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House of Lords

Wednesday, 14 October 2009.

3 pm

Prayers-read by the Lord Bishop of Exeter.

Armed Forces: Parachuting



Asked By Lord Lee of Trafford

The Minister for International Defence and Security (Baroness Taylor of Bolton): My Lords, the Government intend to maintain a parachute capability for the Armed Forces for the foreseeable future. The level at which it is maintained will be kept under review to ensure that it is consistent with operational priorities, but parachuting remains a key part of our defence doctrine.

Lord Lee of Trafford: My Lords, I am grateful to the Minister for that reply but the reality is that at the present time there is a serious overstretch problem with availability of aircraft. Noble Lords visited 16 Air Assault Brigade in July, before the Recess, and discovered that on many occasions soldiers were turning up at Lyneham prepared to jump, only to find that the aircraft were not available, out of service or had been retasked on higher priority, and therefore they had to turn back and return to base. We discovered that, overall, something like 41 per cent of the members of 16 Air Assault Brigade are not now parachute qualified because of lack of jump availability. As for newer recruits, those who have completed the pre-training course have not jumped for more than two years. What plans do the Government have to remedy the situation?

Baroness Taylor of Bolton: My Lords, there is indeed a shortfall and we acknowledge that, as has been made clear in the replies that I have given, not least to the noble Lord, Lord Lee. We believe that we have sufficient training for the core tasks that are in hand. Operational requirements have to take precedence, but we have made provision to use Skyvan. The contract with the private contractor that was used until 2004 is now being reinstituted, which should help to ease the situation.

Lord Selsdon: My Lords, I was on the visit and I was very concerned that the Paras did not have any wings-they had lost their pride. We are short of aircraft but we have 40 countries co-operating with us in Afghanistan, many of which have Hercules and other aircraft. Perhaps they might be able to lend them to us so that our parachutists could learn how to jump.

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Baroness Taylor of Bolton: My Lords, we have looked at the possibility of making arrangements with other countries, such as some of our allies. There are some technical and practical problems with the configuration of the aircraft, even if it is basically the same plane, but we have not excluded that possibility and we are doing everything that we can to be imaginative about how we maintain the training that we need.

Lord Addington: My Lords, is it not the case that parachutists who complete the course get a bonus in their pay packet? Are we not effectively depriving a number of our troops of a bonus that they would have expected to get in their wages?

Baroness Taylor of Bolton: My Lords, we have taken account of that factor. The bonus, which I believe is £5.35 per day, is paid to those who have qualified even if they are not able to maintain their current qualification by jumping within the prescribed period. It means that they do not get the training and practice that they want and that is obviously important, but, in terms of financial penalty, those who are not able to maintain their currency do not get penalised, because we have made provision for that.

Lord Naseby: My Lords, when exactly will this all be sorted out? This is not an optional extra of Her Majesty's forces: this is a key component of them.

Baroness Taylor of Bolton: My Lords, as I made clear, the current capability is there. The lack of parachute training is not having an effect on the mandated operational capacity. Of course, we would like to improve the training facilities, but I hope that everybody would agree that it is right to give operational needs the priority that we have given them.

Lord Boyce: My Lords, will the noble Baroness comment on the effect on ethos of the lack of training such as has been perpetrated by this withdrawal? In extension, what might the ethos of the Territorial Army be in light of the reduction of training that it is about to suffer?

Baroness Taylor of Bolton: My Lords, it is clear that those who are in parachute regiments want to be able to exercise their skills. That is something that we all understand. As far as I understand it, morale is good and I have checked that with those who are in charge of the particular division. They would like more facilities and would appreciate more opportunities to jump, but they all acknowledge-as we should all acknowledge-that when aircraft are needed for operations, that is where they should be. That is important.

Lord Rotherwick: My Lords, the Minister talks about developing parachute training. Weston-on-the-Green near Otmoor in Oxfordshire is one of the main sites used for parachute training. The Government have recently been touting this as an eco site. Although it will not go forward in the first round of ecotowns, what provision have the Government made in the event of Weston-on-the-Green becoming an ecotown so that other sites are developed to take on this parachute training?

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Baroness Taylor of Bolton: My Lords, I cannot comment on ecotowns, but we ensure that we have the relevant areas that we require for training. The Skyvan contract, which I mentioned is being reinstituted, is allowing for training in the Colchester area. The training does not need to be in one particular area only.

Lord Inge: My Lords, will the noble Baroness explain what she meant when she said that morale had not been affected? What does that actually mean, and how is it judged?

Baroness Taylor of Bolton: My Lords, I can judge it only by those who are in charge telling me that that is the case. I would not presume to make that assessment myself.

The Earl of Onslow: My Lords, when is a mass parachute drop ever likely to happen again? Surely, mass paratroop drops are as out of date as horses are to cavalry regiments.

