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Mr. Soames: I agree entirely with my hon. Friend, and I hope that we will have an opportunity to hear a speech from him this afternoon. On behalf of the whole House, I congratulate him on his richly deserved reward.

The Government assert that under the new scheme service personnel will be able to earn a full career pension, within Inland Revenue limits, of 66.7 per cent. However, the Forces Pension Society, to which the House is indebted, has calculated that the vast majority of people will be able to accumulate a maximum of 62.5 per cent. at age 55. Indeed, only a few three-star generals will qualify for the higher figure. As the Select Committee said, it is at best disingenuous to structure a scheme well over 90 per cent. of whose members are debarred from earning a full career pension without buying additional voluntary contributions. Moreover, cost neutrality is a misleading term. Individual pensioners are being made to fund the cost of their increased life expectancy while the Treasury reaps the full benefit of the large reductions in numbers that will flow from the contraction of the armed forces.

The early departure scheme is intended to replace the immediate pension, and it is in that scheme that the biggest cost savings will be secured—about £100 million a year, according to some estimates. The new arrangement will produce less income for those departing at age 40, and they will have to wait until they are 65 before their preserved pensions become payable, whereas under the current scheme they are payable at 60. It is important to understand that like the immediate pension, the early departure scheme will be a manning tool, principally for the benefit of the MOD, which needs to shed men at 40, particularly in the infantry, where physical fitness is crucial. The arrangement recognises that for many of those forced to retire from military service, the prospects of establishing themselves in a new career are more limited, at a time when family responsibilities are at their peak.

Mr. Brazier: The other huge disadvantage faced by those leaving the Army is that most of them do not own houses, and house prices are colossal. The one

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opportunity they have to make up some of that difference is by commuting a large part of the immediate pension.

Mr. Soames: That is an extremely good point, which I am sure my hon. Friend will enlarge on when he speaks. I thank him for all he does for the armed forces and for the wary eye that he keeps on their welfare and benefits.

To make the point more emphatically, the House should bear it in mind that some have put estimates of ex-servicemen among London's homeless as high as 20 per cent. Equally, for those with readily transferable skills, such as signallers, RAF pilots, aviation engineers and other technicians and highly trained service personnel, who are likely to be lured away prematurely by the private sector, the IP and its attendant lump sum payment provide an incentive to stay on.

The Defence Committee estimated that even assuming an inflation rate as low as 3 per cent., the value of the EDS payments by the age of 65—the new point at which the ex-servicemen's preserved pension is payable—will have halved. The new arrangements will be inferior to those applied to the police and the fire services, whose members will receive a proper index-linked pension at 55. What will the Government do to address the issue?

We must also be told what effect the removal of the EDS from the pension rules is likely to have. We were told by the Treasury in a parliamentary answer that the EDS will not be subject to national insurance contributions, but what guarantee is there that the Government will not change the rate or make other changes without consulting Parliament? An immediate pension is a pension enjoying all the special protections associated with pension funds. Our fear is that the EDS is neither fish nor fowl.

The £100 million cut in the cost of the IP will clearly help pay for some of the improvements that we warmly welcome. Those include improvements in benefits for widows and dependants, particularly the increase in dependants' pensions from 25 per cent. to 33 per cent., and the death-in-service benefit, which will increase from the current 1.5 times salary to four times salary, bringing that benefit more into line with best practice elsewhere and reflecting the unique commitment that servicemen give to our country.

We welcome the proposal to abolish the distinction between a widow whose husband's death was attributable to military service, and a widow whose husband's death was not attributable. In future, both groups will retain their pensions in the event that they marry or cohabit. That is an important step. However, the so-called unattributable widows whose husbands have already died, together with those whose husbands die before the new scheme comes in, will not qualify.

To that group of disadvantaged people, add one other distinguished group of pensioners wholly ignored by the Government—the widows of those who died before 1973, arguably some of the most deserving, since it was the husbands of many of them who helped preserve the freedom of these islands during the second world war. As things stand, they receive a pension worth one third

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of their late husband's pension, whereas those whose husbands died after 1973 receive half. Under the new scheme, future widows will receive 62.5 per cent.

John Robertson (Glasgow, Anniesland) (Lab): The hon. Gentleman refers to 1973. After that, there were 18 years of Tory Government. Perhaps he can tell me what he did to solve the problem.

Mr. Soames: That is not the point that I was making, but it is a valid point. Those people have not been treated as well as they should have been. In addition, those who married retired servicemen who left the forces before 1978 receive no widow's pension. They will see that they have been overlooked, particularly in favour of unmarried partners.

The extension of benefits to unmarried partners is a contentious issue that understandably arouses strong passions on both sides of the argument. [Interruption.] I could tell that the Secretary of State was referring to his hon. Friend the Member for Glasgow, Anniesland (John Robertson). I thought he might wish to speak.

We accept that the armed forces must have regard to social conditions prevailing in the wider society that they serve and from which they recruit. Nevertheless, as appears to be agreed across the Floor of the House, the armed forces are indeed different. We would argue that that difference—their commitment to a raft of values that is sadly not always apparent in the rest of society—results in the kind of stunningly successful military operations that we have just witnessed.

We are alarmed that the principal reason advanced by Ministers for the changes is not that without them recruiting would dry up, but that they must be introduced to comply with something rather dismally called the Government's equality agenda. I warn Ministers that the elevation over military efficiency of some kind of Orwellian social engineering and political correctness will inflict lasting damage on our armed forces. This is not the only area. There are other areas where great concern is being expressed by senior officers about the increasing "risk-averse" difficulties becoming apparent in the armed forces, and the reluctance of people when training to react in the way that they normally would.

Even now, the Government have failed to provide a comprehensive set of criteria by which servicemen and women living together will be deemed to qualify for the benefits available to married couples. In answer to my hon. Friend the Member for Aldershot (Mr. Howarth) at the Defence Committee evidential session just two months ago, the Under-Secretary said:

The Parliamentary Under-Secretary of State for Defence (Mr. Ivor Caplin): I am grateful to the hon. Gentleman for giving way. In his research for today's debate, I am sure he will have seen the memorandum that I submitted to the Defence Committee after my oral evidence, including Annex A, which details what the Ministry of Defence regards as a substantial relationship.

Mr. Soames: I am about to come to that. For all those who had the opportunity to read it, it was a walk through the foothills of immortality.

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On 27 November 2003, the MOD submitted a draft Defence Council instruction setting out some of the proposed criteria, which the Under-Secretary has just drawn to the attention of the House. Unlike the Secretary of State, I am no lawyer, and in that regard I am disadvantaged in life, but even I can see that the opportunities would make a member of the right hon. Gentleman's profession salivate.

When the Under-Secretary winds up, I trust that he will tell us what assessment has been made by the Ministry of the likelihood of litigation arising from those who are not considered to meet the criteria that are finally agreed. That is a matter of fundamental importance. I shall anxiously read in Hansard what the hon. Gentleman says about the matter. Furthermore, with respect, he needs to consider the knock-on effect his proposals on benefits will have on accommodation. That is a serious matter, which I know is giving rise to a great deal of thought in the Ministry of Defence, particularly among senior servicemen and commanders.

The Government will not extend to those on the existing scheme certain benefits from the new scheme that it might have been reasonable to make available, such as the much increased death-in-service benefit. However, they are prepared to import into the current scheme some of the less favourable aspects of the new one. For example, in order to comply with the Government's new wider pension policy, under the new scheme, the age from which the preserved pension will become payable will be raised from 60 to 65, but this change will also be applied to those in the current scheme.

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