WEDNESDAY 13 MARCH 2002
Mr Bruce George, in the Chair
Memorandum submitted by The Ministry of Defence
Examination of Witnesses
RT HON ADAM INGRAM, a Member of the House (Minister of State for the Armed Forces), MR BARRY MILLER, Director General, Service Personnel Policy, Ministry of Defence, examined.
(Mr Ingram) Yes, Chairman. With me I have Barry Miller, who is the Director General of the Service Personnel Policy section. I am grateful for the opportunity to make just a brief statement on this, as I think it is important to set out some of the directions from where we come on this. I really do welcome the opportunity to give evidence to the Committee today on the Armed Forces pensions and compensation arrangements, because I genuinely feel this will help the process. I want to cover, in broad terms, the why and the what. The Armed Forces Pension Scheme review, as the Committee will know, was born of Sir Michael Bett's Review of the Armed Forces Manpower, Career and Remuneration Structures. It was started in late 1998, after other related aspects of the Bett Review, such as career structures, had been resolved. Like other employers, the scheme for us is part of our manning strategy and the review was set up to create a more up-to-date scheme to support recruitment, retention and the motivation of new entrants well into this new century. Above all else let me make clear, it will, as the present scheme does, recognise both the special commitment given by Service men and women and the need to act as a good employer in terms of benefits for retirement and ill-health. It seemed sensible to look at the compensation area at the same time. The current arrangements are complex, confusing and inconsistent with wider current thinking on compensation. For instance, at the moment, there are compensation arrangements associated with both the Armed Forces Pension Scheme and the War Pension Scheme. Because of this, we propose to replace these two schemes with modern, fair and simpler arrangements, focused more effectively on those who are most severely disabled. We have entered into a genuinely open, and far-reaching consultation process. I believe it is an authentic seeking of views, and this session with you today is part of that approach. We are still listening, developing and open to input. Clearly, a framework has been developed against which alternative views can be set. I believe there are few who contest that the current pension and compensation schemes are generous - as indeed they are. The aim of the reviews is to make sure that the money we have available is focused as effectively as possible for Service personnel, consistent with our overall objective of being a responsible employer. Through our memorandum we have already explained to the Committee that cost-neutrality was not originally and necessarily one of the ground rules for the pension review, although cost-effectiveness and affordability were specified. However, we could only justify more money if we could prove that the pensions area caused us real problems in recruitment and retention. Objectively we cannot do that. There are particular small groups of Service personnel for whom pensions are an issue, and we can best deal with these specifically and we will do so. Of course, the ex-Service community seeks to maximise the benefits available - that is well understood - and we value their ideas, but we believe we cannot "cherry-pick" all the best bits from all other schemes and try and make a new whole. It is not a sensible or productive way of handling an issue as complex as this. I am sure I do not need to elaborate on the growing trend in the private sector to move away from final salary schemes. But we remain committed to the final salary approach with no diminution in the overall level of employer contribution. That said, there is a need to examine the best distribution of those contributions to maximise benefits across the board and to remove any glaring inequities within the existing scheme. I want to stress that whatever precise shape the new scheme takes, it will be aimed at new entrants. Serving members will not have to transfer to it, but we hope that many will see the advantage in doing so. It will be their choice, and to help them make them an informed decision we will provide all the information required and in a form that is understandable. This communication challenge is no less important for the proposed new compensation arrangements. All attributable injuries and ill-health occurring after introduction of the new scheme will be covered by it. Conditions that arose before the review will continue to be assessed under the old arrangements. Finally, we do not underestimate veterans' concerns or their apprehension and we will continue to address both as best we can. In conclusion, Chairman, I believe that the timing and constitution of the reviews is logical; I believe that we cannot justify spending more on a new pension scheme; I believe that the new compensation scheme is focused on future needs and should be simpler and more effective in delivery terms; I believe that the present schemes rank high in the public and private sector and that the new scheme will at least match that standard. Let me end where I started: we have entered this process in an open and transparent way. I believe the Committee's Inquiry and conclusions will help me in framing the new pensions and compensations arrangements which will add to the overall package of pay and conditions available to the men and women of our Armed Forces.
(Mr Ingram) Let me say that in one sense it can be viewed as a delay but I would hope that the Committee takes on board the way in which I have tried to explain the overall strategy on which we approach this. We are trying to be open and transparent, trying to listen, assimilate and take on board all the different views which are out there, which necessitates an in-depth examination (over the period of course we have now taken on board the issue relating to unentitled partners, unmarried partners, which is another area we are now looking at), yet within that time-frame the staff themselves have been engaged in dealing with other issues which have come up unexpectedly in relation to some legacy matters. Those are some of the aspects associated with this. If I was looking at this, as a Minister, thinking there was an undue delay and there was great pressure out there for early implementation and that it was important to the department then, of itself, that would force the pace, but we have also got then to put what we are seeking to do into the context of when will it be implemented. As we build up our new IT systems, the likelihood is it will be not before 2004 and well into 2005 before we begin to see the play-out of this, because we have got to take the legacy systems which are currently in place, marry them into the new IT systems and then implement this. It would be a disaster, I would suggest, if we rushed into this, given the complexity of the issues that we are dealing with. That is just some of the flavour as to why there is the longer time-scale. It had been intended that there would be a report in May of this year but that is now likely to be slightly pushed towards the autumn, and that is now our working time-scale.
(Mr Ingram) I would say the answer to that is yes. That then becomes a debatable point, I suppose. My view would be that we have tried to identify as best we could all the areas and the framework within which we were seeking to develop the new structure. Of itself, that then generates the inputs from the concerned organisation and bodies who are out there. If we had answered all the questions then I think, probably, it would have been the first time in pension history that any government department would have got a pension strategy correct from day one; this is a very complex area, no matter which department is dealing with it. It is important that we do get that discourse with the wider community. My view on this would be that the broad reach of what we sought to do identified the issues we were seeking answers on, and was broadly correct - and stimulated and anticipated debate.
