we talked about people
incurring injury whilst undergoing sporting activity and being
able then to be eligible for compensation. Did you consider a
separation that perhaps rewarded people better for genuine active
service injuries and separated that off?
(Mr Miller) Frankly, we did not consider it for very
long. We found it very difficult really, in all fairness, to discriminate
between the individual who is, say, wounded in action, and the
storeman whose work is just as essential to maintaining the frontline
and who is injured in an accident in his storehouse. We thought
on balance it was fairest to treat all Service people on the same
basis for accidents or injuries incurred on duty.
194. So your definition of active service is
"on duty" in any form. Does that include going to or
from the place of active service? There seems to be another grey
area as to what happens if someone incurs and injury in those
circumstances?
(Mr Miller) The issue of home to duty travel is clearly
a difficult one and we have not reached final conclusions yet.
195. Will you do so by the autumn?
(Mr Miller) Yes, but if I can make the point, we dictate
to servicemen where they live. When we do that it is perhaps not
unreasonable that we cover them for injuries incurred in their
home to duty travel. That is the sort of consideration we have
to bring to this.
Jim Knight: I would not want, given their
special status, to downgrade matters. Thank you.
Mr Cran
196. Minister, I am afraid we are back to the
concept and principle of cost neutrality again. I think I made
it very clear to you when we were discussing the pension scheme
arrangements that I thought you were, as an employer, being niggardly.
You are going to produce your comparators to show I am wrong,
and I am waiting for that. However, whilst I may be wrong about
that, I am completely mystified why an employer attaches the words
"cost neutrality" to compensation arrangements. I am
truly mystified by that and I think it will be deeply misunderstood
by your workforce because what it does is gives the impression—
(Mr Ingram) We do not use that terminology in terms
of the compensation of individuals.
197. Well, do, please, tell me why, because
I have it in front of me that you do?
(Mr Ingram) From words I have used?
198. No, just from internal documents that we
have here. Are you saying to me there is no cost neutrality in
terms of the compensation arrangements?
(Mr Ingram) Well, I can because in one sense it is
an unknown quantity, is it not? It is one of those things that
will go up and down based upon circumstances, so we will have
to work in terms of assumed cost to a Department, so notional
funding would be within a Department on that, but if there was
a major terrorist incident or other hostilities where there was
a significant quantity of injuries attributable to Service, then
that has to be met. So there is not a capping on this, at all.
199. I welcome that but, just so we understand
this completely, I have it in front of me that the Review document
says that there will be additional costs in the short term as
the scheme is introduced but "in the longer term we would
expect direct costs of the new scheme to be broadly cost neutral".
How do I put your answer against that statement?
(Mr Ingram) That has to be the working assumption.
We have to look at the historical cost of meeting compensation
claims and then seeing with the new scheme whether this is going
to generate additional multipliers. Of course, the issue relates
to the individuals who are claiming.
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