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Mr. Hoon: I will deal with that specific point when I reach it in my speech. I had thought that the hon. Gentleman would ask me about enabling powers—he obviously felt able to resist that temptation—but I promise him that I will give way to him again when I get to the relevant part of my speech. I hope that he can be patient that long.

We have published details of the two schemes in framework documents—copies are in the Libraries of both Houses. The full scheme rules will also be laid before the House in statutory instruments, giving the opportunity to comment and have an appropriate debate.

Mr. Gerald Howarth (Aldershot) (Con): In dealing with the vexed issue of parliamentary scrutiny, the Secretary of State suggested that the statutory instrument procedure is the way in which the schemes can be considered, but that will give us only one and a half hours of debate, will it not? Or can he tell us that we will have more time than that to deal with these very complex and important matters?

Mr. Hoon: Of course these are complex and important matters—I am not in any way suggesting otherwise—but as I will explain in a moment, the basic issue is how, if necessary, we can amend those complex schemes in time to put into practice any such change. We will be talking not about the broad-brush approach or the general principles, but about things like pension splitting. I had to deal with that when I was a lawyer in practice. It was a development that the courts began to recognise, but it was not allowed in many statutory schemes.

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To ensure that, in fairness, such changes are made available to members of the armed forces, it is necessary to have a relatively rapid means to adjust the precise terms of the scheme to implement them properly; otherwise, as the hon. Gentleman knows from his experience in the House, waiting for primary legislation could take a considerable time—which is the point that I was about to make in any event. If we had to introduce primary legislation each time a relatively minor change to the detailed provisions was required, such proposals would have to wait in the inevitably long queue for legislation. That simply does not seem fair.

The current schemes have been amended two or three times a year to reflect wider changes in Government policy. I have used the example of pension sharing on divorce, and other legal changes occur from time to time. It would be neither sensible nor fair to require such changes always to be the subject of amendment through primary legislation. We are all aware of the pressure of the Parliamentary timetable. It would be unfair to scheme members if we had to wait for parliamentary time on the Floor of the House, with all the appropriate Committee procedure. I shall give way again if I have not satisfied the hon. Gentleman on that important point.

Mr. Howarth: I wish to deal not so much with the subsequent changes as with the initial proposals. The new scheme will be presented to Parliament by way of a statutory instrument. Does the Secretary of State propose to have one and a half hours' debate on the whole new scheme?

Mr. Hoon: No. Obviously, as the Bill progresses through Parliament, the hon. Gentleman and his colleagues will have the opportunity to deal with the details, as well as the principle, in Committee, so he will have as much time as the usual channels allow. I know of his enthusiasm for Committee work, but I promise him that we will try to limit it within reason.

I recognise the Defence Committee's concern that armed forces personnel have no representative body to speak for their pension interests. However, the options are inevitably limited. It is long-established practice that the interests of service personnel are represented though their chain of command and, in particular, through the personnel staff, who have had a direct contribution to the process of policy formulation for the new schemes. We believe that that arrangement has worked effectively, identifying and representing the concerns of service personnel with regard to the reviews. In addition, there was an extensive public consultation exercise, and we commissioned an independent view of the design of the new schemes. Copies of those documents are in the Libraries of both Houses. Against that background, I believe that the interests of service personnel have been taken fully into account as we have developed the new arrangements.

Angus Robertson: On the background documentation and the assessment of the impact of the Government's proposal, may I raise an issue that may be specific only to the handful of hon. Members who represent constituencies with a strong footprint of military bases—I have two large RAF bases in my constituency—and a local economy that is in part

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subsidised by early retirees going into the work market because they are confident that the current armed forces pension allows them to do so? Is the Secretary of State content that the Government's new proposals will not have a detrimental effect on the jobs market, especially in low-wage areas such as Moray? If he has evidence to back that up, will he share it with hon. Members who represent constituencies such as mine?

Mr. Hoon: I am sure that the hon. Gentleman is not suggesting that people who retire from the armed forces should be exploited in any way by being offered an income less than what the market would otherwise bear—[Interruption.] I thought that that was the implication of his question. I expect those who retire from the armed forces to be treated properly in terms of their wages and terms and conditions.

