Benefit Entitlements: War Pension and Armed Forces Compensation

Josh Babarinde Excerpts

Wednesday 14th October 2026 Commons Chamber

[Josh Babarinde (Eastbourne) (LD)]

Debate and discussion about issues of benefits, entitlements and calculations can often be relegated to the mere spreadsheet, but we all know that there are individuals who sit behind each and every one of those awards and numbers. One of those people—an individual who I have mentioned more than I have mentioned anybody else when speaking in the Chamber—is Pauline Cole.

Staff Sergeant Pauline Cole served our country during the Aden emergency in 1967. She was a trailblazer and she told her story in her book, “Army Girl: The Untold Story”. I believe the Minister has a signed copy of that book. Pauline was funny, fierce and utterly determined, as the Minister got to experience at first hand. She also carried the cost of her service for the rest of her life. Her service left her with skin damage and post-traumatic stress disorder. The military tribunal rightly recognised that reality and awarded her compensation for those lifelong conditions.

That compensation was meant to acknowledge her pain, her injury and the quality of life that she had lost. It should have given her a little bit more security and dignity in her retirement. Instead, the opposite happened. Because military compensation is treated as income when calculating pension credit, which Pauline was receiving, most of what Pauline won at tribunal was effectively clawed back by the Department for Work and Pensions.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman on bringing forward this debate. He is a fearless, zealous and assiduous Member for his constituents. We love to hear him come to the Chamber to make his case, and he has done that again tonight. Does he agree that it is a grave injustice when the very compensation awarded to our brave veterans for injuries sustained while serving King, Queen and country is subsequently counted against them as income when calculating means-tested benefits such as pension credit, which he referred to? Does he also agree that the Government must fix this disparity across all welfare and pension benefits, ensuring that our veterans are never penalised financially for the sacrifices that they have made, unlike his constituent?

[Josh Babarinde]

I completely agree. No one should be penalised for serving their country, although that is effectively what happens under the current system. I will come to some of the other benefits that the hon. Gentleman refers to shortly.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

I thank the hon. Member for his dedication, and for his commitment to this issue. The Defence Committee last year published its report into the armed forces covenant. We looked at this issue in detail and heard harrowing testimony from many of our veterans and their families about the disadvantage they experienced as a result of their service—despite their sacrifices. Does he agree that at the next armed forces compensation scheme review, Ministers need to look into this issue in detail and take remedial action? Those who have made enormous sacrifices or have been willing to lay down their lives should be treated with the dignity and respect that we as a society owe them.

[Josh Babarinde]

I agree with the Chair of the Defence Committee, who I know has worked on this issue for some time. I think his suggestion needs to be done sooner than the next armed forces compensation scheme review. We also need to remember that the war pensions scheme, from before that system—before 2003—needs to be looked at. I hope the Minister will be able to give us some commitments to that effect later, and I will spell them out specifically.

[Caroline Voaden (South Devon) (LD)]

Will my hon. Friend give way?

[Josh Babarinde]

Yes, and then I will make some progress.

[Caroline Voaden]

I have heard from several veterans in my constituency who have served and left the forces with a modest occupational pension but now need universal credit to make ends meet. Because their pension is counted as income, they receive less support, and for some the reduction is substantial. Does my hon. Friend agree that the current treatment is not consistent with the armed forces covenant and that something needs to change?

[Josh Babarinde]

I agree. I will talk later about the armed forces covenant and the new legal duties that will be on the Department for Work and Pensions and other Departments from the new year.

Let me animate what my hon. Friend describes with the example of what happened to Pauline. Her pension credit fell from £77 a week to just £11 a week on being awarded military compensation. Let me put that very plainly, just as others have done: she was financially punished for being injured in the service of her country. That was not an abstract loss. The material impact was that Pauline was, in the end, forced to leave her home because she could no longer afford to keep up with the living costs. That is what this policy and the status quo mean for people like Pauline.

I made Pauline a promise that I would fight this injustice on her behalf. I used my first ever question in Prime Minister’s questions to raise the case, and I met the Pensions Minister to press it further. It is with huge sadness that I say that Pauline died on 30 November last year, without seeing the justice that she was so determined to secure. At her funeral, I renewed the promise that I made to Pauline to her sons, Les and Simon Haffenden, and to everyone who loved her, and I am here tonight in an endeavour to keep it. That is why, earlier today, I tabled the Armed Forces Compensation Scheme and War Pension Scheme (Report) Bill—that is a bit of a mouthful, so Pauline’s law will do. However, this is not just Pauline’s story. According to the Royal British Legion, some 144,000 veterans and their families receive compensation for injury, illness or bereavement caused by their service. Over half of our veterans are over 65.

