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Mr. Hancock:
The hon. Gentleman has been uncharacteristically generous to the Government in not repeating the condemnation of the Select Committee, on which he and I served, regarding this whole process. The Committee made it clear that the consultation on the process was "uninformative" and that the MOD had failed to grasp the importance of the issue to the service personnel involved. That leaflet is still vague in the
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extreme, and it still does not properly open the door for those issues to be discussed fairly with the individuals concerned. Does the hon. Gentleman agree that, once again, the Ministry of Defence has failed miserably to put its case properly to the people it serves?
Mr. Howarth: The hon. Gentleman and I both still serve on the Defence Committee, and we did indeed make those forceful criticisms. In fairness, however, this leaflet came out after the Committee's report was published.
Mr. Howarth: The Minister shakes his head, but I do not think that any of us knew that the leaflets were in circulation until we asked, in Committee, what advice was being given. At that point, the Minister stood up and told us that the Ministry had put out a little leaflet. The following day, he came armed with a supply of them so that we should know exactly what was being given to our servicemen and women to enable them to make up their minds. However, as the hon. Member for Portsmouth, South (Mr. Hancock) said, it is pretty generalised stuff, and I return to my point that the leaflet says that the pension team will not be able to respond individually.
In Committee, the Minister said that
"as part of our preparations for the transition, we are obviously considering how to provide and facilitate access to independent financial advice. That is the responsibility of a good employer, which is what the Ministry is."—[Official Report, Standing Committee B, 10 February 2004; c. 131.]
We concur with that, but so far, I see no evidence that any details of those preparations have been vouchsafed to us. Certainly, I have been given no new information that extends beyond this little leaflet. It is incumbent on the Minister to tell the House how the preparations for the transition are going, and whether he has come to any conclusion on how to provide and facilitate access to independent financial advice. That is the issue, and we and those whom we represent need an answer. The Minister is driving this measure through—I shall be contrary here and say that he has both gripped it and rushed it through, but I am in opposition and I am entitled to say that—and he is pressing ahead with the April 2005 deadline. We need to know what detailed provision he has made to facilitate access to independent financial advice.
The Minister also told us that plans were under way to provide comparative individual benefit statements to enable servicemen and women to make an informed decision. Fearful as we all are of the capacity of government to cope with any new IT system, he ought to tell us what progress has been made in establishing the system necessary for the provision of that information. He was very confident in Committee that this could be done, so we would like to know that the system will be up and running and that it will provide what is needed to supply the individual benefit statements.
Subsection (6) refers to the mortality and longevity assumptions, which underpin much of the complex debate on the affordability of the pension scheme. On
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Second Reading, my hon. Friend the Member for Mid-Sussex (Mr. Soames) said:
"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".
As my hon. Friend went on to say, that
"flatly contradicts the Government's claim that any savings in one area"
"enhance benefits elsewhere."—[Official Report, 22 January 2004; Vol. 416, c. 1500.]
However, he might regard the Chancellor of the Exchequer as a benefit.
Given the capacity of Government to manage—that is the word I use—the figures, it is essential that there is some independent scrutiny of how a scheme as important as this is arrived at. The mortality and longevity assumptions on which it is based should be in the Bill, hence proposed subsection (6).
Subsection (7) would provide for the Armed Forces Pay Review Body to keep under review the legacy issues, which are defined in subsection (12). The Minister and all of us are aware of the great concerns out there, particularly among those who retired some time ago or their widows, about the feeling that there are issues that have never been addressed, either by this Government or by previous Conservative Governments. Therefore, it would be helpful if we provided for the AFPRB to have a specific remit to keep those legacy issues under review.
That would help us and the Minister. Indeed, it would help me when we swap places after the next election, as we would be able to have some independent assessment. [Interruption.] My hon. Friends say that the Minister will not be here then. Well, Brighton and Hove Albion are doing pretty badly at the moment, so he may follow suit. It would help Ministers of whatever description if some well-regarded, well-respected and professional organisation could have a look at issues that have been of concern to a number of our constituents over a great many years.
"The Review Body may make to the Secretary of State recommendations for variations in the Schemes."
