Armed Forces (Pensions and Compensation) Bill

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Mr. Caplin: Perhaps I might help the hon. Gentleman as he meanders through the last part of our deliberations.

Mr. Howarth: It is important stuff.

Mr. Caplin: It is. Indeed, the hon. Gentleman will know, because we have discussed it before, that I regard my duty as an employer seriously. When our troops are on exercise or in training, we take health and safety seriously. However, Conservative Members will be aware that different rules and different risks apply when they are in combat or on operations, as we debated in the previous sitting.

Mr. Howarth: I do not want to detain the Committee too long on this issue, but our armed forces, especially those in command, are concerned about how far they can give orders. The Government will have to address that issue, as we will when we return to Government next year. In the meantime, we must deal with what we have. I remind the Committee that in the summer of 2002 the Minister gave the House of Commons an undertaking that comparative statements would be provided, although the hon. Gentleman may have tried to distance himself from such a commitment at the Defence Committee's last sitting. We need to know about those comparative statements, assuming that they will be given. What does the squaddie do then? If the buck stops with, say, the major, the major will say, ''Look, I am not an independent financial adviser. I can't give you advice.''

The consequences are twofold. First, where should the squaddie go to obtain advice? Who will point him in the right direction? Secondly, his respect for his superior officer will be diminished if that officer cannot give him any advice on this important matter of his welfare. Those in the chain of command are never short of giving advice to those in their charge. Sometimes, that advice is given abruptly. At other times, the relationship will be cosier. In this case, however, any officer who holds himself out as an adviser to a squaddie may find himself in great difficulty. I suspect that he will be deeply reluctant to tell someone what they should do.

So what do the Government propose to do about the providing of advice? Do they, for example, propose to set up a panel of approved independent financial advisers, on whom service personnel can call? Will they have surgeries at fixed bases? Will they send people on to ships, to RAF stations and into barracks, to brief people on the implications of this measure? If they are proposing to do that, whom will they authorise to give this advice? Will they have a

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bidding process, and invite the IFAs to nominate themselves as suitably qualified to give this advice to members of Her Majesty's armed forces? The Government appear to have given scant attention to these issues, unless they are simply keeping us in the dark. The Ministry might consider drawing up a list of approved financial advisers who could help. If the Government did that, they would go some way to meeting their duty of care, and they would be facilitating rather than giving advice. At the end of the day, if those in the chain of command hold themselves out as being in a position to give advice and things go wrong, the Minister knows where the buck will stop: it will stop with him.

Mr. Eric Joyce (Falkirk, West) (Lab): The hon. Gentleman is making rather a meal of this. We are talking about a simple calculation of comparative benefit, which any regimental administration officer in a major unit could make, as the hon. Gentleman knows. Any future member of the pension scheme can go to his regimental administration officer, certainly at major unit level or above, and be told what benefits he will receive from a particular pension scheme. This is simply a comparison between two different schemes. I am sure that the hon. Gentleman recognises that that would be entirely feasible in a comparative situation such as this.

Mr. Howarth: We do not even know yet whether we will get comparative tables. The hon. Gentleman blindly assumes that we will get comparative statements.

Mr. Joyce: They are simple to produce.

Mr. Howarth: The hon. Gentleman says from a sedentary position that such statements are simple to produce, but I suspect that some quite important IT may be required to deliver up to 200,000 sets of individual comparative tables. I may be wrong and he may be right, but I think that the situation will be more complicated than he suggests, and we have a duty to ask questions. I would be happy if the comparative tables given to people were of good quality, clear and straightforward. In such circumstances, I would be inclined to feel that the chain of command could handle the issue, but I do not think that the hon. Gentleman realises the extent to which it will now feel inhibited and nervous about giving advice on a matter of this complexity, particularly when there are issues in the public domain about pensions mis-selling and so on. It is an extremely serious issue.

There are many unanswered questions about the transitional arrangements that the Government intend to introduce. I hope that the Minister will now share with the Committee exactly what he proposes to do. The hon. Member for Falkirk, West has served in Her Majesty's armed forces and may be able to give him some advice. My hon. Friend the Member for New Forest, West may be able to give him advice. The Minister should take advantage of the wisdom in the Committee and tap into it to test what he proposes to do. Time is galloping on, however, and if he wants to have things in place by April 2005 he must crack on, get the systems in place and tell us what the systems are.

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4.30 pm

Mr. Caplin: I shall consider new clauses 8, 12, 13 and 22 in some detail in a few moments. I shall start where the speech by the hon. Member for Aldershot ended: what arrangements have we put in place? Of course, if my hon. Friend the Member for Falkirk, West has any ideas, we will be more than willing to hear them. I shall reserve judgment on the hon. Member for New Forest, West just in case he returns to new clause 5 too quickly.