[Mr Jonathan Brash (Hartlepool) (Lab)]

I appreciate the hon. Gentleman giving way, and the assiduous way in which he has gone about campaigning on this issue throughout his time in this place—it is to his enormous credit. In November 2023, when I was just a local councillor, I moved a motion so that in Hartlepool, all locally administered benefits would have military compensation disregarded. I am really proud that that is now the case in Hartlepool, but many councils across the country are not doing the same. In addition to the demands for national action that the hon. Gentleman is making of the Minister—which I support—is it not also incumbent on our local councils to do the exact same thing in order to honour our veterans who receive military compensation?

[Josh Babarinde]

There are so many who need to act here. It is not just a Department for Work and Pensions issue; it is a local authority issue as well. The Royal British Legion has a very helpful map that Members can access to find their local authority and identify which locally administered benefits are disregarded.

[Gideon Amos (Taunton and Wellington) (LD)]

I am extremely grateful to my hon. Friend for being generous with his time. Will he join me in congratulating the veterans of the Taunton and Wellington branches of the Royal British Legion, who have been campaigning on this issue with me and have secured a commitment from my colleagues on Somerset council to review benefits so that all military service compensation is disregarded as income?

[Josh Babarinde]

I absolutely congratulate my hon. Friend’s local veterans and commend them for their service. When I speak at his annual dinner in a couple of weeks’ time, I will pass on the message personally, if any of those veterans are local members.

Of the folks I mentioned earlier, an estimated 146,000 are eligible for pension credit. Only around one in five receive an occupational pension for their time in service, so many of them live on low incomes. The most important number when assessing the viability of the disregard in question, though, is 4,120. That is the number of veterans and bereaved spouses who currently receive military compensation and would be claiming pension credit. These are the people I prioritise in pushing for this reform. If someone is ruled ineligible for pension credit, they do not just lose pension credit; they lose the passported help that comes with it. There is a ripple effect across the forms of support that folks can receive. On average, they can be denied around £5,900 a year in direct and passported support. For our poorest veterans, that is the difference between getting by and going without.

I know the argument that the Department has made before. It is the argument against so-called double tapping—the principle that someone should not receive two separate payments from the state that meet the same need. I do not dispute that principle, which is a very long-held one within the Treasury, but it simply does not apply here. Double tapping assumes that both payments meet the same need; these payments do not. Pension credit exists to provide a minimum income for ordinary living costs; military compensation exists to recognise injury, loss or bereavement caused by service. They are different payments for different purposes meeting different needs, so the double tapping excuse will not fly.

Counting compensation against pension credit simply uses the benefits system to claw back part of an award that was made for an entirely separate purpose, and the Government’s own policy already proves the point. Universal credit fully disregards war pension scheme and armed forces compensation scheme payments. The Government have themselves stated that this is in line with the treatment of civil compensation for personal injury, which does not impact pension credit calculations, so if military compensation is not double funding under universal credit, it cannot be double funding under pension credit. The Department cannot accept the principle for working-age veterans but reject it for older veterans.

There is a further inconsistency within pension credit itself. Only the first £10 a week of military compensation is disregarded. The Minister has told me in correspondence that this partial disregard exists in recognition of veterans’ service. The Government already accept that service deserves to be treated differently, but everything above that £10 is treated as income for everyday living costs. I am yet to hear a clear rationale as to why £10 is the right figure. It seems arbitrary to me. If the Department believes that £10 of compensation serves a separate purpose, why not the rest?

Meanwhile, under pension credit, a civilian with a personal injury compensation award, trust or structured settlement may have that compensation wholly disregarded. Pension credit therefore currently gives greater protection to compensation for an injury suffered at work or on the road than to compensation for an injury suffered in service of our country, one of the most valiant forms of work. The armed forces covenant promises that members of the armed forces community should face no disadvantage as a result of their service.

[Lee Pitcher (Doncaster East and the Isle of Axholme) (Lab)]

The hon. Member has mentioned inconsistency quite a bit, and I hope he will not mind me echoing what other Members have already said tonight. Alongside the issue he has raised is the related issue of how local authorities treat compensation. The Royal British Legion’s “Credit their Service” campaign highlights significant inconsistencies with local authorities’ policies in determining how military compensation is treated under different circumstances. Does he agree that there should not be a postcode lottery? It should not be about where someone lives; everybody should be treated fairly and equitably across the country.

[Josh Babarinde]

The Royal British Legion’s “Credit their Service” campaign is one reason I am here. I pay particular tribute to Elliot, Jo, Claire, Hannah and Hermine, who were in Parliament today running an event to help promote the campaign. While I am here, I pay tribute not only to Sam McManus from my team, but to Euan Morrison. He started out as a case worker, picked up Pauline’s case and fought and fought.

Through the Armed Forces Act, the covenant of duty is being extended to central Government, to welfare benefits and to service-related compensation. When it comes into force early next year, the Department for Work and Pensions will be legally required to pay due regard to those principles. Treating military compensation as income for pension credit fails both tests, in my view. It disadvantages veterans as compared with civilians who receive compensation.

