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12.54 pm

The Parliamentary Under-Secretary of State for Defence (Mr. Kevan Jones): I congratulate the right hon. Member for East Hampshire (Mr. Mates) on introducing this Bill. His success in the ballot suggests that he has the same lucky touch that I had. His Bill calls for the equal treatment of pension provision for forces widows. He has clearly followed the usual advice to keep it as simple as possible to ensure that people could not fillet it when it came before the House.

A similar Bill was introduced in December 2007, with its Second Reading taking place on 1 February 2008, when the debate was adjourned. The Bill was twice rescheduled, for 22 February and 17 October, but unfortunately for the right hon. Gentleman, it was not reached. The main proposals in the Bill were also extensively debated during the passage of the Pensions Act 1995. I pay tribute to the support that the right hon. Gentleman has given to members of our armed forces, not only in promoting this Bill but generally over many years.

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As Minister for veterans, I always find it a great privilege to meet veterans and widows. Those widows are very varied. Some are very elderly, but there are now some who are very young as a result of the conflict in Afghanistan. Last Friday, one young widow, Victoria Bateman, convinced me and the hon. Member for Colchester (Bob Russell), foolishly, to do a parachute jump with her to raise money for the Parachute Regiment charities. She is a young lady of 24, which demonstrates the differences that exist, which are also, of course, reflected in our veterans. There are our second world veterans and the two remaining first world war veterans, but also the younger veterans that we have today.

This Government have a proud record in supporting veterans and armed forces widows. To their credit, they introduced the post of Minister for veterans—a job that I am very pleased and proud to do—to recognise the special debt that we owe to veterans in society. The success of the veterans badge is shown by the fact that more than 715,000 individuals have applied for it and are wearing it with pride. I hope that all right hon. and hon. Members will participate in armed forces day on 27 June, and the lead-up to it, not only to say thank you to today’s servicemen and women but to support and recognise our debt of honour to our veterans from former conflicts.

As the right hon. Gentleman intimated, the Bill does not only deal with retrospection in benefits paid to widows; it has an impact not just on that scheme, but on other schemes involving the Ministry of Defence and other public services. As he said, when someone joins a pension scheme, the terms and conditions under which they do so are clearly laid out, and it has been the policy of successive Governments that retrospective benefits are not paid in the MOD pension scheme or in other schemes. As he rightly said, the issue to consider is affordability. This Government have made only one exception to that rule, to which I shall refer later. It rightly applied to a specific group of defined widows.

Mr. Mates: So does this.

Mr. Jones: But the numbers involved are different, and I shall certainly cover that matter later.

We need to deal with the principle of retrospection, and it is important to put the Bill and the matter of pension provision in historical context. Over time, the pensions of armed forces and other public sector workers have been changed and amended. Quite rightly, successive Governments have tried to improve the benefits of those schemes. Unfortunately, we are now perhaps entering a period in which they will not be enhanced, because in some cases affordability will be limited. We cannot ignore the cost to the Exchequer of the armed forces pension scheme or any other scheme.

There has been a trend of improvement, and successive Governments of different political persuasions have introduced changes. The original armed forces pension goes back to 1831. I was going to look up the 1831 Act to compare it with today’s arrangements and see how things have changed, but I think that would try the House’s patience a bit. The forces family pension scheme was introduced in 1952, and it set out what widows of RAF officers and warrant officers who had served after
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31 August 1950 were entitled to, subject to stringent conditions. That was the first time that it had been ensured that families and widows were taken into consideration. It was a different time, and people did not have the access to pension support that we do today.

That first scheme created a category of people called class 1, who were considered for a pension when death occurred during or after service. The pensions were at a flat rate according to rank and did not vary by length of service as they do today. The rate was doubled if the death was accepted as having been due to service. That is very different from today’s scheme, in which both length of service and rank are considered.