(Mr Ingram) Not pre-empted - and again you appreciate this pre-dates my involvement - but having looked at it myself I would come to the same conclusion, that if this was a pressing issue, because it was a manning tool, if this was an issue that we believed to be ranking high in terms of recruitment and retention strategies, then a bid would have had to have been made to say "We now need to do something more substantial within the existing scheme and any proposed new scheme". That would have been the imperative in all that. However, that is not what we are finding in terms of our assessment of the market-place - to use that terminology. Therefore, it is a case of we believe it is a very substantial scheme as it stands, we are using the same global sum of money and moving it around to try and make it better focused, as I said, in delivering it in certain key areas where we believe there are significant shortfalls - in areas like dependants' benefits and so on. I do not think it is a pre-emption at all. If we had entered this with a blank cheque then that is not the way in which I would suggest policy should be developed on this or any other area, because it is "Where is the top line in that"? We believe this is a substantial scheme with a substantial sum of public money going into it, it is not one of the high-ranking issues - although it is a manning tool - in terms of retention and recruitment strategies, and we believe that the money is better targeted for those types of issues in specific areas.
Chairman: I am sure my colleagues will wish to come back to this.
(Mr Ingram) It is part of the overall manning strategy, along with all the other pay and condition issues with which it is associated. It is not the key issue. If there was a debate out there that was saying "This is the one, key issue which said that we would join the Armed Forces, or this would ensure that we will stay in some of those key sector areas", then that sets the alarms going and we say "Okay, now there is a real issue out there that has to be addressed by using this mechanism". If you use the analogy, say, with air crew retention, there is a clear analogy where there is an identifiable problem and money is then put it to seek a resolution to that particular problem. Only time will tell whether it solves that or not. That is the way in which we would tackle the manning issue - if it was highlighted as a key issue of concern to the department in terms of its overall recruitment and retention strategy. That is why I say what I say, and I think it can be tested against the analysis which we have done on this.
(Mr Ingram) I would just say do not believe everything you read in the newspapers about the Ministry of Defence, but I think I would take some of your prejudice - if that is the right word - about the legacy and about the way in which some systems have not been well-implemented, not just ----
(Mr Ingram) Yes. It is a long time since I worked in the IT industry, but it seems to me that the scale of what is done in government is so huge, so complex that there is always a possibility of weaknesses creeping into complex systems. I think we have decades of bad history in this. It is for that reason, when I was looking at this overarching IT strategy, in terms of the personnel schemes, that I have become personally involved in this and I am asking those very same questions: that we should seek as best we can to ensure there is no repetition of any failings of the past. There is no certainty in life, but there is a lot of effort being put into this. On the time-frame, it is more likely to be in 2005 before we can begin to move forward on this. Barry may want to come in and explain it in greater detail, but with all the legacy systems in the three services, you are trying to marry all of that up and look for every glitch that can appear that does not bring about the implosion of your new system. We will also be running the old legacy system alongside the new pension system. This is a big area of activity. If there is slippage in it I can only say that there would be slippage for a good reason; that is, we have identified problems that need to be resolved. We are pushing on to get this implemented, because it is not just in the pension sectors, of course, it is across a range of other aspects of personnel delivery that we need to get new IT systems in place.
(Mr Ingram) I think we can, but Barry may want to comment further on that.
(Mr Miller) Chairman, we are talking about what we know as the Joint Personnel Administration Project. The aim is to replace the rather more than 200 legacy systems in the field with a single system using off-the-shelf software. The project is at a relatively early stage as yet. We have only just down-selected the particular software that we intend to use and it will come to main gate in just under 12 months. It is a bit difficult to be too positive abut time-scales until we have completed the main gate process. However, at the moment, we are on time and we are reasonably optimistic.
(Mr Ingram) I would hope they are taking lessons across the reach in terms of this. Do you mean specifically in terms of benefits, or is it the implementation strategy?
(Mr Ingram) Barry may want to deal with that because he is dealing with the actual in-depth detail of these matters.
(Mr Miller) We have been keeping a close eye on the Civil Service proposals and, indeed, on other work that is going on in the public service on pension schemes. In particular, we are watching very closely the way in which the Cabinet Office does its communications in connection with the new Civil Service scheme because that is an area where we think we have got quite a lot to learn.
Chairman: Thank you.
(Mr Ingram) I did say there would be few who would contest it, and that I means that I recognise that some would contest it.
(Mr Ingram) Then you are into, I suppose, a quality against quantity argument as to the direction from which it comes. Also, later in the statement, I refer to the concerns and the apprehension of the ex-Service community. We clearly recognise all this and some of the issues - and we may explore them today - which have been raised with us are taken on board to examine "Is there a way of dealing with the concerns which have been raised?" It would need an actuary, I suppose, to be able to argue convincingly whether and where this particular scheme sits in any right order. Because we are not comparing, in many ways, like with like, it is very hard to take our scheme - existing and proposed - and set it against the wider trend within both the public and private sector, because people retire earlier and there are other matters relating to dependants' benefits and so on, which we have tried to correct. I think it can be tested, but it is only an opinion. It is for that reason that I have asked if there is a way in which this can be examined on an independent basis to make sure that that particular statement stands true examination. I do not have that audit at the present time. Whether we can get that or not will remain to be seen, but if that becomes available then I would make the commitment that we would so advise the Committee on this, because I am fairly sure, in terms of the overall breadth and depth of the existing scheme, that it does rank high. You can take individual elements and say that it is not as good as another public sector scheme, or, indeed, a private sector scheme, but that is why I also say in the statement that it is wrong to cherry-pick and take a very good idea from one scheme and try to implant it into another complex scheme. By taking one concept or one benefit, it then has to be set against what it means elsewhere and against, also, the fact that no new money is going into this particular pot. So, to repeat the point, although I think it is an opinion I think it can be tested, and perhaps one testament to it would be the Pay Review Body's own assessment of this, where they say there is a 7 per cent benefit compared to the comparators they would draw upon. Now, the question of independent audit, I think, could be important in proving that - or not, as the case may be.
