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1.57 pm

Mr. Nicholas Soames (Mid-Sussex) (Con): I apologise to the House and to you, Mr. Deputy Speaker, as I have to the Secretary of State by letter, for the fact that, since the business managers moved this debate to today, an obligation prevents me from staying for the winding-up speeches; indeed, I have to leave very soon after I sit down. I thank the Secretary of State for being gracious in that respect.

George Washington said:

The changes to the armed forces pension scheme will determine how we treat our veterans and their families for years to come. The arrangements that we establish now will set down the provision for those who have not yet even begun their military service, and they will have profound implications for those already serving, should they choose to transfer to the new scheme.

The starting point of any armed forces pension scheme must of course be the unique nature of the armed forces themselves. I quote from an excellent letter in The Daily Telegraph yesterday from a gentleman in Scotland, which I thought was very well written:

All that the members of the armed forces ask is that they and their families be treated fairly in return for the sacrifices that they make on our behalf.

That unique situation has been recognised by successive Governments, including the present one, who rightly acknowledged it when they introduced the

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minimum wage. The right hon. Member for Makerfield (Mr. McCartney), the then Minister of State, Department of Trade and Industry and the Minister responsible for the National Minimum Wage Act 1998, gave his reasons for making the armed forces exempt from its provisions:

An introduction to military pay on the Ministry of Defence website states that

That should continue to be reflected in the make-up of the new armed forces pension scheme. Recent events have demonstrated the critical importance of ensuring that our armed forces are supplied with the best equipment and accorded the best conditions of service. After all, it is the men and women of Her Majesty's armed forces who are the key to securing success in often dangerous military operations.

That is the litmus test that we shall apply when assessing the adequacy of the Government's proposals to change the arrangements for the payment of service pensions and compensation to those injured as a result of their military service. Regrettably, the Government have failed to make a good start. Although they instigated a review following the publication of the strategic defence review, it was not until 2001 that a consultation document appeared. It was roundly condemned in a tour de force by the Defence Committee, to which the House is greatly indebted for its thorough, painstaking and professional work in a highly complex area, and whose deliberations I make no apology for quoting liberally. It took the Government another two years, until last September, before further proposals were published, and they, too, received a thorough going-over by the Select Committee.

Our first objection to the Bill, and one of the Select Committee's principal indictments, is that it is an enabling measure, with much of the essential detail missing. As the Committee concluded, it is unreasonable to expect Parliament to agree enabling primary legislation without those details being available. In their response, the Government rather feebly pleaded that their September proposals provided a suitable basis for discussion, but they admitted that their plans to replace the immediate pension with a new statutory early departure scheme had not been finalised. The early departure scheme is not only a major change in armed forces pension schemes but is the principal source of the savings that the Government hope to make to fund improvements elsewhere. As the timetable for introducing the Bill was exclusively the Government's responsibility, there is no excuse whatever for bringing before Parliament a measure whose principal controversial ingredient is still the subject of negotiation with other Government Departments.

The armed forces pension scheme, uniquely among pension schemes, has no independent governance, and its members do not have trade union representation. Instead, it is constructed and protected by primary legislation, or Act of Parliament. However, the

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Government are to strip the armed forces of even that protection, and are not going to introduce independent trustees. When they eventually complete negotiations on the final shape of the early departure scheme, its details, as the British Medical Association has pointed out in its helpful briefing, will be given in secondary legislation, which will not be subject to proper parliamentary scrutiny. That is simply an unacceptable state of affairs—the Government should have held the Bill back until that key issue and others were resolved.

Mr. Wilkinson: My hon. Friend is making a powerful speech and has just made a telling point. Is not a great deficiency of secondary legislation the fact that it cannot be amended? Measures as complicated and as important to servicemen and their families as the early departure scheme require detailed scrutiny and the provision for amendment that primary legislation alone provides.

Mr. Soames: I entirely agree with my hon. Friend, particularly because, as the Secretary of State rightly acknowledged, this is a delicate and profoundly important matter for members of the armed forces.

Mr. Hoon: Can the hon. Gentleman answer two questions? First, if he believes that there is a principle missing from the Bill or, indeed, the detailed arrangements, does he acknowledge that it could be added by means of an amendment if he and his supporters feel strongly about the issue? Secondly, is he saying that if a beneficial change in the detailed provisions of pension arrangements is to be introduced—that regularly happens, as I have told the House—members of the armed forces should wait for primary legislation?

Mr. Soames: The right hon. Gentleman is leading with his chin. Members of the armed forces are used to waiting for almost everything—[Interruption.] I am going to answer the question. The Bill is an important measure. Given the time that we have had to wait for it, the missing details should have been included in a detailed appendix.

Mr. Hoon: The Opposition should table amendments.

Mr. Soames: We will do so, but if the Government are going to make a noise like a chicken, it is preferable that they lay an egg. We would like complete and detailed provisions.

We do not intend to divide the House tonight, but we reserve our position and will judge the Government on any progress made in Committee. The Government have declared that the changes should be cost-neutral, so increased benefits can be paid to someone only if someone else has theirs reduced. We recognise the constraints on public expenditure, but the Government cannot proclaim that their motivation for introducing change is to produce a scheme commensurate with best practice elsewhere while at the same time cutting some existing benefits. The Defence Committee said of the initial consultation paper, in its first report published in May 2002:

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During interminable debate on this issue, the Ministry of Defence has effectively moved the goalposts by changing the actuarial assumptions on which everything is based. As the Defence Committee reported, the expected cost of the existing scheme to the Ministry in 30 to 40 years' time has been recalculated from 22 per cent. to 24.5 per cent. of pensionable salary. The new scheme will reduce the estimated cost to 22 per cent. However, if the original actuarial assumptions were applied to the new scheme, it would cost 20.3 per cent. of pensionable salary, so the total value of the new scheme is 1.7 per cent. less than the value of the current scheme, which flatly contradicts the Government's claim that any savings in one area would be used to enhance benefits elsewhere.

Sir John Butterfill (Bournemouth, West) (Con): Does my hon. Friend agree that it would be helpful if the Government could give figures for the saving that they would make by quantifying the precise saving made by deferring the pension from 60 to 65?

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