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Lord Craig of Radley: My Lords, I rise to support Amendment No. 3. I make no apology for reiterating some of the telling arguments that the noble Lord, Lord Astor of Hever, has placed before your Lordships.

The Minister has argued that it is not possible to treat service non-attributable causes of death differently from other government employees, because the non-attributable causes of death are similar. However, only the Armed Forces differentiate between causes of death in that way. They deserve to be treated separately.

Noble Lords should remember that the MoD has now embraced the principle of widows' pensions for life, which is very good news. The MoD and the Government did the right thing to help attributable widows in 2000. The political will was there and the money—not much—was found. The new pension scheme will no longer differentiate between service attributable and non-attributable deaths in relation to widows in the new scheme. By persisting in not granting the proposal in this amendment, the Government would create a new widows' legacy issue.

All efforts should be directed to trying to remove or ameliorate those disgraceful and heart-rending legacy issues, which affect a small and vulnerable group. It seems totally callous to be prepared to accept the creation of yet another legacy issue which, with political will and a more realistic application of the interdepartmental accruing superannuation liability charge rules would ensure that there was not another new legacy issue, nor a great financial penalty to the Ministry of Defence.

The legacy issue will haunt the Government; and, more importantly, penalise a vulnerable group in society. The numbers involved are not great. They will decline from the introduction of the new scheme anyway. Moreover, because we are considering how many non-attributable widows might actually remarry, it is savings forgone by the MoD rather than up-front costs that would arise. I urge the Government to take this small step of great importance to a relatively small number of widows.
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I hope that even now the Government will think again and be remembered for behaving honourably, generously and indeed logically. It is time to put the matter to rest to help those who might wish to remarry but face the unenviable choice of having to remain single to preserve their pension benefit. I strongly support the amendment.

Lord Redesdale: My Lords, I also support the amendment. I was surprised to hear that the noble Lord, Lord Astor, was planning not to press the amendment. It is up to any other noble Lord to press the amendment, and I think that we would support it. I thank the Minister for his letter, and I agree that the case he has put for the amendment's financial implications is compelling. However, I was slightly surprised by the argument of the noble Lord, Lord Astor, that we have to scrutinise the Bill to the utmost extent and therefore we should not press the amendment. That would be slightly strange at this stage in the Bill, because it is the last opportunity that we have to scrutinise it.

I know that the Minister will say, as he has done at earlier stages of the Bill, that the calculations that have been made show that this provision cannot be afforded. I believe that it is the duty of this House, specifically as regards information that was not available to us at earlier stages of the Bill but is now available, to send it back to the other place for reconsideration. If it comes back, it will be for this House to decide whether to move forward with the Bill given the many benefits that it contains.

If we do not press the issue, the opportunity to do so will be lost to this House for a number of years. We are talking about legacy issues, some going back almost 30 years. The number of affected people is dwindling. By the time the next such amendment to an Armed Forces pensions Bill comes before either House the number of affected people may well be insignificant and therefore the measure will be almost affordable. However, that does not alter the moral imperative that this issue should be looked at once again.

Lord Guthrie of Craigiebank: My Lords, I, too, support this amendment. However, I should first declare an interest—I am privileged to be a Vice president of the Forces Pension Society. I have long believed that the treatment of the widows of our servicemen who die (from whatever cause) while serving in the Armed Forces has been less than generous. I am very pleased to note that this Bill will in future place all widows (both attributable and non-attributable and, indeed, unmarried partners) on an equal footing. In the future all will keep their pensions for life regardless of whether they choose to remarry or to cohabit.

The reason that I support this amendment is that should this Bill go forward in its present form the Government will wilfully and knowingly create a new group of disadvantaged widows. These are the existing non-attributable widows who will lose their forces family pension should they elect to remarry or cohabit at some time in the future. I have little doubt that in
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due course they will become a thorn in the side of officials and Ministers; the only service widows who will still be required to choose between perhaps their future happiness and financial security.

Finally, it strikes me as more than a little strange that in future the survivors of partners (heterosexual or homosexual) who have never married will keep their pensions for life even if they choose to establish a new liaison. At the same time existing non-attributable widows will lose theirs should they choose the more conventional course of remarriage. I am tempted to say that perhaps this might be taking political correctness a step too far. Nevertheless, I know that this amendment would resolve this longstanding injustice once and for all.

Viscount Slim: My Lords, I believe that the figures are not yet clear. I say with no disrespect to the noble Lord that we have been rather muddled by the different quantities that have been thrown at us regarding this particular problem. I see this as a diminishing cost but I see one thing that I believe is far more important; namely, that in my fairly long experience I am sure that it is the duty of this House to persuade any government who are in power to put a wrong right. This is a wrong and I believe that the Government should put it right. I support this amendment.

Baroness Park of Monmouth: My Lords, I, too, strongly support the principle that we are here to do our very best. If that very best does not succeed, we shall at least have used what powers we are given by Parliament in endeavouring to persuade the Government that this important issue should be treated properly. All the arguments have been made and I do not need to make them again. However, it makes very little sense for this House to exist if we do not do what we are here to do.

Lord Morris of Manchester: My Lords, we have heard much this afternoon about affordability. Yet little has been said about the attrition inflicted on war widows by age-related diseases and disabilities. Their number is declining year by year and the totality of the costs of war widows' pensions is falling in real terms. The noble Lord, Lord Redesdale, was right to say that time is extremely important. Over the next few years more and more widows of the Second World War will have died. That will further reduce the cost of war widows' pensions. I think this is a moment for generosity and for recognising, as was done in the memorial services held on the 60th anniversary of D-Day, just how indebted we are to those whose problems we are addressing this afternoon. I hope very much that what has been said will be listened to carefully and sympathetically by the Minister and that we will hear from him authentic figures this afternoon about the declining total cost of war widows' pensions year by year.

