Veterans’ Pensions

Jason McCartney Excerpts

Monday 16th March 2015 Westminster Hall

[Anna Soubry]

I am grateful to the hon. Lady for that intervention, but I have not finished my speech. I am explaining why. She may take the view that it need not be done retrospectively; she may and does take the view—I think that it is the view of the Opposition—that there should be some special arrangement involving application to the LIBOR fund. I will come to that, but there are others who do not share her view, and who do not take the view that an individual should have to go cap in hand to a Government fund. Some argue that it should be done retrospectively, so it is only right and fair, given the terms of the debate, that I respond to their arguments as well as to the arguments quite properly advanced by the hon. Lady, as I shall do in due course.

I have dealt with the covenant and what it does. The two key principles are no disadvantage and, in some instances, an advantage. This is why I do not believe the covenant applies to that group of our former servicemen and women. Before the Social Security Act 1973, there was no entitlement to a preserved pension for any public servant. Officers in the armed forces who had not served for 16 years from the age of 21, and soldiers who had not served for 22 years from the age of 18, were not entitled to a pension.

As I said, it sounds astonishing, but those were the rules then. They are stringent terms compared with today’s status quo, but although it sounds perverse, they compared favourably with other public sector schemes at that time; they were not that onerous. A civil servant, for instance, had to serve for at least 10 years and be over 50 to be eligible for a pension. Furthermore, members of the armed forces had access to other benefits. Although it did not constitute a pension, officers leaving after nine years and other ranks leaving after 12 years qualified for a gratuity to ease their transition from service to civilian life. Additionally, veterans who suffered illness or injury as a result of their service were entitled to what was called a war pension, although I am not sure that “pension” was ever the right word. It matters not—the point is that they were rightly and properly entitled to a sum of money that they received for life, no matter how long they had served.

One common misunderstanding is that the veterans we are discussing today somehow paid for their pensions but never received them. That is not right. Armed forces pensions are non-contributory. That was true of the armed forces pension scheme 75 and remains so for our new scheme, which will be introduced later this year. The Armed Forces Pay Review Body takes the pension provision into account as one of a range of factors when considering broad pay comparability for the armed forces, but armed forces pay is not abated as a direct consequence.

Taking into account all of the above, I think that it is clear that in terms of preserved pensions, members of the armed forces who left before 1975 were not disadvantaged compared with other groups of the time. So there is no case to answer under the terms of the armed forces covenant.

That said, the hon. Lady can rest assured that where we find clear disadvantage, we act. Of course, a recent high-profile example of that was the issue of pensions for life for surviving spouses and civil partners of personnel—a subject that she, like Members from all parties, has shown considerable interest in and campaigned on for many years. In that case, given the unique nature of service life, the widow or widower would have been prevented from earning an occupational pension of their own, which would have put them at a distinct disadvantage when compared with the rest of society. It has to be said that we are talking primarily about women, especially with regard to that generation. Service life meant that they married not only the man, but whichever part of the armed forces he served in, and often followed them around the world. They went from place to place. It was just often the way that they did not have a job of their own, and therefore were not able to build up their own pension pot or contribute to any pension scheme. We rightly identified that as a clear distinction that put them at a clear disadvantage, compared with others.

Consequently, from 1 April this year, all war pension scheme and AFPS75 widows and widowers will be able to retain their partner’s pension for life, and rightly so. That is one of the great achievements of this Government.

[Jason McCartney (Colne Valley) (Con)]

I must declare an interest: I have a preserved pension, having served in the Royal Air Force as an officer.

I commend the Government for the work they have done on war widows’ pensions. However, on veterans’ pensions, the Minister talked about the billions of pounds that a change to the system could cost. Have actual costs been calculated, and are there any firm proposals about giving some kind of due acceptance and acknowledgement of the service that these veterans gave to our nation, at home and abroad, pre-1975?

[Anna Soubry]

I am grateful to my hon. Friend for his intervention. I hope that he will forgive me; I had not realised that he had served in the RAF, and under a scheme that means he receives no pension because of the rule that pertained at that time.

My officials will provide me with any details during this debate, but it is my understanding that no costings have been made for the proposed change. However, I said earlier that we believe that it would require an astonishing amount of money; some say that up to billions of pounds would have to be found if we were to set up any new scheme. [Interruption.] I am right that there is no firm figure, but it is thought that it would cost billions of pounds if we were to make good on this—if I can use that expression—in the way that my hon. Friend, and indeed the hon. Member for North Ayrshire and Arran, have suggested.

Let us now look at the idea that is being advanced of using LIBOR funding, so that people can apply directly. A lot of money has been recovered by way of LIBOR fines. We have been able to allocate £10 million each year, in perpetuity, to fund military charities and to continue the work to advance the armed forces covenant, but I stress that it is only £10 million each year, which, frankly, would be a drop in the ocean compared with the sums we have talked about today. I am also slightly confused as to whether or not the idea is that individuals would be able to apply to some fund that would be funded from the LIBOR funds, on an individual basis. I would be grateful for any assistance on that.