(Mr Ingram) No, there is a good basis for saying this, but to take it on an element-by-element basis, as others do, and say "It is not as good in this area as another scheme" is not the way of looking at the totality of a pension entitlement.
(Mr Ingram) That is an opinion, I would suggest.
(Mr Miller) If I may, please? It is not the case that it is unsupported by actuarial examination. The Armed Forces Pay Review Body do involve actuaries in reaching the conclusions they did, and their clear conclusion is that in terms of the benefit to members the Armed Forces scheme is between 6 and 7 per cent better than the comparators.
(Mr Miller) I will need to talk to the Pay Review Body, because they are an independent Pay Review Body.
Mr Cran: But you will come back to us on this.
Chairman: We have that information already.
(Mr Ingram) You say you already have that information in terms of the comparator study in all of this. We are not saying that it is the best in every element. I do not think many pension schemes could say that. Indeed, probably those schemes which would make that assertion are probably those schemes in the private sector that are now being examined as being too expensive. Mr Cran, you are only too well aware of what is happening in the private sector; the way in which industry is resiling from this particular cost-element. Remember, it is put within a context of being part of a manning tool as well, and remember also what I said, that if it was a critical issue in terms of that strategy, then we would have to revisit it in a different way. It is because of those aspects that we believe that it is a generous scheme - which may be debatable.
(Mr Ingram) It is always going to be debatable and we will never satisfy everyone to the nth degree. Indeed, our own MPs pension scheme - which many would say was exceptionally generous - has been voted on by the House to make it even more generous. Things can always improve. It is the role that is played by that pension scheme. We believe it is generous at the present time, we believe that it is well-received within the Services; we believe that what we are seeking to do enhances the overall delivery in some of the key areas, which will assist in dealing with some of the pitfalls or weaknesses which exist within the present scheme and which are being referred to as matters that need addressing as well as the matters which we have addressed ourselves in all of that. I believe I am not going to convince you on the overall merits of the scheme.
(Mr Miller) We have looked wider but our principal comparators are undoubtedly the public service schemes.
(Mr Miller) We clearly are aware of the levels of benefits which are common in the private sector. In that sense, that has been taken into account in the early stages of the work, but, no, we have not offered it in detail.
(Mr Miller) We could let the Committee have sight of any information that we have available. As you say, it is an on-going process and we are very conscious that the private sector, in particular, is changing quite radically at the moment - and not for the better.
(Mr Miller) I will need to offer you a paper on that.
Mr Cran: Thank you.
(Mr Miller) In general, the Pay Review Body's assessment has indeed changed over the last few years, coming down from a full 7 per cent to 6 per cent, although they are still abating pay by 7 per cent. That is their judgment, we have no say in that. That is very largely because the level of benefits in the comparator schemes have improved over that period. Clearly, there must now be a question mark over that. We did look at the possibility - and this really touches both on contributions and funding - of going for a funded scheme or a contributory scheme, and came to the conclusion that the benefits to the individual pensioner were not such as would justify the very considerable additional administrative complications that would go along with that approach. Fundamentally, it is the view we took in relation to the funded schemes, where the main reason for funds, of course, is protection against bankruptcy, and government bankruptcy seems a somewhat unlikely eventuality to protect against. Contributions, if you do not have a funded scheme, have a certain element of artificiality about them, and if the whole process is unnecessary and administratively complex, as it would be, we took the view it would be better avoided.
(Mr Miller) We could indeed, but why do we need it? Funds exist in the private sector's pension industry because of the risk that the company will go bankrupt.
(Mr Miller) There would be anyway, and if we had gone for a funded, contributory scheme that would be an additional complication to the new scheme. The fact that the Pay Review Body make that adjustment in their assessment is well-known. I would not, for one moment, pretend that every soldier carries it in the forefront of his consciousness every day, but the information is readily available.
(Mr Miller) It would be more apparent if there was a contribution, yes.
(Mr Ingram) I do not think the department is all over the shop, I think the department is very clear in its approach on this. What I said - and it is in the memorandum as well - was that the cost neutrality aspect was not an original driver in all of this.
(Mr Ingram) Yes. That is the way in which it has now been developed because what we are doing is reshuffling the pack, so to speak; to take some elements and modify them to pay for enhancements and improvements elsewhere. I tried to explain in my earlier comments about what the driver in this would have been; that if this had been a major, key issue - before my time but it may well have been revisited in the time in which I have been doing this job - then the arguments would have had to have been advanced to say "We now need more money to do something because the scheme, in terms of the overall assessment and our own internal assessment, is far short of what we believe is necessary. It is a drag on that recruitment and retention strategy." The reality is, though, that if that argument is advanced and money is then given to the defence vote for that purpose, it is then not being given to something else. There is not an open book from the Treasury in all of this. We would have then had to have set our demand against other priorities. However, that is not the way in which it has been approached. That could well have been the way in which that would have been approached because the cost of pensions - by the very nature of the numbers we are dealing with - is likely to be heavy. In those ways it could have become an issue. The other aspect they could have looked at could have been on the contribution side and, going back to the earlier approach, to say "Is this another way in which enhancements can be made in all this?" That would have been quite a significant departure from the current approach, but it would have been a way of dealing with some of those issues.
(Mr Ingram) I did not use that emotive analogy. That is your interpretation.