Baroness Taylor of Bolton: My Lords, I hear a voice from behind me saying that we should have one on Otmoor, but I am not sure that that is our intention. The important thing is that there is no stated requirement for that kind of parachuting in Afghanistan. That is our priority at present because the operational commitment is extremely high. If we can meet our obligations there, we will be pursuing the right priorities.

Earl Attlee: My Lords, what other key capabilities are being neglected, because I believe that there are many?

Baroness Taylor of Bolton: My Lords, I do not believe that key capabilities are being neglected. It is right that we should prioritise operations.

Viscount Slim: My Lords, is it not a fact that the Royal Air Force plays an important role in parachuting? Any curtailment in the research and development of new techniques and new technologies for clandestine entry by parachute and other means must not in any way be thwarted.

Baroness Taylor of Bolton: My Lords, I totally agree. The Ministry of Defence spends a great deal of money, time and research on new technologies and new techniques, and that will continue.



3.14 pm

Tabled By Lord Barnett

Lord Sheldon: My Lords, on behalf of my noble friend Lord Barnett, and at his request, I beg leave to ask the Question standing in his name on the Order Paper. My noble friend is recovering quite well from his stroke but, in spite of his 86th birthday today, he is unable to put his Question.

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The Financial Services Secretary to the Treasury (Lord Myners): My Lords, we are all delighted to hear that my noble friend Lord Barnett is making a good and swift recovery. The House joins my noble friend in conveying our very happiest returns to my noble friend Lord Barnett on his 86th birthday.

As part of their recapitalisation and participation in the asset protection scheme, the Government agreed certain commitments with the Royal Bank of Scotland and Lloyds Banking Group, including on lending, remuneration and board structures. Government stakes in financial sector institutions are managed at arm's length and on a commercial basis by UK Financial Investments Limited, which acts as an engaged institutional investor. The Government do not impose wider policy objectives on the banks through UKFI.

Lord Sheldon: I thank my noble friend for that reply, but my noble friend Lord Barnett considered that, in connection with the specific policies imposed on banks, the answer should have been, "None". Has the Minister seen the article in the Times that said-it was either a genuine leak or just a guess-that £27 billion of high-quality loan applications by small and medium-sized companies had been refused and that he intended to impose a positive response? Will he say whether that is true? What sanctions would have been imposed on the two banks, Lloyds and the Royal Bank of Scotland, if it was not true?

Lord Myners: My noble friend Lord Barnett would have been incorrect in saying that there were no conditions. The Government's support for the banks importantly included conditions around remuneration, board structures and governance, as well as making credit available and the conditions on which that credit was available, including conduct and forbearance consistent with good practice. As for the lending agreements, we have indicated that we will report annually to Parliament on progress against those agreements and will do so after each of the boards of the two banks has produced its annual report and accounts.

The report in the Times gave a figure that I did not recognise. What is more important is that, as I heard on the radio this morning, the Royal Bank of Scotland says that it is approving 85 per cent of business loan applications that it receives. What I hear is that the pricing of loans to small, medium-sized and larger businesses has come down dramatically in absolute terms and, more recently, in terms of lending margins, and that the banks are making a real effort to promote the availability of credit to creditworthy customers, which is consistent with the undertakings that they gave us when we provided them with support.

Lord Bilimoria: My Lords, given what the Minister has just said, why is it that-I know this through bitter experience-everyone from whom I hear in the SME community continues to feel that they cannot get lending from the banks? Why have the Government saved the banks while not doing enough to save the businesses that those banks are there to serve?

Lord Myners: The experience that the noble Lord, Lord Bilimoria, describes is not one that completely accords with what we hear from the banks. Yesterday

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afternoon, my noble friend Lord Davies of Abersoch and I met the heads of small business lending of every major UK bank, together with representatives of the CBI, the Engineering Employers' Federation and the Federation of Small Businesses. It was quite clear from that meeting that the primary issue in terms of lending to creditworthy, well managed and solvent businesses is demand. I cannot speak to personal experiences in which those definitions of business may not necessarily apply.

Lord Newby: My Lords, the Minister has already said that the Government have got lending commitments out of RBS and the Lloyds Banking Group. We know, by virtue of leaks from RBS, that it is not meeting those commitments. It is difficult for Members of your Lordships' House to know quite what is going on. Would the Government commit themselves, first, to publishing the commitments that they have with the banks and, secondly, to reporting on a quarterly basis-rather than annually and well after the event-on what has been going on? Equally, would the Government not hide behind the spurious argument of commercial confidentiality to prevent them from doing so?

Lord Myners: My Lords, it is not a spurious confidentiality clause; it is critical to the agreement to protect the commercial interests of the banks and to create an environment that they think is likely to facilitate their achievement of the lending agreements. The lending agreements are conditional on a number of factors, including the overall economic outlook and performance. I am clear that, in a number of areas, demand for bank credit has reduced. For instance, large companies have been able to access rights issues from the stock market and the corporate bond market. The Bank of England is very clear in its own reports on lending that there is no question over availability of credit for larger businesses. The Bank of England's most recent lending report also made it clear that availability of credit has improved recently. In that context, I would expect to see the Royal Bank of Scotland and all British banks increase their lending to creditworthy borrowers.

