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4.28 pm

Mr. Julian Brazier (Canterbury) (Con): The man or woman on the Clapham omnibus might reasonably expect that, with all that has happened in the past few years, especially the past few months, no one could fail to appreciate the value of our armed forces. However, some of the actions of the past few weeks suggest that that assumption is rather wide of the mark. The proposals that we are debating leave it open to question.

Sadly, it appears that the Government will ignore their duty of care and exploit their position as the employer and only guardian of the armed forces' interests. The Government's position as sole guardian has been made clear often in the debate, not least by the hon. Member for Dunfermline, West (Rachel Squire) in her excellent speech. The armed forces have no trade union for reasons that we all understand. There are no independent trustees; they are the only public servants who have no independent representation.

To compensate for the lack of independent arrangements, members of the armed forces have, for generations, had their pensions and benefits protected by statute—by Act of Parliament—as my hon. Friend the Member for Mid-Sussex (Mr. Soames) said. It is now proposed to remove that safeguard. Under clause 1, the Secretary of State will be able to make whatever fundamental changes he wants, without any reference to Parliament beyond a statutory instrument, discussed only by a little Committee that meets for a short time Upstairs, out of view. Yet there is no proposal to introduce any independent scrutiny element to the pension scheme.

The Bill, as several Members have observed, is a pig in a poke. The devil is in the detail of the proposals, but that detail will be revealed only when the Government get round to thinking about it. The Select Committee was right to say:

Of course, the Government disclosed their hand when they stated that they would make the changes cost-neutral, rather than considering best practice and what the armed services deserve.

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The Minister stated in evidence to the Defence Committee:

Even if that were true, it would be a pretty large comedown from considering best practice, but during the consultation, the Government decided to lay the deck against service personnel. They expect that the current scheme will cost them more in 30 to 40 years' time because individuals are living longer, a problem for all pension funds. However, while the longevity of the individual serviceman is increasing, the fact that numbers in the service have decreased by so much during the past two decades is a major contributor to a move in the opposite direction. The Ministry of Defence currently makes payments to pensioners drawn from a much larger work force than that to which it is currently paying salaries, so its overall pensions bill will decrease at much the same time as the effects of increased longevity take hold. Individual service personnel will thus be expected to bear the cost of their own increased longevity through the diminished total value of their expected individual pension packages, while the Treasury creams off the entire saving through the reduction in numbers.

That is not the end of the matter. In the public services as a whole, longevity can be compensated for by increasing the retirement age from 60 to 65, which is what is proposed. That is to be extended to the armed forces but there are two objections to that proposal, as has already been pointed out. First, as my hon. Friend the Member for Bournemouth, West (Sir John Butterfill) said, it is very unfair that the armed forces should be the first guinea pigs for that scheme, because their lack of an independent voice makes them uniquely vulnerable. Secondly, very few members of the armed forces ever have the opportunity to serve beyond the age of 55.

The very nature of a career in the forces requires a complex system of pensions and benefits to aid recruitment and retention. That reflects the fact that a service career never extends to a full working life, and a serviceman or woman is often left with limited earnings potential after service. Under current arrangements, the small minority who stay in the service until the age of 55 or beyond receive their pension on retirement. The huge and crucial financial cut to be introduced—details of which we still do not have—is the early departure scheme for those who leave before the age of 55, which is the vast majority of service personnel. Those people will not get their pensions before they are 65, receiving instead the early departure payment. The Government admit that that will be paid at a much lower rate, and it will not be annually uprated. That will leave those people much less well off when they retire than at present.

That proposal will affect even those who choose to stay in the existing scheme. The weasel words in the submission to the Select Committee were that, from their future service—in other words, from next year onwards—those people will receive diminished benefits, in the kind of two-tier arrangement that my hon. Friend the Member for Mid-Sussex described so eloquently at the Dispatch Box. When the Prime Minister and the Secretary of State for Defence visited our servicemen and women in Basra, I wonder whether they told them

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that they are in the process of substantially reducing their pension expectations, whether they choose to go for the new scheme or stay with the old one.

