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Mr. Caplin: I was going to begin by congratulating the hon. Member for Aldershot (Mr. Howarth) on his technological skill in being able to access a website. He can explain that to the hon. Member for Mid-Sussex (Mr. Soames) later. But then the hon. Gentleman made a rather poor joke about football, revealing his lack of understanding of the game. Because he is an Aldershot Town supporter, however, I will forgive him. I shall confine myself to congratulating his team on reaching the Nationwide Conference final play-off. My team is in the second division play-offs, which will take place in a couple of weeks. We greatly look forward to them. That was a digression, and may represent the only point of agreement in this exchange. We shall see.
There are a number of issues with which I want to deal in this important debate. I welcomed the comments of the hon. Members for Aldershot, for Faversham and Mid-Kent (Hugh Robertson) and for South-East Cornwall (Mr. Breed) and my hon. Friend the Member for Dunfermline, West (Rachel Squire), who themselves
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welcomed the announcement that I made to the House last week. What I shall say now constitutes a response to the views of both the Select Committee and the Standing Committee considering the Bill. In the Standing Committee we discussed at length the whole issue of independence, and shared views on the various legal niceties in which we would have to become involved.
I hope that the House will accept that, given that it is only seven days since I made the announcement, some details are still being worked out. My officials are in discussions with the chairman of the pay review body as we speak on the details of how we will conduct the reviews. I understand why the House is so interested in the discussions so, when they are complete, I undertake to make a further statement to the House in the usual way to keep Members advised of progress. I make that undertaking because we are talking about the new scheme and the first review might not take place until 2010, so that the scheme has time to settle down.
The hon. Member for Aldershot and my hon. Friend the Member for Dunfermline, West have asked why we chose the period of five years. A number of pension schemes choose a period of five years to look at the way in which things have changed, if at all, in that period. I was a trustee of a pension scheme before coming to the House and my experience is that there were sometimes very small changes over a long period in the nature of pensions in the wider economy. Considering the changes is one of the remits that the AFPRB will naturally have. Five years is about the right time. It will allow the scheme to come in and allow the body to take stock of it in order to prepare a report for 2010.
Hugh Robertson: I take what the Minister says at face value. However, like him, I worked in the pensions industry for a while, albeit on the other side, before coming to Parliament. We were reviewed every three years, and almost every commercial firm is engaged in rolling three-year reviews. That is standard in the commercial world. The time period could be appreciably shorter than five years.
Mr. Caplin: I accept that entirely. Triennial valuations are not uncommon in pension funds. However, in this case, we are not valuing a fund, and that might be the difference. We are asking the AFPRB to review the scheme as a whole and its conduct as the main armed forces pension scheme.
I want to say a few words about the work of the Select Committee. As my hon. Friend the Member for Dunfermline, West knows, I very much value the work that she and her Committee undertook on this issue. As Members will recall, we made sure that the response to the Select Committee was published in time for Second Reading. It was published in record time as opposed to the normal period of eight working weeks that we could have taken if we had wanted to. We did that because I believe that the Select Committee plays an important part in maintaining a watching brief on many of the issues relating to the armed forces. I hope that it will continue with its brief, and one or two interesting inquiries are under way at present. We all wish the Committee an interesting time whenever it gets to interview those people whom they invited last night to appear before it.
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I turn to the issue of choice. I have used the word "choice" constantly throughout our debates, because the armed forces will have a choice when we get to the period after 6 April 2005 provided, as the hon. Member for Aldershot reminded me, the Bill gets through both Houses. I should have added that proviso earlier.
It might help Members if I remind the House of what I said at 4.45 pm in a sitting of the Standing Committee. I pointed out:
"New clause 13"—
which was tabled by the hon. Member for Aldershot and his colleagues—
"would require the Ministry of Defence to provide each service person eligible to transfer with a comparative benefit statement. I have already indicated that we intend to do that, and I recognise the importance of ensuring that our current service personnel have the information they need to make an informed decision on which pension scheme will meet their personal needs."—[Official Report, Standing Committee B, 24 February 2004; c. 218.]
The view that I expressed then has not changed at all, except that we are progressing our work on how that advice should be offered.
2.45 pm
We are in discussion with a consortium of independent financial advisers on the services that they might be able to provide and the terms under which the services might be provided. I make it clear from the Dispatch Box on behalf of the Government that the Ministry of Defence and the chain of command are not licensed to give such advice. Therefore, in the transfer period window—it will not be April 2005, but could be a period of more than two years—people will get an individual pension benefit statement and they will then choose whether they wish to move to the new scheme. They will have the opportunity to seek independent financial advice to help them to make their decision. That will help us to avoid the problems of pension mis-selling that the hon. Member for South-East Cornwall reminded us about. That took place in the 1980s, and I know quite a lot about it.
I fully expect the arrangements that I have described to be in place in good time to enable the transfer arrangements to take place. Hon. Members who served on the Standing Committee will know that I am reluctant to suggest dates for the introduction of computer system technology, and they have accepted that it might be wise of me not to do so.
I come now to the new clause. We have taken an important step forward in inviting the AFPRB to carry out work for us in a professional way and on a quinquennial basis. As I have said, if the body feels in any of its annual reviews that it wants to make recommendations about parts of the terms and conditions, it will be free to do so. However, completely separate from that—I emphasise that this is applicable only to the pension scheme—there will be a piece of work to deal with the pension scheme itself.
The new clause seeks to establish a much wider role for the AFPRB. In my statement last week, I tried to set out the basis of the discussions and agreements that I have reached with the body and its chairman to bring about the change. The role that I have announced deals directly with the concerns that were expressed in
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Standing Committee and on many other occasions about the need for external and independent validation of the armed forces pension scheme.
The AFPRB will compare pension scheme arrangements with practice elsewhere in the wider economy and consider the extent to which those arrangements meet the recruitment and retention needs of our armed forces. It will publish the observations in an annual report after the completion of the first five years of the scheme in 2010, and the Government are committed to responding publicly to that report.
The work that I have asked the AFPRB to undertake is clearly focused on the armed forces pension scheme and the current pension arrangements that we are discussing in the context of recruitment and retention. It would not be appropriate for the body to consider as part of its remit any of the legacy issues that the hon. Member for Aldershot and others have raised.
Mr. Caplin: For the reasons that I have set out. The AFPRB is being asked to look at the new pension scheme and to report on that and its conduct in relation to a quinquennial review. It is not being asked to look back on the legacy issues that the hon. Gentleman has already accepted occurred primarily under the Conservative Government.
Mr. Hancock: I am delighted that the Minister has given way—he is being extraordinarily generous. I understand his reply to a certain extent, but if the AFPRB is not the appropriate vehicle through which to decide legacy issues, who will decide on such issues? Who will take proper account of the plight of servicemen who have been denied pensions so far, or of those who have problems with their pensions? What about widows and other groups such as the Gurkhas?
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