(Mr Ingram) That may be how you interpret that. What I am saying is that in any set of relationships, if money is being made available, if we are making a bid against the centre across the broad reach of the Armed Forces, then we have to justify our case. By your argument, there should simply be an open pot from which the Armed Forces can draw. That does happen in terms of times of emergency or in times or crisis - not a wholly open book, everything has to be justified in terms of extra expenditure, and there has been quite exceptionally extra expenditure because of events in Afghanistan. So the Treasury (ie, the Government) shows a willingness to deal with the immediacy of those particular problems, but it must be part of the overall assessment of what we are doing, in terms of whether it is pay or whether it is pensions, and that then becomes a cost which we are saying is something that has to be justified against all the other demands across the broad reach of Government. If people are appalled by that (and I assume you may well be appalled by that) I would ask them to look at the real world and not at the world of rhetoric.
(Mr Ingram) Both the schemes you refer to are contributory schemes, and I cannot remember the figure off the top of my head ----
(Mr Ingram) I do not know whether, Mr Howarth, you are developing your own policy as part of this. I understand you are ----
(Mr Ingram) I am interested to know whether it is a spending commitment which has been made to you because you set out your arguments at length trying to justify ----
(Mr Ingram) There are also arguments contained within it and premises upon which it is based.
(Mr Ingram) If you are trying to help me against the Treasury, we are always grateful to receive that type of assistance. The more we can lift the argument about the importance of the Armed Forces overall, and I know that is an issue you share with us, then the better it is for all the people who serve in those circumstances which we ask them to serve on behalf of the country. However, in terms of that approach which is taken, of looking at two schemes where, in the case of the police scheme, 11 per cent is the contribution towards that, yes, if we change the basis of it then you can have uplift in a whole lot of key areas. Please recognise, however, what I am saying here in terms of how we assess this: that we believe this to be a generous scheme (that may be contested); we believe that it meets a whole lot of needs within the Armed Forces community; we are rearranging it in certain areas to deal with some of those specific issues, and there will be an uplift as a consequence of the changes if that is what is then implemented. So we are beginning to address all of that. However, to cherry-pick and say "There is one element, now lift it there; there is another element, now lift it there", means there must be a cost-element to it and that must be met from somewhere.
Mr Howarth: The point we are making is that you said in your memorandum that cost neutrality was not the starting point. What you are now saying is cost neutrality has to be a point. Let us not pursue that, because genuinely I recognise the role of the Treasury in this and I do feel that the public has got to know that if ministers are on-side in the department that is responsible and the Treasury holds the purse-strings, the nation has to decide on the priorities. One final point, Minister: when you refer to the police, as Mr Cran has just pointed out to you, the cost to the employer of benefits as a percentage of pension payable to the police is 21 per cent; the Armed Forces is 15 per cent. So they are less of a burden on the employer than the police, yet if a police officer is killed in the line of duty his spouse gets five times his pay, whereas the spouse of a serviceman or women killed in action, it is proposed, will get three times.
Chairman: And the Army is not threatening to strike.
(Mr Ingram) What we have done is identified some of those key areas that have been raised (and dependants' benefits is a prime example) and looked at the inequities that exist between officers and other ranks and to try and find ways of smoothing that - to try and find some sort of standard methodology contained within that. It is right to say that in making some winners there then has to be reductions elsewhere - that is the very nature of the way in which the sum of money is being re-allocated - to meet those areas of what we believe to be issues that need to be addressed - widowers' and widows' benefits, and dependants' benefits and other areas - and smoothing out of the relationship in terms of other ranks and officers. So it is addressing some of those inequities that we are seeking to do, and the inevitability of the logic of this is there will be losers within all of that. I do not know whether the argument will then be "Everyone should be a winner out of all of this" and I can understand some who may argue that, but we have to live within a real world in all of this. The way in which we are approaching it - and I repeat the point - is that we believe that we have a generous scheme, we believe it is substantially funded and what we are now seeking to do is to take that funding and better allocate it. That is the philosophy which has been applied and will be applied in all of this. To do it in a different way means we are then into issues of funding. Where does the funding come from? Contribution or by some other input? Our view is that we cannot justify that other approach because it is not (and this may, hopefully, convince Mr Howarth) the key issue that we believe other issues are within the services which we seek to deliver. That becomes the priority of government and the strategy of government. There is nothing inconsistent with that approach across governments.
(Mr Miller) I wonder if I might just enlarge on this business of reducing retirement benefits. What we have done is slightly defer the Immediate Pension point for the early retirers and reduced the accrual rate in the early stages of the Service, which means someone who retired early will receive, relatively speaking, lower retirement benefits than he would have done. That has paid for both improved benefits to widows, dependants and so forth, but also an improvement in the pension at the full career point, because of course the move to final salary rather than the notional salary, which we base the current scheme on, will result in an improvement for a significant number of servicemen who are serving on the higher pay range.
(Mr Miller) No. Both groups will in future be on a common basis for the immediate payment, rather than the current situation which means that another rank has to serve for longer for immediate payment than does an officer. They will all have to serve for the same time. As I say, there is some slight delay in the immediate payment point. The other point I was making is that for some of those who retire early there would, indeed, be a reduction in benefits because the accrual rate has been reduced. The current scheme provides for accelerated accrual in the early years and then a much slower rate of accrual for the balance of the Service. We have moved to a common rate right across the Service and the net effect is that there will be some losers amongst those who retire early; amongst those who serve to full career there will be some who gain, and we have been able to fund the improvement in benefits for widows and dependants and so forth.
(Mr Ingram) We would see it very clearly as a manning tool. There is absolutely no question at all about that, and it can assist in encouraging people to remain in Service, because they get to that point where they then get the benefit. There is nothing I would suggest unusual in this approach: all employers, public and private, would probably view their pension policies and schemes as part of their overall remuneration package. If they do not do that then it is an unusual philosophy they would adopt. So it is about attraction and about trying to keep people in place, and we are no different in that particular sense. The immediate pension approach is an integral part of that overall remuneration package, and it has benefits in terms of encouraging the retention aspect to it. It is interesting that some have been arguing a different approach on this but no one is saying that we should abandon that strategy of the immediate pension.
