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Baroness Dean of Thornton-le-Fylde: My Lords, I speak briefly in support of the three amendments. The noble and gallant Lord, Lord Boyce, in his most courteous way chided me about my stance and said that he did not believe that one could compare the Armed Forces with the other emergency services. I was comparing them—but about the burden of proof on the legal cases for injuries. Apart from that, I entirely agree with him, especially on this particular area.

I agree with the noble Lord, Lord Astor, that this is a very important part of the Bill. When our Armed Forces personnel go away on duty, they want to know that if anything happens to them while carrying out their duty to their country, their families will be looked after. If the Bill does not contain some of the measures that are in the three amendments, it will be a very much diminished Bill and not achieve what many of us want to see it achieve.

In conclusion, on Amendment No. 14, to which I have put my name, I could not say anything in addition or better than the noble Baroness, Lady Strange, who is also a friend. She put the case most eloquently—and
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I should not like to be in the Minister's position and have to refute the points that the noble Baroness is making.

Viscount Slim: My Lords, I support noble Lords on this amendment. In Committee, I asked the Minister and other members of the Government if they would consider carefully the state of the widows pre-1973, and the fact that all of them are living on one third of their husbands' pension. That is not a state of affairs that should be countenanced in this country today—particularly in view of the fact that, as the noble and gallant Lord said, the widows of Members in another place get the full amount.

The politest way in which I can put my remarks is that Parliament seems satisfied, in this day and age, for a section of our military widows to live on one third of their husbands' pensions. Those are widows whose husbands fought in the Korean and other wars, and it is—I am almost forced to use the word—wicked that Parliament should allow such a measure to be in place today.

That matter is slightly aside from the points made by the noble and gallant Lord. I support what has been said and I believe that the amendments are very important. Speaking as one who works almost entirely among veterans, in view of the concern that they have for widows—and the great work that the noble Baroness, Lady Strange, does for widows—I believe that there should be some initiative from the Government. I am not simply blaming this Government; I was just as curt to the previous administration on this matter, who were just as much to blame for this sort of thing as are the present Government.

Even if the Minister cannot agree somewhere, somehow, within the Ministry of Defence, somebody should put his mind to the problem. There might be a bit of a crack at the Members of the other place to think not only of themselves but of others. In my generation, we were taught as officers that, come the end of the day, one looked after the mules first, because they carried the heaviest load. One then looked after one's men—and then, if there was time, one looked after oneself. I must say that I find Members of another place rather good at looking after themselves first, and to hell with the rest of us.

Lord Morris of Manchester: My Lords, like my noble friend Lady Dean, I hold the noble Baroness, Lady Strange, in high admiration. I have the very good fortune to work with her in the War Widows' Association of Great Britain, of which she is president. She is extremely proud of its membership, as I am too as vice-president.

As my noble friend Lady Dean said, the noble Baroness has made a compelling case for the amendments. She speaks not only with commitment but also great authority in this policy area. I know that the Forces Pension Society has done a very great deal to sustain noble Lords who have been supporting the purpose of these amendments. I pay tribute to them as
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well. With regard specifically to Amendment No. 9, the important point to emphasise is that it is about ensuring equity all across the scheme. I hope very much that the Government will accept that there is very strong feeling in all parts of the House in support of these amendments, and that they will offer a positive response to them this evening.

Lord Bach: My Lords, I am grateful to all noble Lords who have spoken to these three important amendments. The noble and gallant Lord, Lord Craig, began to address the House in Russian, when he said nyet, nyet, nyet. For those noble Lords who understand basic Russian, as he and I do, he may be somewhat pleased to hear that my response is in the spirit of, "Nyet, nyet and da". For those who do not speak basic Russian, that means that the Government will make a concession on Amendment No. 14. I shall come to that in due course.

I turn first to Amendment No. 7. I apologise profusely to the noble and gallant Lord if his letter of 22 July has not been replied to. His letter of 19 July has been. I have checked, so far as I can while I am in the Chamber, and I am told that the officials know nothing of another letter of 22 July. I shall make inquiries immediately the Report stage ends and come back to the noble and gallant Lord. I am very sorry that the letter has not been replied to.