Lord Molyneaux of Killead: My Lords, I should like briefly to support what has been said already. I do so as
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president of a Royal British Legion branch who very often accompanies my welfare officers. It is quite staggering at ground level when you meet these pathetic cases time after time without any real opportunity to put them right. Therefore, I plead with the Minister to listen very sympathetically to what is said and, as I say, put this matter right.

Lord Bach: My Lords, I, of course, recognise the strength of feeling behind this amendment. I thank all noble Lords who have spoken for the reasonable way in which they have put their arguments in favour of this amendment. The strength of feeling has been well illustrated by debates on this issue at earlier stages of the Bill, and not least by the debate at Third Reading.

I hope it will be helpful if I take a little time—I hope that it will not be too long—to give the House a little background. The proposed new Armed Forces pension scheme includes provision for non-attributable widows' and widowers' pensions to be paid for life. Existing members can, of course, 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, including the widows and widowers of those who have already retired.

For the majority of public service schemes non-attributable widows' and widowers' pensions still cease on remarriage. 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—and, importantly, that will be paid for by adjusting benefits elsewhere in the new scheme—changing an arrangement for the current scheme would carry with it no offsetting saving. It would, therefore, be an expensive change with—here I disagree with the noble Lord, Lord Astor—retrospective effect; retrospective because this amendment would enable past service of a service person prior to April 2005 to count towards a widow's pension on remarriage. It would require us to provide benefits against service where in the past there was no entitlement. As I said, these pensions can be reinstated. It would therefore be an expensive change. Together these would make it a deeply unattractive change, I am afraid, to a government of any colour.

Against this background, I propose to talk about two things: cost and retrospection. I know that there has been some confusion on the cost issue. I am grateful to the noble Lord, Lord Redesdale, for his mention of the letter that has recently been sent. I do not think there is any confusion about retrospection.

I shall do my best to explain the different aspects of the costs involved, following the debate at Report on this issue. I have written to the noble and gallant Lord, Lord Craig, in an attempt to clarify this difficult aspect and I have copied this letter to other interested noble Lords. Let me repeat some of those points.

I start by explaining the difference between past and future costs. That is not the distinction between the cost of providing benefits retrospectively and the
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paying of benefit from now onwards. Rather, it relates to the fact that benefits must be bought by the department over the length of an individual's service. Where payments were not made, the benefit was not bought.

If we want to buy this benefit now for those past years of service, a past service cost would be properly charged to us by the Treasury to cover all the costs for each year of past service for all those who will benefit. The future service cost is a similar cost for each future year of service. As noble Lords know—we discussed this matter last week—that is paid annually as an addition to the accruing superannuation liability charge.

Individuals are entitled to the benefits of the Armed Forces Pension Scheme that is in place when they are serving. Those who have left the scheme and are already receiving benefits are not entitled to any improvements made to the scheme after their departure. Why? Because the sum paid annually to the Treasury by the Ministry of Defence secures only the package of benefits in place at the time, and a pension for life for non-attributable widows was not part of that package.

In describing the costs involved in making the change, I have referred in past debates to three different figures: future and past service costs for the MoD and the past service costs for all public service schemes. Let me deal briefly with each of these costs in turn in so far as they cover the current proposal to give non-attributable widows pensions for life.

First, the future cost of £14 million a year covers the future service cost. This cost gives the benefit only in proportion to future service. Let me give an example. An individual with, say, five years' service left would earn benefits based only on these years, so if he had a total of 20 years' service only one-quarter of his widow's pension would be extended for life by this £14 million measure. This measure would not address the fact that the department has not in the past made payments to the Treasury to cover previous years of service.

Secondly, the £500 million—half a billion pounds—is the one-off cost to the Ministry of Defence to cover the years of past service. In my earlier example, the widow would be entitled to benefits based on the full pensionable career of 20 years, if this payment was made, as well as the £14 million a year for each year of future service. This would cover all existing pensioners and ex-service personnel.

None of these costs would allow for backdating of pensions of those widows or widowers who had already remarried and lost their pension at the date of change. The costs are based on pensions being reinstated only from the date of any change. Backdating would increase very substantially the cost of change, although we have not made an estimate of this more far-reaching option.

Thirdly, the £3 billion is the past service cost extended to cover provision of this additional benefit across all public service pension schemes.
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I mentioned in the debate that serving personnel will be able to get the benefit of a non-attributable widow's pension for life by joining the new pension scheme when they are given the choice. To do so they will, of course, have to give up benefits in the current pension scheme, such as the more generous immediate pension, and they will need to decide whether the trade-off is reasonable. We have been able to afford the benefit for the new AFPS because it will be paid for by a reduction in benefits elsewhere in the scheme.

I do not accept, again I am afraid, what the noble Lord, Lord Astor, said about the new Armed Forces pension scheme being somehow bottom of the public service scheme. It is true that in some areas the new scheme does not match every best practice. There will always be a need for balance across the scheme, but there are areas where we match and perhaps go further than best practice. That includes the level of death-in-service benefit and the very early mid-career departure benefits. The early retirement age is exceptional—better than most—as is the rate and levels of widows' pension accruals.

This is a good scheme and we believe that that was the view shared not just within the Armed Forces but by many bodies which work for the Armed Forces and veterans outside. We have independent confirmation from respected actuaries—Watson Wyatt—to confirm what I have just said.

I am bound to resist the amendment, although, to answer the point of the noble Lord, Lord Astor, of course we will look yet again to see if there is anything we can do. But I do not hold out any realistic promise of being able to answer the deeply felt pleas made in the House. I have to resist the amendment, also, because of any government's clear policy on non-retrospection—

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