The scheme was quite harsh in a lot of ways, because it was an either-or scheme. No widow could qualify for both a pension from the Ministry of Defence on grounds that their husband’s death was due to service—that was called a “special” pension—and one for other related service, which was called an “ordinary” pension. A widow qualified for state widow’s benefits only subject to stringent conditions, and only if her husband’s death was not due to service. The tests that were set, not just by the MOD but by the broader welfare service, were therefore harsh. The state benefit was only 10 shillings a week. For older Members, let me say that that is 50p in new money. The special pension for death due to service was more beneficial.

The widow of a man who had held the rank of warrant officer class 1 but did not serve after 31 August 1950 was entitled to the special pension only if his death was due to service, which created a class of pensionless widows. That demonstrates that, even in the early days of developing armed forces pensions, not all widows were covered. The issue that comes back time and again in the context not only of armed forces pensions, but of other pension provision, is that when we move dates or change benefits, some people lose out.

Mr. Simon Burns (West Chelmsford) (Con): So that we can put into perspective the impact of the pension on recipients at that time, can the Under-Secretary tell me what the state pension was?

Mr. Jones: As usual, the hon. Gentleman makes a useful intervention. If he uses the great services of the Library, he will find the information, but I do not have the answer at the moment. The key point is that whenever a new pension is introduced, there are always winners and losers. That happens today, too, and I will say more about that later.

There were stringent conditions relating not only to the husband’s length of service, but to age, marriage and even the age difference between the man and the woman. The system was far from simple. The main requirement was that the marriage took place before retirement or discharge. The resultant pension was awarded subject to a means test. As the hon. Member for West Chelmsford (Mr. Burns) suggested, the state pension was taken into account.

Until 1939, for the RAF, both types of pension—special and ordinary—were paid out of the MOD vote. However, the responsibility for funding a pension for death due to service in the case of those who served after 3 September 1939 was then assumed by the Ministry of Pensions, which would be the Department for Work and Pensions today. The pension was called a war award. As has been
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said, where the money comes from is important. It is Government money, but we must ensure that there are not burdensome pressures, not only on the general Exchequer but on the defence budget . Even back then, there were competing demands for funds.

The rate of pensions was not altered until 1950, but increases were awarded, with other service pensions, under legislation in 1944 and 1947. Improvements in benefits were considered after the post-war pay and pensions review and resulted in a new benefit called the family pension scheme, which was introduced by Command Paper 8741, payable from 1 December 1952. It relates to those who served in the armed services after 31 August 1950.

It is interesting to note that the then Government considered whether improved family schemes should be financed by a contribution from the serviceman. I think that the right hon. Member for East Hampshire referred to that. We must remember that the schemes that we are considering are not funded. The individuals do not make contributions, although I accept that under the current scheme, people’s pay awards are taken into consideration as an abatement, which sometimes causes concern and resentment in parts of the armed forces. It is sometimes difficult to explain the figures when calculating wage awards.

It was decided in 1950 that the non-contributory scheme should continue because applying a contributory scheme to the services presented too many difficulties. The right hon. Gentleman said that servicemen and women are a unique group, and I agree. However, there is some crossover with the police and fire service. Again, their schemes are non-contributory and those individuals put their lives at risk, but I accept that the armed forces are unique, and there is nothing comparable that we could consider. However, anyone who is involved in local government will know that those two schemes, which are both unfunded, are under a lot of pressure.

The main changes to the scheme were introduced for those who served after 31 August 1950. The new scheme again demonstrated that pensions policy evolves, with the introduction of new measures, which were not retrospective, including the abolition of some of the restrictive conditions of the former scheme. The pension for widows of men below the rank of WO2 who had served after 31 August 1950 also qualified, subject to length of service. Again, we get a sense of dates being introduced that improved benefits, but those benefits were not made retrospective.