(Mr Ingram) What I have tried to do is give the flavour that it is not the critical issue, as it can be elsewhere, in terms of the golden handcuffs or however they are going to be described. We have recently enhanced the air crew retention measures because we have recognised that to be a device by which hopefully we can encourage key personnel - and it is not just pilots but others within that structure - who have particular skills and attributes that we want to retain. Because we have been able to justify it on the basis that there is a problem there and it is a very real problem that has to be addressed and a response is then given to that. In terms of bonuses, if it became the same flavour elsewhere, then the way in which we would have to analyse it is exactly the same. Is it important? Is it a measure which we can now put in place that will get that potential return? We will have critical areas. In one sense all of that is constantly being considered but at the present time not actively considered. It is a concept out there which can be lifted off the shelf at any point if we have a critical area, and then looked at as a possible solution. The danger I would suggest in all of that is we would end up with a plethora of a whole range of different schemes and remuneration packages, and that is not necessarily the best way of tackling the scale of the problem that we then have to address in all of this. I do not know whether that answers your question? It is not written out as a concept, and it is something which we constantly have to give consideration to - whether this is a mechanism which would deliver in a critical area - but the critical area has to be there before we apply it.
(Mr Miller) I wonder if I might, Minister, say this: although we did not attempt any detailed costings of possible bonuses, we did confront the basic parameters which are, of course, that a bonus in these circumstances would be taxable and therefore, by definition, has to be substantially higher than the gratuity paid to the Serviceman when he retires - never mind something to allow for the fact that he would have an income stream as well. So we are looking at bonuses which would, of necessity, be substantially higher than the gratuity that is paid. The reason for not going into detailed costing is that there seems little point in detailed costing when any assessment of the likely effect of the bonus would be, at best, broadbrush and, arguably, highly judgmental, because one has no scientific way of assessing what effect the figure of X as a bonus would have in terms of the retention or the tendency of people to leave. So it was really faced with this basic problem of accommodating the taxability of bonuses that made us think that we were unlikely to be able to produce an acceptable solution to replace the immediate pension
(Mr Ingram) My answer, shortly, would be yes. If we thought differently then we would be tackling it in a different way. Barry may be able to give a more detailed answer in terms of the valuations made and the attitudinal surveys and the focus group approach on all of this.
(Mr Miller) Frankly, it is a feature of any pension scheme - some people benefit more from elements of a pension scheme than others. What one is doing, whether it is a contribution or an abatement, which it tends to be with a flat rate across the board, is paying for the average. The fact is, just taking the basics, somebody who dies within, say, five years of retirement does far less well out of his pension scheme than someone who survives for twenty or twenty-five years
Rachel Squire: A point well made.
(Mr Miller) I am not quite sure, Mr Rapson, what you are after. The fact is yes, there are different fitness standards in the three Services. The three Services also differ, of necessity, in terms of the point at which they may well find it necessary to dispense with the Services of some individuals. Clearly, for example, the infantry requires a much higher level of fitness than, for example, the Royal Electrical and Mechanical Engineers, as they were. That would be adjusted and I am taking examples deliberately within one Service. They will have a different approach to these things. What we have done is attempt to construct a pension scheme that will cope with the extremes of the likely requirements of the Services.
(Mr Miller) No, I do not for one moment think there is a bland average for everyone. I think the pension scheme inevitably charts a mean path between the alternatives. We then tend to rely on other manning devices to do the fine tuning and, as I say, this is not an issue between the Services: it can be an issue within a given Service.
(Mr Miller) We have made no proposals to the Treasury on bonuses. As I said earlier, having realised that bonuses would be taxable and therefore substantially greater than the gratuity, we did not feel there was much mileage in that particular way forward.
(Mr Ingram) I think this is an important issue and we do recognise that a lot of the material is not best placed and probably a bit out of date. Clearly, if and when the new scheme comes into place, we have a responsibility on us as a Department to try and make this as clear and informative as it possibly can be without it being over complex, because even very experienced people trying to assess some of this find it difficult and there are occasions when there is a requirement to go to an independent financial adviser. If, say, the choice was to move from the existing scheme to the new one for an existing member of the Armed Forces, that has to be the individual's judgment, so there is an onus upon us to make sure that they are fully up to speed with every aspect of this - the complexity as well as the simplicity of it, as best as that can be explained. We recognise at the end of the day, if it is a transitional judgment that has to be made, it is a matter for the individual and best advice would be given but it cannot be independent advice. We cannot then say, "It is best for you to do this". That has to be taken on the basis of all the information that we so provide. We are putting a lot of effort and energy into looking at how this can be done and how we communicate that, both in written material and on the internet and other ways we can spin out or play out all that information. Anyone who tries to understand the pension scheme knows how difficult it is, and all we can say is we will do our best to take the very best practice in the explanation of all of this.
(Mr Ingram) How long have you got?
(Mr Ingram) Yes.
(Mr Miller) Just to answer that specifically, we do envisage that we will give individual projections of what they would get in these schemes.
(Mr Ingram) You are taking these from the examples. They, of course, are features of the particular combination of time served and so forth in the examples that were given. It is not necessarily the case that all lieutenant colonels or all sergeants have lost out.
(Mr Ingram) In that particular case, yes.
(Mr Ingram) The point I was making earlier is that we have said that it is recognised that those who retire early will not do as well under the new scheme as under the old, and that is one of the things they will have to take into account when they make the judgment as to whether or not they want to transfer to the new scheme.