I assure the House—this is relevant to the point that the hon. Gentleman raised—that more detailed information on the arrangements for a new early departure payments scheme will be available by the time that the Bill reaches Committee. The scheme is the one major aspect of the proposals about which we have not yet given full details, which is due mainly to the limited time available following the publication of Inland Revenue proposals to develop an alternative to the early immediate pension. The early departure payments scheme is a unique, mid-career leaver's compensation scheme that will be paid to personnel aged 40 and over when they leave after 18 years' service. The early departure payments will be structured in a similar way to the current immediate pension, with a lump sum payment and an income stream paid until the individual reaches 65, when a second lump sum and pension will be paid. In fact, only a minority of armed forces personnel benefit from the current immediate pension. It has historically been an extremely expensive benefit for a relatively small number of people—about one third of the annual cost of the scheme goes to the one in five people who receive that pension.

The chiefs of the armed forces are content with the reduction in the value of the payments to fund improvements to benefits elsewhere and to help to cover longevity costs. The armed forces recognise that the levels of provision introduced in 1973 are no longer required to maintain retention through to age 40. It is also recognised that the level of assurance provided to those leaving is sufficient given the better employment prospects of those leaving the armed forces mid-career as a result of the improvement in transferable skills. The change is thus a sensible rebalancing of resources.

Mr. Wilkinson: Will the Secretary of State clarify what the level of gratuity or terminal grant will be for officers who leave under the new scheme at the "38 years of age, 16 years of service" point, and for people of other ranks who leave after 22 years' service? Will the terminal grants be more than the existing grants to compensate for reduction in people's income stream thereafter? That needs to be spelled out.

Mr. Hoon: I said that we have more detailed work to do on that aspect of our proposals, which should be available before the Bill reaches Committee. I do not think that the hon. Gentleman was dealing entirely with the specific point that I was addressing. I was talking

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about an adjustment to arrangements that were originally introduced essentially as a retention measure to encourage and pull through—to use a service expression—those who joined the armed services, and specifically the Army, in their late teens so that they would stay until they had completed 22 years' service. As I said, the adjustment is supported by the chiefs and recognises the different employment and retention situation in the armed forces.

The details of the new schemes are set out in two framework documents. The new pension scheme is a defined benefit pension scheme with benefits linked to final pensionable pay. It will give a high level of assurance to our personnel in their retirement or in the event of injury, ill health or death. It will also be fairer than the current scheme, with common terms for officers and other ranks. Those are two important differences from the present scheme.

There will be significant improvements to dependants' benefits. The death-in-service lump sum benefit will be increased from up to one and a half times pensionable pay following a death due to service to four times pensionable pay. Widows' and widowers' pensions will be increased by 25 per cent. to reflect the particular demands of service life and their impact on a spouse's ability to earn a pension. Additionally, dependants' benefits will be extended to unmarried partners, including same-sex partners who have a substantial relationship. The precise levels of payment that a dependant will receive will depend on individual circumstances, such as the rank and length of service of the service person who has died. The changes reflect key concerns that were raised during our consultations. They address the need to make proper provision for those who are left behind when personnel die or are killed in service.

The pension scheme will be introduced for new entrants to the armed forces on 6 April 2005 and will be available for existing personnel who choose to transfer to the new scheme no later than 6 April 2007. The decision to transfer will be entirely voluntary for each individual member, and the Ministry of Defence will give individuals all information necessary to allow them to make an informed choice so that they may decide what is best for them and their families.

It is also proposed that a new compensation scheme will be introduced from 6 April 2005 for death or injury resulting from service after that date. The arrangements will replace provisions under the war pensions scheme and benefits under the current pension scheme. The existing arrangements will continue for disablement or death due to service with a cause that predates 6 April 2005.

The existing arrangements have their origins in the two world wars of the past century and are they are now outdated and over-complex. The standard of proof used in the war pensions scheme—beyond reasonable doubt—was introduced in 1943, but for the first world war and the first four years of the second world war, the scheme used tests based on a balance of probabilities. We propose to use that standard of proof for the new scheme.

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The standard was changed to beyond reasonable doubt because of the extreme circumstances of the time, including a global conflict involving millions of combatants and thousands of claims that had to be decided quickly using incident and medical records that were often incomplete. The social, medical and political environment is very different today. The proposed balance of probabilities standard of proof is widely accepted for other occupational schemes, as well as for decisions in the civil courts. It is no longer possible to justify a different approach for the war pensions scheme. In combination with the absence of any time limit for claiming, it does not allow an evidence-based decision to reflect properly how conditions arise. The lack of focus of the current scheme means that if we perpetuated the current outdated arrangements, we would risk not making proper provision for those who deserve it most—those who are most seriously disabled—and do service personnel a disservice.


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