Payments of a reduced pension called a modified pension—this is where the length of service and other conditions were satisfied—were made from MOD votes to widows who qualified for the war award from the then Department of Health and Social Security. Another important change was that the conditions requiring marriage to have taken place before retirement or discharge were relaxed, only to recognise the re-employment service given during 1939 to 1940, so that if a serviceman qualified for a reassessed pension and his date of marriage preceded the date of the completion of his re-employment, his widow could be considered for a pension.

The length-of-service conditions were also changed. In particular, the length-of-service conditions for the payment of a forces pension to a widow of a man below the rank of WO1 who died after discharge were: 22 years for a man at the rank of WO2 or a flight
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sergeant; 27 years for a sergeant; and 32 years for a corporal or below. That created a second category of pensionless widows, because the husband would be receiving a pension regardless of rank if he had completed 22 years’ service after 19 December 1945, but only if he had completed a longer term than that required by the widows regulations. Again, the system changed, with the consequence that widows whose husbands did not meet the new criteria did not receive a pension.

The legislation covering rates has also changed over time. The ordinary pension was paid at a flat rate according to rank, with variations relating to length of service for widows of men below the rank of WO1. The flat rates attracted increases under subsequent measures to increase pensions, and they formed the basis of what was called the minimum rate, for which any widow whose husband had retired or been discharged before 31 March 1973 could qualify, where the benefits to which they were entitled under other provisions were smaller.

The introduction of the modified pension was necessary because it became obvious that a widow qualifying for an ordinary pension plus state pension benefits, which had by then improved, could be financially better off than a widow of a man whose death was due to service, but who was receiving only the war award, as it was still known. Modified pensions were approved for war award widows who otherwise qualified for an ordinary pension. Again, there was a flat rate by rank, which was equal to approximately half the ordinary pension for officers, to two thirds of the pension for those at the rank of WO1 and to the special rates for lower ranks. Those pensions also qualified for the increase in benefits.

The war award benefits paid by the then Department of Health and Social Security were related to rank. There was no minimum length of service required, and the date of marriage was not a barrier if death occurred after 3 September 1939. Some would argue that that illustrates two systems working side by side, possibly resulting in unfairness because some people qualified while others did not. Perhaps this demonstrates the long history of unfairness that has built up in the system over many years.

In 1958, the Grigg committee’s recommendations were accepted by the Government and were introduced and payable from 1 April 1959 for widows of men who had died after 4 November 1958, regardless of when their service ended. However, the changes did not benefit the widows of men below the rank of warrant officer who were discharged before 31 August 1950, or the widows of men discharged after that date who had died before the introduction of the changes of 5 November 1958 and who had not previously qualified. Again, this is a change that some would argue disadvantaged certain individuals.

The revised provisions at that stage gave widows an ordinary pension of a third of their husband’s original retirement pay or pension, or a third of the invaliding pension for which he would have been eligible if he had died while serving. The modified pension, where death was due to service, was set at half the ordinary rate. Widows’ pension attracted the benefit of an increased measure introduced since the date of discharge or death in service. The minimum rate could be paid as an alternative, where that was more advantageous.

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It soon became clear that, because the new benefits were awarded to the widows of men who had died after November 1958, regardless of their date of retirement or discharge, anomalies were being created between the flat rate and the two-thirds award given to the widows of men with exactly the same service record and dates. So the widows of two men who had served for exactly the same length of time could be treated differently.

It also became clear that many widows of men whose death was due to service were worse off financially than they would have been, had their husbands died in normal circumstances. Approval was given to reassess the former, and to introduce a supplementary pension for the latter group. This recognised the unintended consequence of the changes, which had left a group of widows at a disadvantage.

Under the Grigg reassessment, as it was called, all existing widows’ pensions were given the benefit of a third principal ordinary pension or a sixth principal modified pension, instead of the pension that they were receiving, where that was to their advantage. The scheme was designed to help those who had been disadvantaged, but the revised rates were paid from 10 December 1963, and the underlying principle of all the changes was not one of retrospection, which is what the Bill calls for.