That would enable the AFPRB to keep the compensation scheme under review, as well as the pension scheme. It is important to recognise that we are dealing with two schemes—one relating to pensions, the other to compensation. Again, the proposal would assist the Minister, as the compensation scheme could be kept under review. I suspect that the way in which he proposes to change that scheme—I will come on to that when we discuss another new clause—is likely to cause problems for him and his successors. Therefore, giving the AFPRB a remit there would be valuable.
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I hope that I have made a compelling case as to why we should include provisions on the review body. I acknowledge that the Minister has listened to some of the arguments and moved a long way to meeting our concerns. I hope that he goes the extra mile, as that would please us all.
2.15 pm
Rachel Squire (Dunfermline, West) (Lab): I welcome the fact that the new clause has been tabled and I welcome its contents, which raise a number of issues. I also welcome last week's written statement by the Minister on the Armed Forces Pay Review Body, which shows that he has indeed taken careful note of the concerns of the Select Committee, of which I am a member, and those expressed in Committee, as well as the views from a range of individuals and organisations. I am pleased that the AFPRB will now have a role in externally validating the provisions of the armed forces pension scheme.
The review body will enable all views to be expressed on the issues that involve all ranks of the armed forces. While debating and consulting on the Bill, I and others have been concerned about how much voice—or rather, as it often seems, how little—has been given to all ranks of our armed forces, instead of focusing on officers having their say. The most junior ratings and privates get little opportunity either to be informed of the proposals or to respond to them.
May I ask the Minister two questions about his response in last week's statement? First, I welcome the clarification he has given on the five-year proposal not constraining the AFPRB from considering recruitment, retention and pay more frequently. However, I still want to press him on whether he will consider the possibility of the AFPRB being able to consider matters related to the pension and compensation schemes more regularly than every five years. One of the interesting suggestions in the new clause is that a range of individuals serving in the armed forces and other organisations should be able to write to the AFPRB to express their views and concerns about the operation of the new scheme and how things are happening.
Secondly, and linking up with the question I have just asked, the Minister said in his statement that
"we plan that this will be done in the context of their quinquennial valuation of the AFPS, though more frequent examinations of the scheme provisions could be undertaken if wider developments justified this."—[Official Report, 30 April 2004; Vol. 420, c. 65WS.]
What does he mean by "more frequent examinations"? Could that mean every year? Will he give examples of the "wider developments" that would justify the AFPRB looking at things more regularly? The new clause suggests an annual review of the new scheme.
I welcome the fact that the new clause also considers consultation, the impact that the new scheme may have on retention and recruitment, the transfer arrangements and the AFPRB making a critical examination of the longevity and cost-neutrality issues, which have been addressed previously.
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On consultation, I welcome the fact that the Minister and the Government have responded to some of the concerns that were raised about how little opportunity it seemed that Parliament would have to debate the detailed regulations, as they were introduced, to this enabling Bill. I welcome the assurance that statutory instruments will be available for discussion, and that the House will be able to give a negative response if it feels strongly about them. I am not content, however, with the way in which the consultation on the proposed new pensions and compensation scheme has been conducted over the past six or seven years by the Ministry of Defence. I always react strongly to the argument that says, "This is the way that things will be done, because that is the way that they have always been done", whatever the issue. Half of the population of this country—I and other women—would not have been allowed to vote or stand as Members of Parliament if that argument had been upheld and the established arrangement therefore maintained.
As for other aspects of the new clause, subsection (6) raises the issue of mortality and longevity, which was certainly an issue for me and other members of the Select Committee. The Armed Forces Pay Review Body should have an opportunity to consider the straitjacket, as we see it, of cost neutrality. Many of us are still concerned that the new armed forces pension scheme is not based on what our armed forces deserve but on how much they get now. Improvements are being paid for by reductions in benefit to compensate for the fact that people are expected to live for longer. In its report, the Select Committee made the point that the Government's proposals do not deal with what we considered was the likelihood that due to the reduction in service personnel, the MOD's total bill would decrease over time in spite of the increased life expectancy of all pensioners. Will the Armed Forces Pension Review Body be able to consider the fact that personnel are being asked to bear some of the burden of increased cost, rather than the MOD? I will listen with great interest to the Minister's response to the issues that have been raised by new clause 2.
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