(Mr Miller) It is more complex and I think this is one of the issues that we certainly need to give some more thought to before we draw up our final proposals. The fact is, though, that all our experience of commutation is that it is very few individuals who do not take the option of a tax free lump sum. The question really is one of how many benefits according to the complexity, but, as I say, one notes what the principal Civil Service scheme has done and it is an area we would need to think about.
(Mr Miller) I would not say that it is any more complex for us than for the comparator.
(Mr Ingram) Remembering the comment I made, we are still in an input mode at the moment. We have not concluded our assessment of all of this, and that is why I said in my opening statement that the input from this Committee, coming at the time, will assist us in that. It does not mean to say that every recommendation will be automatically accepted before we know what the recommendation is, but the quality of the assessment out there helps us to come to conclusions in some of those areas. It is not signed off on all of these aspects and, therefore, if the case is well made and there is a sustainable argument, then it has to be given a positive consideration.
(Mr Ingram) Barry will deal with this but there is a general issue here that this is another example of where, as we have been through this process, we have begun to look at this because it has taken on an increased debatable point as to what should happen. These are very big issues right across the whole of the public sector, and some departments I understand are now beginning to tackle it. We have a particular issue in depth here that we have to look at. It is then how is that going to be costed, how is that going to be funded as well at the end of the day, and there is work still required on this to establish fully where we will end up in terms of what is identified as being the type of partner, what the qualifying criteria would be, and how that is to be met. If it is to be met within the existing scheme, then it means that the benefits that have been paid to new members may have to be modified accordingly. So we have to look at this in that particular way and we have not yet done a total summation of all of that.
(Mr Miller) We have been in the first instance talking to the Government Actuary about the costing of this likely effect. There are discussions still going on. We will need in the process of producing our estimate to get some sort of handle on the number of servicemen who have unmarried partners who would fall within an acceptable definition. We have been giving some thought to acceptable definitions - there are a number of models out there - for example, the Australians - and the aim would be to bring all of this work together in due course to enable us to put a handle on what it would cost. Once we have done that, of course, we are then up against the general policy, and Mr Howarth just now quoted the policy which, of course, applies to the specific issue, not the generality of the pension scheme.
(Mr Miller) That is our intention, yes.
(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.
(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.
(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.
(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.
(Mr Miller) So I believe.
(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 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.
(Mr Ingram) Is it driven by the European Courts? No.
(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 dictat 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.
(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.
(Mr Ingram) $48 billion.
(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 operation of 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.
(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.
(Mr Miller) The issue of home to duty travel is clearly a difficult one and we have not reached final conclusions yet.
(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 Ingram) We do not use that terminology in terms of the compensation of individuals.
(Mr Ingram) From words I have used?
(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.
(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.
(Mr Miller) The words you were quoting there were a description of the effect of our proposals. We did not, when looking at the Compensation Review, do so against an objective of cost neutrality.
(Mr Miller) We would not be faced by any budgetary constraint in terms of implementing any scheme, whether it is the scheme we have or, indeed, the scheme we propose, because clearly the issue would be demand-related, and it would depend on the number and type of claims that we get.
(Mr Miller) I said that we did not conduct the Compensation Review with the objective of producing a scheme which was cost neutral in its effect, and we have not. The point is made that we expect additional cost in the early stages. The schemes that it would replace we would expect to pay if the demand was there. If cases were advanced we would not expect to be constrained by our budget, and that would apply to the new scheme equally. If individuals are entitled, they will be paid.
(Mr Ingram) I think we have given a clear statement on that --
(Mr Ingram) That becomes a debatable point. If further information is required in clarification terms, then clearly we will assist the Committee on that.
Chairman: It would be helpful if you clarified this. I am not having a general debate now.
(Mr Ingram) There must be a cost involved in this. This is something which, as Barry said, is demand-led --
(Mr Ingram) Yes. The rules of the scheme define what then can be claimable from it, but that will be assessed on the basis of what is sensible and the way in which we are now approaching the new structure of the scheme. Does it sit within that? Is it something which can then be evaluated and, therefore, is there a liability for us within that?
(Mr Ingram) That is one way of looking at it but it is not the way we are looking at it. I am giving that clear statement. There is no capping because of the demand-led aspect to it, and that is not the approach we are taking to this particular scheme. It is not being driven by that consideration.
(Mr Miller) The expenditure on war pensions was what was known as annually managed expenditure - in other words, it is demand-related and not capped and it remains so even under the Ministry of Defence. Although the - how can I put it - structural position may change, we do not expect the amounts that we pay to be capped by any budgetary limit under the new scheme.
(Mr Miller) No, we would not expect that.
(Mr Ingram) Not at all. There is an accepted list as well. If medical science changed or medical knowledge changes then we are obliged to revisit our previous consideration. There are unknowns in all of this. We hope to put in place a coherent, structured system which is hopefully better and more easily understood so that there is then an obligation on people to bring forward their claims and an easier means of evaluation and rights of appeal, and so on, for fair purposes. We believe that is the right approach, it is a cleaner and more efficient system, not driven by a financial consideration.
(Mr Ingram) There is no certainty in that.
(Mr Ingram) That perhaps could happen in certain circumstances.
(Mr Ingram) I do not know whether we have historical data on this in terms of the period of claim, I do not know whether that is immediately available, if not we can seek to make it available. We are approaching this on the basis of trying to get a clean, coherent structure and not driven by the philosophy which you are alluding to --
(Mr Ingram) -- to try and ensure that it is structured in such a way to encourage people to claim within a reasonable time scale. Undoubtedly it is different from what exists at present. We are changing the culture of that approach because we believe it is a better way of doing it, rather than going through the civil burden of proof and rather than having it open-ended in terms of the claim structure at the present time. We believe it is more sensible in terms of best use of all resources and in the way in which we can then, I think, assist our serving personnel to claim their entitlement. That is our philosophy. That is our approach. It is not driven by cost neutrality or saving money out of the system.