Interestingly, the Select Committee, which rightly picked out this issue as the most important single problem, said:

The Government's reply to the Select Committee report—I saw many replies when I served on the Select Committee—is one of the most blatant brush-offs that I have ever read. The reply at paragraph 27, page 10, states:

They have not only brushed off the Select Committee but done it in thoroughly misleading words. Other people will still be able to get it from 55—only the armed forces, and the vast majority of their members, will have to wait until 65, with, in the meantime, this much smaller early departure payment, which is not annually index-linked.

Under the existing scheme, if service personnel leave before the age of 55, the immediate pension takes effect at slightly different ages—38 for officers and 40 for other ranks. I have no problem with bringing those into line, and I agree with the hon. Member for Crawley (Laura Moffatt), who said that it was time that they were brought into line. My concern is not that a couple of years' difference exists between senior officers and non-commissioned officers but that eligibility for a proper pension payment, with all the protections that pensions have from Treasury raids and everything else, will not be introduced until 65 for both. Immediate pension payments constitute about a third of the total value of all payments under the existing pension scheme. Those choosing to switch to the new scheme will lose the equivalent of three years' salary and pension benefits over their expected lives. That point is made in the Select Committee report.

I want to return to a further point that was kindly picked up by a Labour Member from my intervention: the huge disadvantage that the armed forces, but particularly the Army, who are the manpower-intensive service—three fifths of our regular service personnel are in the Army—face in the housing market. While I welcome the Minister's enthusiasm in his announcement about a new initiative on housing, I am afraid that he is barking up the wrong tree. All the evidence from the last housing survey that I saw, a couple of years before we left office—I am happy to share it with him, as I still have a copy on my shelf—is that once members of the Army purchase houses, they are far more likely, particularly those with marketable skills, to leave the Army than if they continue staying in rented accommodation.

The difficulties of trying to rent a property and living hundreds of miles from it are massive. People pay tax on any rent that they get in, but do not get tax relief on the rent that they pay out. They have problems with people

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disappearing, damaging the property and so on. The other additional problem is the inequity. Some service bases are in areas where there is readily available property, so people posted there are liable to want to stay; if they get posted away from it, they leave the forces. Others live in areas where there is no readily available housing, or live abroad.

In many cases, the only way in which members of the armed forces can hope to square the desperate disadvantage from which they suffer in the housing market when they leave the armed forces is by commuting a large part of that immediate pension to provide a large additional payment over and above their gratuity, to go some way towards making a reasonable house affordable. The huge cut in the immediate pension and its replacement by the early departure payment will effectively bar that route.

My father was a career Army officer who served for 30 years. His father fought through both world wars: he was wounded in the first and decorated in both. One of my sons is a member of his school cadet force and is considering dedicating his life to the service of his country by joining the Army. I would be very proud for him to do so, but if the scheme goes through in its present form, I will have to take him aside and explain what it will mean for the rest of his life, particularly when—as I imagine he will—he has a family. It will put him and his family at a great disadvantage.

I could spend time talking about a few of the improvements to the new scheme, which are welcome but relatively inexpensive. Instead, I simply want to say that the proposals will adversely affect recruitment and retention. More significantly, I believe that they are a cynical betrayal of huge numbers of people who serve in our armed forces and have no voice of their own.

I am sure that most of the hon. Members who have spoken in the House today share my concern about the fact that the Secretary of State's main advice has come through the service personnel staffs. They have no concern with people when they leave: their job is to consider the next generation coming through. People who have given the best years of their working lives to the service of their country in uniform deserve better.

Finally, I return to compensation. It has been thoroughly debated, not least in the excellent speech of the hon. Member for Dunfermline, West, who is standing in for the Chairman of the Defence Committee. I wish to add just a little to what she said. As my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) said, many medical conditions caused by service life do not emerge for many years. Furthermore, young servicemen are often inclined to ignore a nagging ache or pain; it may have emerged within five years, but they may not do anything about it until afterwards.

Both having a five-year cut-off limit in most cases and raising the burden of proof are not fair. In the civilian world, the doctor has nothing to do with the employer, which is not comparable. The British Legion wanted the Veterans Agency in the then Department of Social Security, at arm's length from the Ministry of Defence, but it is now all being shoved into that Ministry. It is grossly unfair that the whole system will fall under the Ministry of Defence.

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