A full project team is at work at the Ministry of Defence. It is managing the overall project on the armed forces' pension and compensation schemes. We also have teams working in the agencies, such as the Veterans Agency. They are preparing for the role that they will play in delivering the new services. A substantial number of staff are considering communications. That is important and I shall say more about it as we continue. We intend to build up the number of such staff in the coming weeks and months as we head towards April 2005.

The hon. Member for Aldershot made a point about advice for the squaddie, as he calls it. I am sure, although I have not been able to find this in the three Hansard reports of our proceedings, that I dealt with that issue. I probably did so when we debated clause 1. I have been clear about the role that will be played: we at the Ministry of Defence are not licensed, nor are commanding officers, but we are going to look at how advice is provided. That is clearly our responsibility within the confines of the Financial Services and Markets Act 2000.

Of course, the ultimate decision will be down to the individual members of the forces. They will be given an offer to transfer with the relevant form. Yes, we have to have a computer system and we have to get the right information out to them, even those who are on service overseas—I will deal with that in a moment. We are looking at the possibility of setting up helplines, and, as I have said before, at a range of independent financial providers and associates who might be able to assist.

Current service personnel will have a choice about which scheme they belong to—I have been very clear about that from the moment I announced it on 15 September. As I indicated, transfer arrangements are developing, which is a phrase I would like to use today. Such arrangements will include consideration of the transfer value of service under the current arrangement, and I can assure the Committee that all this information will be available in good time for current members of the armed forces to make a properly thought-through decision.

The hon. Gentleman asked me a couple of other questions. The first was about the date of joining the scheme. We have concluded that, to be fair and equitable, the date of joining the pension scheme will be the date of joining our armed forces, which is not the current situation.

Mr. Howarth: So the day that someone joins up at age 16 or the day that someone enters Sandhurst will be when they join the scheme. That is very helpful.

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Mr. Caplin: That is the case. The hon. Gentleman raised an interesting issue about these windfall examples. I have not previously had sight of those cases, so I am grateful to him for raising the issue. Perhaps he will forgive me for saying that I want to go away and have a look at it in more detail.

I shall deal with the four proposed new clauses. The purpose of the first new clause is to require details of the transfer arrangements of the new pension scheme for current service personnel to be set out in a statutory instrument, as well as to allow the Committee the opportunity to discuss that aspect of the new arrangements. The statutory instrument for the new armed forces pension scheme, in line with normal practice, will set out the transfer arrangements applying to those currently serving members of the armed forces who choose to join the new scheme. Therefore, I can give the hon. Gentleman a categoric assurance that when we come to the secondary legislative aspects, we will set out the issues in relation to transfer in a statutory instrument. In my view, there is no need for them to be specified in primary legislation.

New clause 12 concerns the mortality-longevity assumptions used to cost the new pensions scheme in the public domain. Here I have good news for the Committee: I have already made those assumptions available to the House. The Defence Committee had them, and they were published in the second volume of the Committee's first report of the 2003–04 session, which covered oral and written evidence in relation to armed forces pension and compensation. If my memory serves me correctly, it was tagged to the debate on Second Reading on 22 January. I intend for that information to continue to be provided to the House whenever the scheme is re-costed, but I do not see any need to make that the subject of primary legislation. I hope that that is a suitable explanation for the Committee.

4.45 pm

New clause 13 would require the Ministry of Defence to provide each service person eligible to transfer with a comparative pension 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.

We will provide a range of material to assist members of our armed forces to make that decision, including individual statements of the benefits under the old and new schemes as well as information about the key features of the two schemes. That information will be fully compliant with the requirements of the Occupational Pension Schemes (Disclosure of Information) Regulations 1996. There is therefore no need for the requirement in new clause 13 to be set out in the Bill.

I was asked about personnel on operations overseas. We recognise the challenges involved in ensuring that all our armed forces personnel receive the information they need. We plan to allow a longer decision period for those on operations. For example,

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the civil service had a three-month decision period, and although we have not reached a conclusion, I can comfortably say that ours will be longer. If members of our armed forces fail to respond, we will try to get a response. I can give clarification, however, in that the default position is that they will remain within the current pension scheme arrangements. That approach was also adopted by the civil service scheme, and it is right to follow it until the individuals make the decision to transfer to the new scheme. There should be no confusion about that.

The largest of the new clauses is new clause 22, which runs to five subsections. Someone was clearly working overtime at Conservative central office to produce it. I am sure that those people are now obsessed by the Bill rather than the shadow Chancellor's strange speech, to which we will return at a later date, when you are not in the Chair, Mr. Griffiths.

The Committee has already discussed in detail the majority of issues raised by new clause 22. My right hon. Friend the Secretary of State gave an excellent and eloquent explanation on Second Reading of why enabling legislation is the most sensible way to make the schemes work. As I said this morning, our approach gives Parliament more involvement in the new scheme than it has in the current scheme. That is also in line with what is happening to other public service schemes.

I do not need to go through each subsection in detail, as enough has been said about all the points in our last few sittings.

 

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Prepared 24 February 2004