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Mr. Soames: It is jolly lucky to have you.

Rachel Squire: I thank the hon. Gentleman for such a compliment.

As the hon. Gentleman and other hon. Members recognise, the Defence Committee has a long-standing interest in armed forces pay and conditions, and we welcome the keen interest that has been shown in our report. Towards the end of the last Parliament, we conducted an in-depth inquiry into personnel issues, and our report on the Government's proposals was published in May 2002. We stated that we considered the proposals to be

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In December 2002, the Committee took evidence on legacy issues from the then Minister, my hon. Friend the Member for Kirkcaldy (Dr. Moonie), and the report on the proposals that are before the House was published in December last year.

The Committee welcomes certain aspects of the Bill and the proposed schemes. We welcome the modernisation of pension and compensation arrangements in the armed forces; the fact that officers and other ranks are to be put on an equal footing so that all will be able to start accruing a pension as soon as they enlist, at whatever age, and all will be able to claim early departure benefits at the same age and after the same period of service; the improved provision for widows and other dependants, especially where a service person has been killed in action, and the introduction of benefits for unmarried partners; the focus on compensation payments for the most severely injured and disabled; the setting up of an independent appeals system for contribution claims; and the guarantee of the possibility of parliamentary scrutiny of future schemes—albeit a very weak form of scrutiny.

However, the Committee still sees problems with the proposed pension and compensation schemes, even after the Government's response to our report. On pensions, the proposals essentially amount to "making ends meet". We do not consider that that is what our highly valued and professional armed forces deserve. The Government have made no attempt to break out of the straitjacket of cost neutrality. The proposals are based not on what the forces deserve, but how much money they get at present. Apparently, no one has tried to assess whether what our armed forces get now is what they need and, indeed, deserve.

Even worse, the level of benefit that our armed forces will get year on year is being reduced to compensate for the fact that they are expected to live longer. Although the forces have a low retirement age of 55, very few people actually serve to that age—no more than 10 per cent., almost all of whom are career officers. The remaining personnel—that is, 90 per cent. or more—will, under the new pension scheme, get their preserved pension five years later than they do now, at 65 instead of 60.

We have already heard about the early departure payments that are replacing immediate pensions for those who stay on to about the age of 40. Those payments seem to have two purposes—first, to improve retention of skilled personnel, and secondly, to compensate those personnel for their reduced career prospects on leaving the armed forces. The Committee is concerned that we still do not know how that benefit will be structured, although I welcome the assurance that the Secretary of State gave earlier. The reason given for the delay was that it was necessary to rethink the immediate pension following the publication of the Inland Revenue's proposals for pensions tax simplification. We find that hard to accept, given that those proposals were published more than a year ago, in December 2002. It is unacceptable that the Government failed to publish details of their proposed early departure scheme before the debate. We know that the value of the payments will be less than before, but we do not know whether they will be protected from inflation.

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The Committee has questioned the Government's commitment to giving service personnel the benefits that they deserve. The Superannuation Act 1972, which legislates for most public service pensions, has written into it a requirement to consult, but there is no such requirement in the Bill. That may be because there is no one to consult, because service personnel have no specific organisation to represent them as employees. The Government's reply to the Committee's report states:

With all due respect to the personnel staffs, they have their own interests to represent, and the Committee feels that there has been little evidence that the chain of command has sufficient regard for the interests of personnel who are towards the bottom of the chain.

Mr. Brazier: The hon. Lady is making a powerful and courageous speech. Highly professional as the personnel staffs are, they can have no further interest in a major or sergeant in his 40s who has come to the end of his service, because their interest always has to be in the next generation. Parliament has the duty to take account of those who have given the best part of their lives to serve in the armed forces.

Rachel Squire: I thank the hon. Gentleman. I agree, and I am confident that the Defence Committee would agree, with his point.

Personnel who serve a full career to the age of 55—career officers such as those at the top of the chain of command—will have excellent pension entitlements. However, benefits for personnel who serve for only a short time—the vast majority—are, in the words of the Government's own independent consultants, only "fair", and will "look increasingly less generous" in future. People do not generally think about pensions when they decide to join the armed forces, but that does not mean that their needs on retirement should be ignored, especially by Parliament.

Not surprisingly, there is a very low level of interest in, and understanding of, pensions among those in the forces. The Committee admits that there has been a poor response to flawed consultations. However, that does not mean that consultation should be taken to be a waste of time, but that our forces personnel should be better educated about their entitlements. That underlines the need for a body that is truly representative of all ranks of personnel as employees.

We proposed that a requirement to consult should be written into the Bill by making schemes that are made under it subject to super-affirmative procedure. The measure should provide for proper consultation with armed forces personnel in the same way as the Superannuation Act 1972 provides for proper consultation with other public servants. There is currently no such provision and the Committee would like to know the reason for that. We would like the Government to establish in law their duty to consult all armed forces personnel.

The Committee agrees that although the scheme is non-contributory and unfunded, there will be no independent trustees to ensure that it is properly

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administered. Sadly, cases of maladministration of the existing schemes have recently come to light. Would not it be appropriate to ensure independent oversight of those who administer the new scheme?

Mr. Caplin: My hon. Friend is making an interesting speech, as the hon. Member for Canterbury (Mr. Brazier) said. In pension policy, independent trustees are usually appointed because there is a fund to manage. In the case that we are considering, there is no fund to be actively managed.

Rachel Squire: I thank my hon. Friend for his point, but I re-emphasise the Committee's concern about the absence of information and consultation in all ranks, and of proper scrutiny and accountability when the new pension scheme is introduced.

Hugh Robertson: When the hon. Lady is considering the Under-Secretary's point, will she also bear it in mind that the armed forces are unique in having no representative body such as a trade union that looks after their interests? They are a special case and even if they do not have a fund and therefore do not need trustees, they need a form of independent governance because nobody else looks after their interests. Surely that is the critical point.

Rachel Squire: I agree with the hon. Gentleman. When the Committee has been on visits and made an effort to talk to all ranks of armed forces personnel, we have been genuinely concerned by the lack of information about, and understanding of, the proposals.

I do not want to take too much time because other hon. Members wish to speak, but I should like to deal with the compensation scheme. It exists to help service people who have suffered injury or illness through their work in the armed forces. It is an unusual but important benefit. Again, the Committee emphasises how few other jobs require employees routinely to put themselves in mortal danger.

One of the main changes to the scheme is the method for deciding whether an injury has been caused by service. It is worth going over the points that have already been made. The Ministry of Defence currently has to prove beyond reasonable doubt that an injury was not caused by service. Otherwise, a claim for compensation succeeds. The proposal would change that so that, in future, service people would have to prove on the balance of probabilities that their injury was caused by service. The Ministry of Defence claims that that

However, the Committee believes that it is only natural to be sceptical about a change that appears to make life easier for the Government and more difficult for claimants.

The Committee is prepared to keep an open mind about whether the balance of probabilities is an appropriate standard of proof, but it is much less happy about the proposed change to the burden of proof. As the Committee's report states, armed forces personnel

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The Government have acknowledged that they have responsibilities to service personnel who make compensation claims. That is welcome.

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