As regards Amendment No. 7, the new pension scheme has been designed to be broadly cost neutral. The cost of benefit improvements in some areas, such as those for widows and dependants, has been offset by a reduction in the value of benefits elsewhere, for example, the immediate pension.

Amendment No. 7 would enable the Secretary of State to provide current and future widows and widowers of current scheme members with the best of all possible worlds. If the widows and widowers of members were to be allowed to compare the benefits they receive under the current pension scheme with those under the new scheme, and to select accordingly, that would frankly increase the cost of the new scheme very significantly. It would be unreasonable to allow individuals to have a substantial improvement to their benefits when their spouse had either not accepted the balancing trade-offs in the new scheme when an active member of the current pension scheme or had never had the opportunity to do so as he or she had retired before the new scheme was introduced.

There is the further point that given the conditionality of the wording of Amendment No. 7, even if the amendment were passed there would be no immediate entitlement. Were a future government to decide to make such a change, they would not require the proposed change in primary legislation to do so. The value of the amendment is therefore unclear to us. On that basis I am afraid that I cannot agree the underlying objective of the amendment nor the need for it in terms of enabling a future government to make such a change.
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I turn to Amendment No. 9. I thank noble Lords who have spoken to the amendment. The noble and gallant Lord, Lord Boyce, spoke ironically of his eloquence not being needed as he was not present to speak to Amendment No. 1. Thank goodness he was not here; with his eloquence goodness knows what the result would have been. The noble and gallant Lord has spoken with great eloquence on the issue that we are discussing, not just today but at a social gathering that we both attended some time before the Summer Recess. However, in spite of what he said to me on that occasion, and in spite of the strong arguments that have been put today, I am afraid that I must resist Amendment No. 9. I shall try to explain why that is.

The proposed new Armed Forces pension scheme includes provision for non-attributable widows' and widowers' pensions to be paid for life. I stress that existing members can transfer to the new scheme if they wish to benefit from this provision. The new clause proposed here would extend this to current widows and widowers from April 2005, who are not provided for in the new scheme.

For the majority of public service schemes, non-attributable widows' and widowers' pensions still cease on re-marriage. This approach reflects to some extent the view of society at the time the schemes were established that wives could expect a level of financial security on remarriage so the pension of their deceased husband could safely be withdrawn. As with the Armed Forces current scheme, these pensions can be reinstated on second widowhood or divorce if the individual is otherwise financially worse off than when first in receipt of their Armed Forces pension. While we are able to make changes for the future under the new Armed Forces pension scheme, paid for by adjusting benefits elsewhere in the new scheme—that is something that I could have said with more certainty before the vote on Amendment No. 1 this afternoon—changing an arrangement for the current scheme would carry with it no offsetting saving. It would therefore be an expensive change, with retrospective effect, which together would make such a change unattractive to a government of any colour.

The debate in Grand Committee on this same amendment focused on the cost of such a change and the extent to which widows of Armed Forces personnel could be seen as a special case in this regard as compared to other public service employees. Since then I have written to a number of noble Lords and I think that I should place some of the comments that I made in those letters on the record. First, as regards cost, the one-off cost of £500 million for the Armed Forces cannot be avoided. It is a cost that would need to be paid even if payments were to be made from a future date. It reflects the relatively large numbers involved from the World War II and conscript era, and the way in which seemingly small numbers each year mount up. The overall cost of a concession would be even higher if there were to be, in addition, any backdating of payments. The figure of £500 million represents the past payments that the MoD would need to have made to the Treasury each year to buy this future widows' benefit for our members
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throughout their service. We have for many years paid annually the agreed costs of the benefits provided by the scheme through something called the accruing superannuation liability charge, but the costs of non-attributable pensions on remarriage have not been a part of that cost.

A number of noble Lords made the point at Grand Committee and today that, as the affected widows were already in receipt of pension payments, a concession would cost little. This is a highly seductive, but I argue incorrect, argument for the reasons that I have just tried to explain. While it is true that, if a widow were not to remarry we would continue to pay her pension for life, the assessed costs of the scheme on the basis of which the MoD pays the accrued superannuation liability charge takes into account the expectation that a certain proportion of non-attributable widows will remarry and thus lose their benefits. Thus a change to this policy would have a long-term impact on the costs of the scheme.