(Mr Ingram) Okay. Mr Chairman, what I can say is, and it is repeating the point, we are still in the receive mode, we have not closed down on this. This is something which we have tried to set out and tried to define. We will certainly take into account the representations which have been made by the British Legion and any representations also made by your Committee. Again, if it stacks up, if it is an issue which has a justifiable point then we will revisit it in a positive way.
(Mr Ingram) The answer is yes to that.
(Mr Ingram) Are you talking about the compensation scheme here or the pension scheme?
(Mr Ingram) This is on the burden of proof point and the shift in the direction on this. Clearly people will think that the current system is, in one sense, preferable because it is open-ended. What we are saying is to try and bring some structure to it and to put measures of evaluation into this and to try and enhance the payments for attributable injuries and having a lump sum payment being made for pain and suffering and then a guaranteed income stream alongside. That, it seems to me, to be a more desirable approach on this. If the view of the Committee is that we should have no change in this I think we would be losing a lot of enhancements in terms of the restructuring that we are trying to put in place here.
(Mr Ingram) If it is an old claim it is set against the old scheme. The new scheme relates from the point of implementation.
(Mr Ingram) There are assertions in there - I am not a walking encyclopedia of every question ever asked and every answer that has ever been given or all the minutiae of Ministers arrangements within departments. I do not accept some of the assertions contained within there. What I will do, Chairman, is take that on board and if there is an answer required I think the best thing is to do that in writing, to take the allegations and to set it against what we are seeking to do. Something in it tells me that some of the allegations there do not stand the examination.
(Mr Miller) There are, indeed, problems with medical records. If I can come back to your original question, Mr Hancock, the fact is that under the War Pension Scheme it is effectively the agency which is required to prove that a condition was not attributable to service. What we are proposing is to adopt a much more common burden of proof - which is the one that is used virtually universally elsewhere in the United Kingdom - which is quite simply that the individual should demonstrate that on the balance of probability his condition is attributable. Clearly in a case where medical records are not available that is an issue that would have to be taken into account, just as it is an issue that the courts will take into account if a case ended up there because there was an issue of negligence.
(Mr Miller) That if I may say so, Mr Hancock, misrepresents our position.
(Mr Ingram) Statements have been made here about the Department's policy of approach relating to answers which have been given in Parliamentary questions. We all know that sometimes interpretations can be different and I do not for one moment accept that the Department, in the way in which it has been described by Mr Hancock, operates in that way. We are very careful, we are very analytical and we are very thoughtful in the way in which we tackle all of these issues. If we come to different conclusions then, of course, it is based upon our assessment, but it not because we are uncaring or indifferent or we do not recognise the importance of the issue. If the answers have been expected today based upon - I do not know whether Mr Hancock has them - the specific Parliamentary questions then I think it is better if we analyse it and look at the interpretation placed upon it and if further clarification is required to set out the Department's position that would help everyone. I am not accepting those charges against us.
(Mr Miller) Indeed.
(Mr Ingram) I am also confirming what has been said, there are gaps in the knowledge base. There is no way in which that can be recovered, that gap, because, for whatever reason, that information is no longer there. There is a danger about this because we are, perhaps, dealing with a specific series of claims that are in at present and then try to make the headlines in the back of all of that, and I think that is unfair.
Mr Hancock: That is a bit unfair!
Chairman: Hang on, we have 25 minutes to go. We have had the same question three or four times, the Minister has said he will respond. When that response comes if the Committee wishes to take it up further we will only be too pleased to do so.
Mr Hancock: I am sure the Minister is glad of your protection, Chairman.
Chairman: Can we have a new question now, please?
(Mr Ingram) Yes. I do not think there is any other answer than yes, because of the new approach we are adopting. It has to be an attributable injury rather than any injury. If the view is that just because someone is in the Services end they should automatically get a claim that, I think, is not a proper approach. It has to be attributable to Service. What we are seeking to do within that is to give enhanced benefits targeted on that attributable injury. I would suggest, Mr Hancock, that our approach to this benefits those who are in Service, have an injury and then get the benefit of the lump sum and the guaranteed income stream. This is an enhancement in terms of that approach.
(Mr Ingram) I will write in detail on this.
Chairman: We have had this question four times now, I cannot see much point in proceeding.
Mr Hancock: You might not, Chairman, but there are a lot of people out there ---
Chairman: Mr Hancock, when you chair a meeting you run it, when you do not chair a meeting I run it.
(Mr Ingram) I have said in response to an earlier question on the time limit eligibility that a case has been made and we will examine the validity and strength of that case. We have not closed down on that aspect at all.
(Mr Miller) We anticipate we will need to have some review arrangement, we have not yet thought that through in any detail.
: Mr Jones
(Mr Miller) It is important. We will need to give more thought to how we set up any review arrangements.
(Mr Miller) It might well be.
(Mr Miller) Mr Hancock, we need to give more thought to the detail of the new arrangements that we incorporate. Clearly it will be necessary for any arrangements we set up to be flexible enough to cope with the sort of circumstances you have outlined.
(Mr Miller) We have said that the tariff figures that we published are only illustrative. We need to give this more thought.
(Mr Miller) That is a factor.
(Mr Miller) It is not that we have not looked at it, we have not worked this through in the detail which will be needed before we finalise the scheme. One of the things that we needed to work on, and one of the areas was, frankly, the views and reactions that we got from consultations were going to be important element. One of the things we wanted to establish was whether our adoption of the tariff approach was or was not acceptable to the interested community.
