Armed Forces (Service Complaints and Financial Assistance) Bill [HL]

Baroness Jolly Excerpts

Wednesday 9th July 2014 Lords Chamber

Will this composition be retained for the enduring £10 million a year funding? If the panel details are not to be included in primary legislation, what assurances can my noble friend the Minister give that the Armed Forces, their families and welfare organisations will continue to be involved in funding decisions, the merits of which they will understand better than most? Can my noble friend clarify for the record the possible ambiguity in the use of “person” in lines 5 and 20. In the first three clauses of the Bill, “person” is taken to be an individual and the impression may be given that under Clause 4 individuals can apply direct to the Secretary of State for assistance. However, the guidance notes for the two schemes indicate that applications are for projects rather than individual hardship cases. It would be helpful if my noble friend could clarify the definition in this context. I look forward to her reply.

[Baroness Jolly (LD)]

My Lords, I thank noble Lords for their comments. I shall try to tease out issues around process and demonstrating effectiveness for the noble Lord, Lord Rosser, and the composition of the panel and what a “person” is for my noble friend Lady Garden.

The proposed amendments would affect Clause 4, which deals with financial payments to charities and other organisations that support the Armed Forces community. As my noble friend the Minister made clear at Second Reading, this Government have made a commitment to all those who serve or have served in the Armed Forces of the Crown and their families. This commitment takes the form of a covenant. The Armed Forces covenant has two key principles: that those who serve in the Armed Forces, whether regular or reserve, those who have served in the past, and their families should face no disadvantage compared to other citizens in the provision of public and commercial services; and that special consideration is appropriate in some cases, especially for those who have given most, such as the injured and the bereaved. This obligation involves the whole of society. It includes voluntary and charitable bodies, private organisations and the actions of individuals in supporting the Armed Forces. Recognising those who have performed military duty unites the country and demonstrates the value of their contribution. This has no greater expression than in upholding this covenant.

Over the past four years, the Government have committed £105 million to deliver on the commitments of the covenant—£55 million has been distributed through the community covenant grant fund, which strengthens ties and understanding between the Armed Forces and the wider community, and through the £35 million LIBOR fund, which backs projects supporting the broader aims of the covenant. A further £10 million of community covenant funding and a final £40 million veterans’ accommodation fund is set to be distributed this year. We are also developing proposals for the management of the future Armed Forces covenant fund, which is set at £10 million per year from 2015 onwards.

Organisations working with the Armed Forces community are based throughout the United Kingdom and we want them to benefit from these funds, wherever they are located. However, the use of covenant funding is currently constrained by two pieces of legislation. Section 31 of the Local Government Act 2003 confines payments to local authorities in England and Wales and Section 70 of the Charities Act 2006 limits financial assistance to charities and other benevolent institutions that provide a direct or indirect benefit to England. We have temporarily navigated around these constraints by making payments under the appropriation Act. However, this is not a long-term solution. Clause 4 therefore enables financial assistance to be given to organisations that support the Armed Forces community, wherever they are based.

The Secretary of State is already required to produce and lay before Parliament an annual Armed Forces covenant report under Sections 343A and 343B of the Armed Forces Act 2006, which I believe satisfies the intent behind the amendment proposed by the noble Lord, Lord Rosser, in respect of the obligation to report publicly. As noble Lords will know, the Armed Forces covenant report is about the effects of membership or former membership of the Armed Forces on service people, specifically in the fields of healthcare, education and housing, and in such other fields as the Secretary of State may determine. Clearly, then, it could and does cover the areas in which we currently provide financial assistance under the community covenant and LIBOR funds and the veterans’ accommodation fund.

Throughout the most recent Armed Forces covenant report, published in December 2013, the Secretary of State provided examples, including figures, of how financial assistance was provided to the Armed Forces community, reflecting the twin principles of the Armed Forces covenant. It is intended that the 2014 report will similarly detail how financial assistance has been provided throughout the year. Further to that covered in the annual report, the financial assistance provided by these three funds is also subject to the usual parliamentary scrutiny of government expenditure.

The National Audit Office has access to annual reports and to date has not expressed any negative views on how Armed Forces covenant funding has been allocated, the propriety of the financial assistance that has been provided or the rigorous scrutiny and governance processes that support it. This is provided by regional panels for community covenant schemes, and a central cross-government panel for the Armed Forces covenant (LIBOR) fund and the veterans’ accommodation fund. The scrutiny and governance processes have been explained in detail to noble Lords in the financial assistance brief that was circulated to all Peers recently. In addition, the management of funding for Armed Forces covenant schemes is also subject to the established governance procedures set out in Managing Public Money, a publicly available Treasury document that provides guidance on all aspects of how to handle public funds.

The enduring £10 million per annum that the Government have approved for Armed Forces covenant commitments will be specifically ring-fenced for these activities only. Work is currently under way to develop plans for the new fund and how it will be managed. Expenditure will be reported on both in the MoD’s annual report and accounts, for which the department’s Permanent Secretary is held personally accountable by Parliament, and in the annual Armed Forces covenant report that the Secretary of State is legally required to produce. The National Audit Office will also scrutinise both documents. In addition to the comprehensive governance framework described above, funding for Armed Forces covenant schemes is also subject to the Freedom of Information Act 2000. Anyone, if they wish, can submit a request to receive information on Armed Forces covenant funding.