Baroness Noakes: My Lords, the Minister also mentioned remuneration when he talked about the agreements with the banks. Recently, the Government have reached agreements with all five major banks around complying with the G20 principles. In view of the fact that investment banking revenues are self-evidently buoyant at the moment and that there are rumours of large payouts coming from the City, can the Minister explain what practical effect the agreements with the banks will have on restraining bonuses in that part of banking?

Lord Myners: My Lords, I have come straight from a meeting with the heads of the 11 major investment banks in the United Kingdom. I would like to say that it was in anticipation of the question from the noble Baroness, but it was because we recognise that it is important that we insist, and the banks agree, that their remuneration policies will be in accordance with the FSB agreement and the G20 agreement reached in Pittsburgh three weeks ago-namely, that the banks will not reward failure, that they will defer a significant

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amount of bonus, that there will be clawback arrangements and that the amount of bonuses paid in cash will represent a modest proportion of the total for the very highest earners. Most important, this agreement will come into effect in the United Kingdom from this financial year, rather than a later year, as may well be the case in one or two other countries. That is significant progress. I am delighted that the noble Baroness has given me the opportunity, for which I am grateful, to update the House on another area of achievement by this Government.

Armed Forces: Pensions


3.23 pm

Asked By Lord Morris of Manchester

Lord Morris of Manchester: My Lords, I declare an interest as honorary parliamentary adviser to the Royal British Legion.

The Minister for International Defence and Security (Baroness Taylor of Bolton): My Lords, data on costs in closed cases are not held centrally in respect of war pension scheme and Armed Forces compensation scheme cases where we have appealed first-tier tribunal decisions to the upper-tier tribunal, and which were later confirmed on appeal. Therefore, it is not possible to separate out the costs of cases where our challenge was unsuccessful without examining each individual case and incurring disproportionate costs. A first-tier tribunal decision is challenged only in cases where it is considered that there has been an error of law.

Lord Morris of Manchester: My Lords, I am grateful to my noble friend, as ever, but is it not disquieting that, while haggling with Gulf War veterans and bereaved families over pensions still drags on, Parliament cannot yet be told even how much the MoD spent contesting the case of the late Terry Walker who, as my noble friend knows, had his war pension cut from 100 per cent to 40 per cent shortly before he died, leaving his two orphaned children in poverty? Again, how much has been spent on trying to reduce the compensation awarded to Corporal Andrew Duncan of the Light Dragoons from £46,000 to £9,250? Will the MoD continue to contest the award to this brave young soldier, who has undergone 11 operations since being hit in the leg by a bullet in Iraq?

Baroness Taylor of Bolton: My Lords, I am afraid that I must disagree with my noble friend's use of the word "haggling" in regard to these cases. We do not wish to take money away from any individual, we are trying to make a system which is robust and fair and gives most compensation to those who are most severely injured. My noble friend takes issue with the case of Corporal Duncan and Marine McWilliams that on Monday was adjudicated on. I point out to him that the judge in that case, Lord Justice Carnwath, said in his judgment:

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"The Secretary of State was, in my view, entirely justified in bringing the appeal ... It seeks to clarify some important and difficult issues relating to construction of the scheme".

Therefore, I think that the case was worth bringing. It is important that in all these things we ensure that those who are most severely injured and most need help get the most benefit.

Lord Addington: My Lords, when many of these cases are brought to public attention it always appears that the law is, at least to some extent, an ass. Will the Government undertake to ensure that everybody knows exactly why these decisions have been made, and that this is put into the general media so that we can at least understand what the Government say, even if we still disagree with it?

Baroness Taylor of Bolton: My Lords, I agree that there is a great deal of misconception and misunderstanding about the nature of those cases and, indeed, about the Armed Forces compensation scheme itself. Whatever its deficiencies, it is a new scheme introduced only in 2005. For the first time it gives tax-free lump-sum payments to serving servicemen. We have doubled the basic lump sums. For the first time there is a guaranteed income for those who are most severely injured, so we have made significant progress. There will always be complex and difficult individual cases but the basic principle behind what we are doing-namely, that those who are most severely injured should get the most help-is one on which the whole House should agree.

Lord Harris of Haringey: My Lords, in the case cited by my noble friend, is not the issue at stake the complications that arose during medical treatment? While I understand why there is an important argument to be had about whether that is properly the liability of the compensation scheme, is there not also an issue about the duty of care of the Government towards Armed Forces personnel? Was it not possible to separate out the two issues in this case?

Baroness Taylor of Bolton: My Lords, that is exactly what the judge was referring to when he said that there was a need for clarification. This was a complex case and additional factors came in at a later stage which were not part of the original decision. That is why it was right to seek further clarification. The case will now be remitted back to the independent tribunal, which I hope will come to a decision very quickly. Of course, whatever the decision of that tribunal, the MoD will pay whatever funds and whatever money is recommended.

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