War Pensions: Uprating

Baroness Jolly Excerpts

Monday 11th January 2016 Lords Chamber

[Earl Howe]

My Lords, it is important to make it clear that despite its name, a war disablement pension is not a state pension but a form of compensation for disablement and/or injuries caused by service to the country. It is tax free and payable in addition to the state retirement pension. Payments are set at a higher rate than similar disability benefits and most war pensioners who have reached retirement age will be in receipt of both pensions.

[Baroness Jolly (LD)]

My Lords, the war pensions scheme includes allowances related to employment, so the annual uprating should be related to earnings inflation and not price inflation. Will the Minister tell the House what it would cost the Treasury to link the war pensions scheme to earnings and not to inflation?

[Earl Howe]

My Lords, I know that the Royal British Legion has come up with its own calculation. To answer the noble Baroness’s question, I am not aware that the Treasury has done so. However, the principles should be clear here. Under the Armed Forces compensation scheme and the war pensions scheme which preceded it, an injured service man or woman is assessed on their level of disability, and based on that assessment they are compensated for their deemed loss of earnings in civilian employment. After that, the guiding principle is that the real-terms purchasing power of the annual payment should be maintained, and it is therefore indexed to the consumer prices index, which, as I said, is the index applied by the DWP to all disability benefits.