A combination of all the activity described will continue to provide the assurance that any financial assistance that is provided under the Armed Forces covenant meets the criteria listed in Clause 4(5) of the Armed Forces (Service Complaints and Financial Assistance) Bill, which we are currently debating.

I shall now address Amendment 19. It is essential that the money allocated to the covenant meets the aims of the Armed Forces covenant. Noble Lords will have seen the briefing note that was circulated recently, which set down proposals for how the community covenant grant scheme, the £35 million LIBOR fund and the veterans’ accommodation fund have managed the allocation of funding.

For each of the previous schemes, it has been essential that applicants meet a tightly defined set of conditions, including a clear demonstration of how they meet the aims of the Armed Forces covenant, a clear demonstration of how a project will benefit the Armed Forces community, a clear demonstration of the need and associated benefits, a clear demonstration of how the project will provide value for money and confirmation that the project will not generate any profit. Even where an application meets these terms, a final decision is subject to the agreement of a board of experts.

Funding for the community covenant grant scheme is administered regionally. This reflects the aim to focus on local initiatives, based on a local assessment of need. Bids are first considered by the local joint civil/military partnership board, or where this is not established, the local authority and military signatories of the community covenant, before being referred to the regional grant panel. The membership of the regional grant panel consists of a chair with a rank equivalent to colonel or brigadier, a member of each service with a rank at least equivalent to major, one or two external members from organisations—the Families Federation, for example—the local authority or charitable partners, and a regional administrator, who is the secretary.

Where bids exceed a set level, currently £70,000, these are referred to a central panel for consideration. This includes a representative from HM Treasury and members of the Ministry of Defence Armed Forces covenant team, representing the Chief of Defence Personnel. Applications to the £35 million LIBOR fund and the veterans’ accommodation fund have been administered centrally by the Chief of Defence Personnel. The board that considers applications to these funds includes representatives of the MoD, which chairs the panel, and the Treasury, representatives of the Covenant Reference Group, including the devolved Administrations and selected service charities, such as the Families Federations and either the Confederation of British Service and Ex-Service Organisations or a cluster lead. There are already in existence boards that oversee and manage the distribution of the financial assistance for the Armed Forces community. A detailed explanation of all of these arrangements is widely available through the gov.uk internet site, but I hope I have demonstrated that there is already in place a rigorous governance process to ensure that funding attributed to the Armed Forces covenant is managed effectively.

With regard to the more recent £10 million LIBOR fund, the MoD is currently developing proposals for how the future fund will be managed. If possible, we will bring additional rigour to the process through the appointment of a professional grant-management organisation. This will ensure professional expertise and independence in the grant-making process. This is very much work in progress but I assure noble Lords that the criteria for applications and the rigorous scrutiny process will be retained, and will include a representative panel of experts who can ensure a continued focus on the principles enshrined in the Armed Forces covenant. The priorities for the future fund will also be agreed each year through the Covenant Reference Group.

Furthermore, as set out earlier, the Armed Forces annual report, which the Secretary of State is required by Parliament to produce, will also explain in a transparent way how financial assistance has been distributed to the Armed Forces community through the year in line with the Armed Forces covenant’s twin principles. Most notably in this regard, it is the right of the independent members of the Covenant Reference Group to express their unexpurgated comments in the report. This in itself will provide significant scrutiny of how the funding is allocated.

Approval of the legislation in Clause 4 will give the MoD the flexibility and agility that it needs to provide financial assistance to the Armed Forces community anywhere in the world. The intention is that the schemes should remain discretionary, as opposed to being placed on a statutory basis, but subject to the established governance procedures set out in the document that I mentioned earlier, Managing Public Money. As we continue to strengthen and improve this process, it is essential that we are able to retain sufficient flexibility over the composition of future decision panels, bringing in expertise and specialists.

My noble friend asked for clarification on matters of governance and I hope that she is satisfied with what I have outlined. She also asked for clarification of what a “person” is. The term is technical. The word “person” relies on the definition of the word used as a general tool of statutory interpretation, provided in Schedule 1 to the Interpretation Act 1978, where a “person” is stated to include,

“a body of persons corporate or incorporate”.

These can be companies and unincorporated associations.

While in theory any individual could apply for financial assistance, they would not meet the criteria for any of the current schemes or the terms laid out in Clause 4. It is also most unlikely that an individual could apply to the Secretary of State for financial assistance simply to benefit themselves. The requirement is for the person to undertake activities which are for a charitable, benevolent or philanthropic purpose, and in such circumstances the individual would not appear to be undertaking any activity other than spending the money for their own personal needs.

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[Lord Rosser]

I, too, thank the Minister for her reply. As I understand it, the response to my amendment is basically that the issues I raised in it are likely to be covered in the annual report on the Armed Forces covenant.

[Baroness Jolly]

Yes.

[Lord Rosser]

On that basis, I beg leave to withdraw the amendment.