The supplement was introduced to ensure that the total pension income of the widow of an officer who was receiving a war award would exceed the income that she would have received had her husband’s death not been due to service by at least £26 a year. I have asked how that amount was chosen, because a lot of these figures seem arbitrary—

Mr. Mates: Ten shillings a week.

Mr. Jones: The hon. Gentleman has expressed it in old money. Why it was £26 a year, I am not sure. I asked my officials if they could dig down on that, but it has obviously been lost—perhaps somewhere in civil service heaven can be found the reason why that amount was arrived at. Obviously, it was seen as the right amount at the time. I might receive correspondence explaining why it was £26 a year from someone watching or following this debate who was involved in the issue at the time.

A constant revision and adjustment of all war award cases was the result, so each time the state benefit changed, changes in pension increase measures were introduced. It was also relevant if a child completed education. Here is an example of changes to state benefits impacting, because of the link, on changes to war pensions. The supplement for widows of a warrant officer was 7 shillings a week—in old money, the right hon. Member for East Hampshire will be pleased to hear—and it was 5 shillings for other ranks. In view of my audience in the House today, or perhaps those listening to or following our debate, I should have asked my officials to put all my figures into old money, as that would have been more useful to them.

The next major change was the adjustment in 1971. It became increasingly apparent from the size of the supplements we were paying and the increase in state benefits that the amount of modified pension needed to be improved. A financial comparison between the normal widow receiving ordinary pension from the Ministry of Defence plus state widows benefit from the then
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Department of Health and Social Security and those receiving a modified pension plus a war award from that same Department revealed a significant difference in supplement amounts. It was decided that the modified pension within the forces family pension scheme should be replaced by a benefit, reduced by the rank element in the war award, which continued the principle that the war award widows should be financially better off than widows of a serviceman of similar rank who “died normally”—well, that is what it says in my brief, but I question whether it is possible to die normally.

Mr. Mates: Natural causes.

Mr. Jones: Yes, “natural causes” is better terminology than “normal circumstances”.

The war award widow received from 1 September 1971 a total income equivalent to a full forces family pension plus a basic war award pension, instead of a full forces pension plus state widows pension. That is important. In the debate over war widows pension, we sometimes forget that people are in receipt of other benefits from other pensions that the state provides. I think that that provides considerable help to those individuals.

The basic war award in 1979 exceeded the standard widows pension by about £6 a week. No doubt the right hon. Member for East Hampshire will be able to tell me what £6 was worth and what it could buy in 1979. The hon. Member for West Chelmsford is obviously too young to know what that could buy in 1979—I am flattering him, as usual.

A supplementary adjustment was also necessary for the widows of long-serving and mainly high-ranking officers who qualified before 1954 for a war award, but who also had as an alternative the right to an ordinary pension. The Grigg formula from the Grigg committee and the improved state pension resulted in their being worse off financially—another example of the unintended consequence of changes. Approval was given for a supplement to be paid by the Ministry of Defence equivalent to the amount by which the forces pension would have exceeded the war award.

Dr. Murrison: There has only been one year since 1939 in which our armed forces have not been engaged in some sort of conflict. Does the war award refer simply to awards that can be attributed to second world war service, or to subsequent conflicts? If so, which ones? Does the Minister mean “attributable” widows, or simply widows of servicemen who have been killed in conflict?

Mr. Jones: As I understand it, the scheme refers to both. The distinction that we made, which I shall come to, relates to the 2000 decision, which, as the right hon. Member for East Hampshire said, made an exception for widows of those who had been killed in conflict. There was rightly a retrospective element to that. The defined nature of the individuals to which the hon. Member for Westbury (Dr. Murrison) referred covers only a small number of people. I am trying to demonstrate that the pension schemes have changed over time. Those changes have been made by, I think, successive Governments of all political persuasions, to improve the lot of war widows, who all hon. Members would recognise are a special case.

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