Affordability is placed in even sharper focus when the issue is looked at across the public services as a whole, which the Government consider is unavoidable. The fact that members of the Armed Forces are held in the highest regard by this House and by all sections of the community is not in the end, I am afraid, a relevant argument in this context. The special circumstances of service life are, in my view, fully recognised in the high value benefits we are making available under the new pension and compensation schemes to the widow, widower or partner of a service person who dies of causes related to service, known in the jargon as an attributable death. These, exceptionally in the public services, will be paid for life.

I am aware of a further argument from some noble Lords that the pressures of service life justify different treatment for non-attributable Armed Forces widows; that is, where the spouse has died from causes unrelated to service. At the end of the day we cannot agree with that, nor, I am sure, would those affected elsewhere in the public service, for example, in the police force or in the fire brigades, who might reasonably argue that the pressures of their jobs can likewise put stresses and strains on an individual's health and well-being. They may be different stresses and different strains but they are still potentially very difficult to deal with. The Government do not believe that special treatment should be extended to circumstances where the pension relates to a death which is not due to service. In this case we could not in all fairness treat differently the widow of a service person and the widow of, say, a fireman, a policeman, a civil servant or a teacher. There is no basis for paying pensions for life in one case but not in the other, and if there is a basis it is not sufficient. No special case can be made for Armed Forces widows where a death is age-related or lifestyle-related, or due to a congenital susceptibility. The cost of making that concession for the public services as a whole is estimated at £3 billion, which noble Lords will understand is not currently affordable.
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In summary, even if the Armed Forces were to be treated on the issue as a special case, the MoD cost of changing the policy for the estimated 60,000 service widows and widowers affected is calculated by the Government Actuary to be £14 million a year—that answers the question of the noble Lord, Lord Astor—with a one-off cost for past service of some £500 million.

I come to a vexed question with a lot of feeling behind it. The noble Baroness, Lady Strange—I hope she will not mind me using her name in vain—argued strongly four years ago, in 2000, in debates on the then Child Support, Pensions and Social Security Bill, that attributable widows were different. The Government agreed and made exceptional change to the regulations to allow them to remarry or cohabit and keep their attributable widows' pensions. No such special case can be argued for extending that benefit to current AFPS members and those already bereaved.

I turn finally, and perhaps more happily, to Amendment No. 14, spoken to today by the noble Baroness, Lady Strange, and in Grand Committee by my noble friend Lady Dean. I shall resist the amendment as drafted, for reasons that I will explain, but I want to make it clear from the start that I am happy to support the intent behind it and will make proposals to noble Lords.

The proposed new clause seeks to amend war pension legislation to enable war widows' pensions to be paid for life for a specific group of widows and widowers. Article 42 of the service pensions order, which contains the rules of the war pensions scheme, provides that payment of war widows' pension ceases on remarriage or cohabitation. That rule applies equally to all war widows and widowers. My main argument against the change in the form in which it has been proposed is that the change might entail retrospection to benefit those who have already remarried or cohabited. Noble Lords will recognise the cost implications of such an extension, which would make the change wholly unaffordable.

Following eloquent presentation of the amendment both today and in Grand Committee, however, the Government have given very careful consideration to the issues behind it. As noble Lords will be aware, since October 2000—I have just referred to the matter—we have allowed widows and widowers under the Armed Forces pension scheme whose spouse died from causes related to service to keep their pensions on remarriage and cohabitation. In view of the exceptional position of war widows and the special needs of those whose spouses' service ended before major improvements were made to occupational benefits in 1973, we accept the argument for a change in that respect. It will apply only to future remarriages for widows and widowers whose service spouse left service or died before 1973. It would not be affordable to make the change retrospective for past remarriages.

As with the October 2000 change, the change will apply only to those who remarry or cohabit after the date of change. That means that it is not a retrospective
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concession. However, it means that those war widows who have already remarried will not benefit, although, should their position change and their pension be reinstated in future, the new rules would apply to them. I am happy to place on the record the Government's commitment to make that change for war widows. I suggest that we do it through an amendment of the service pensions order; there is no requirement to amend any primary legislation. I hope that the House will welcome that concession. The noble Baronesses, Lady Strange and Lady Dean, and many others, including the noble Lord, Lord Morris, have worked for it for a long time. I hope that they will accept credit for the part that they have played in changing our minds and achieving the concession.

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