(Mr Ingram) Can I repeat to the Committee a phrase I have used a number of times, we are still in receive-mode. We are still receiving points of view on all of this. What I said in my opening statement was that we had to, of necessity, lay down a framework to set out our thought processes. It is not all rounded off. It is not topped and tailed. There are inputs still coming in from outside bodies and, of course, this Committee is only now - and I do not mean that nastily - giving consideration to the conclusions you will reach as a Committee, which then feeds into our final thought processes. At the end of the day that which goes up for approval then has to be set against my Ministerial judgments and decisions alongside the Secretary of State's position. There is still a Ministerial examination which has to take place in all of this, based upon the very detailed work that is done within a department and then any counter view that may be out there, and that becomes part of the process of arriving at the final decision.
(Mr Ingram) We have an open approach on this.
(Mr Ingram) I will explain it in the way I want to explain it rather than answer if it is true or not. If it relates to a previous period before the commencement of the new scheme then it is the existing scheme which would then apply.
(Mr Ingram) I have already said that, all claims would be set against the existing scheme.
(Mr Ingram) Yes. If it relates to a period prior to the commencement of the new scheme.
(Mr Ingram) Yes.
(Mr Ingram) Because the lump sum payment is for pain and suffering. If an injury has occurred then the judgment would be made that they have a quantifiable claim and a lump sum is then paid. In the case you have given, where it is a recoverable injury --
(Mr Ingram) -- there is nothing for that because they made a full recovery, they can then carry on their active service career or gainful employment outside once they leave. A lump sum is paid for the pain and suffering due to an attributable injury.
(Mr Miller) Yes, indeed service personnel are able to take out their own insurance. That is not without its difficulties, because the insurance industry does find the extreme conditions of Service life sometimes a little difficult to cope with. We think it is right and proper that we should protect or we should offer the individual some compensation for the pain and suffering he incurs over and above what he may have made arrangements for and paid for privately.
Rachel Squire: Thank you.
(Mr Ingram) You mean instead of paying it as an income stream, paying it as another lump sum?
(Mr Ingram) I will refer you to a good mathematician but, Barry, you are qualified to deal with that.
(Mr Miller) I certainly would not meet that particular criterion. We fully accept the arguments that have been advanced by the British Legion that it is undesirable to pay compensation for loss of earnings in severe cases as a lump sum because of the risk that the individual concerned may subsequently become dependent upon the state or on the charity.
(Mr Miller) Because they cannot manage it. That is why we think it is appropriate that the compensation for loss of earnings should be paid as an income stream, in other words should directly replace the pension.
(Mr Miller) From the point of view of the individual it makes little difference. He will get the amount monthly, as it may be, and that is the key issue.
(Mr Ingram) I would need to offer you a note on that. It is not the sort of thing I can put across the table?
Mr Howarth: It would be wholly unreasonable of us to try and get you to answer detailed matters like that.
Chairman: You have got a very good team behind you. Ladies, could you answer the question?
(Mr Ingram) It is a better way if we reflect on the question and give you a written response. It is a bit unfair to suddenly get a piece of paper thrust into my hand and try and then interpret it. It is better to take the quality of the question and try and get a quality of answer.
(Mr Ingram) You are recognising the danger of this. If the wrong answer is given on the basis of misinterpretation then it sets the wrong hare running. It is better we get the question and try and get a precise answer on that basis.
(Mr Ingram) On the administration of the scheme we recognise this is an important feature of the acceptability of the scheme in one sense but important also from the Department's point of view to show our duty of care has been properly played out, so there is an onus on us to put in place as effective and as quick a process as we possibly can put in place with all the attendant appeal mechanisms that flow from that. I well understand the concerns that if we put a new scheme in place, it is the same length of time, and it is not as quick and clean as we hope it would be. We have to make a very close examination of this to try and make it as efficient and effective as possible. As we speak --- probably not as we speak because some of the people working on that are sitting behind me so they are not working on it at this precise moment but when they go back to their desks today they may be giving consideration to that. That is not a ministerial direction. I am sure they understand the point I am making on that. In terms of the statistics it is better to have a written response on that.
(Mr Miller) Probably the single largest cause of delay is the need to obtain medical records and consider them individually. The reasons that we think we can improve on existing arrangements are fundamentally because a tariff scheme is clearly easier to administer and quicker to administer than one based on individual assessments. It is essentially a quicker process to decide which particular level of tariff it should be than a report which goes in detail into each condition. The second element that makes us we believe we can do better is because the Department's efficiency experts have been looking at the process and have suggested a number of ways in which improvements can be effected and they will be implemented on the existing schemes.
(Mr Miller) It was really just to not leave a misleading impression that decisions were entirely in the hands of the medical profession. The decisions are taken by the individual case officers who have access to medical advice where that is needed. In some cases it would not really be necessary. Quite frankly, if you are dealing with a case of amputation there is no need to employ a doctor. In other cases clearly you would need a medical view as to the nature and implications of the condition.
(Mr Miller) No, the decision is taken by the individual case officer who is not medically qualified. They will have access to medical advice where they need it.
(Mr Ingram) Barry will deal with this.
(Mr Miller) Because we are not dealing with negligence cases. The cases that go to court will normally be cases that allege negligence. Obviously there we will reflect the procedures and practice, as indeed we do already in our approach to this. This was not focusing on that area and for that reason the changes in the court process does not really affect what we were proposing.
Chairman: We have one last question. Kevan Jones?
(Mr Miller) The straight answer to your question is no and no. There is no way in which this scheme will stand in the way of individuals who wish to take action against the Government for negligence. That avenue will be open. The reason for adopting no-fault compensation is to provide a system of compensation that does not oblige the individual to pursue us through the courts and all the stresses that that puts on them, which does not mean that they cannot do it if they wish to.
(Mr Miller) That is perfectly true, yes, but nevertheless we think that no-fault compensation is a sensible approach, again given the particular things we ask of the Services rather than expecting the individual to demonstrate that there was some fault on the part of the Department.
(Mr Ingram) Thank you.