I am ultimately asking the Government to act with a few key asks. First, will the Minister commit to amending the pension credit regulations so that military compensation is fully disregarded, bringing it into line with pension credit? Secondly, if he is not ready to go that far tonight, will he at least set out a commitment to review how much that would cost? Currently, the DWP has said that it has not done that piece of work. Thirdly, will he meet me, the Royal British Legion and the veterans affected so that we can find a way forward?

Members across this House—from the Labour party, the Conservatives, the Liberal Democrats, the Green party, Alliance, the Ulster Unionist party, the Democratic Unionist party and more—have signed my amendment on this issue in the past and have signed my cross-party letter. We are determined for change, because people like Pauline deserved better, our veterans deserve better and this House must do better.

[The Minister for Pensions (Torsten Bell)]

I join other Members in congratulating the hon. Member for Eastbourne (Josh Babarinde) on securing this debate on an issue that I know he has championed passionately for some time. I also congratulate him on how he has gone about it, both today and over the past few years in which I have been engaging with him on the issue. Indeed, I think he first raised it with me a month into my time as the Minister for Pensions, when I met him and his constituents, including the late Staff Sergeant Pauline Cole, and members of his team. It was nice to hear him paying tribute to them today. They have obviously worked hard on this issue.

The hon. Member’s speech included a touching and fitting tribute to Pauline, who served our country and campaigned not only for herself but on behalf of other veterans. I was very glad to meet her and to have the chance of knowing how accurate the hon. Member’s description of her was, and again I offer my condolences to her family, who have continued to support the campaign that she championed. I have corresponded with at least one of her sons about this case.

As well as paying tribute to all our armed forces and veterans, I want to acknowledge the work that the Royal British Legion does on their behalf, working to promote and secure the welfare of veterans, campaigning on issues involving armed forces personnel such as the one we are discussing today, and securing a wider recognition of what our armed forces have given to this country. I should also recognise the work of veterans’ hubs beyond the Royal British Legion, including the one in Swansea, where I have discussed this and many other issues with veterans face to face.

The hon. Member has been a fierce and determined campaigner on this issue. He mentioned the first question that he asked during Prime Minister’s Question Time—always a stressful but meaningful moment for a new MP. He has also persistently raised the subject of the interaction between military compensation and the benefits system, and I note that his private Member’s Bill was reintroduced in the House today. I have listened to him and to others, including Members in the House today, and, as I am sure he knows, my colleague the Minister of State in the House of Lords met representatives of the Royal British Legion in November and discussed the matter.

Let me now turn to the long-standing policy issues in this area, and try to do justice to the matters that the hon. Member has raised. He is right to say that there is no single rule for how compensation payments are treated in the benefits system. Treatment depends on the nature and purpose of a payment, whether it is in the form of a regular income or a lump sum capital payment, as well as the legislation governing the relevant schemes. In pension credit, most income is taken into account, because the benefit is intended to top up the retirement income that a person already has. Pension credit is intended to do something different from any other element of the benefits system: to provide a guaranteed minimum level that our pensioners will always have to live on. During the 2000s, it drove the halving of pensioner poverty that was such a big feature of the previous Labour Government.

Pension credit rules already recognise veterans’ specific circumstances. As the hon. Member said, the first £10 of specified war pension scheme and armed forces compensation scheme income is disregarded. I should add—because this is important and it has not been discussed in the debate so far—that the armed forces independence payment and specific additions to the war disablement pension are disregarded in full, in recognition of the different nature of those payments. Lump sum payments under the armed forces compensation scheme are treated as personal injury capital, which can remain protected through a trust or annuity under the applicable rules. Those arrangements are more favourable than the treatment of other similar schemes with disablement elements. For example, the industrial injuries disablement benefit is taken fully into account for pension credit, and the fire and police service schemes also have no disregards applied.

However, I think that the centre of the hon. Member’s argument is the different treatment in respect of universal credit. That is the point that he dwelt on, so I will try to do justice to it. Universal credit was introduced with no partial disregards, which is what drove the initial change. Pension credit predates the introduction of universal credit and does retain the partial disregard structure that all the legacy benefits had. A more important point is that the two benefits serve very different purposes: one takes work incentives into account, while the other is intended to provide that minimum guaranteed income.

What is probably more relevant to this specific case is the fact that pension credit rates are significantly higher than the standard allowances in universal credit, because the House decided, in passing the legislation, that our aim was to more or less guarantee pensioners’ incomes up to a minimum level. Pension credit is also more generous in its treatment of capital: the first £10,000 has no effect on entitlement and, unlike universal credit, it has no upper capital limit. That is for the obvious reason that pensioners tend to have larger savings, and those savings provide other contributions to people’s income. By contrast, capital above £6,000 can affect universal credit entitlement, and that entitlement normally ends if somebody has over £16,000 of capital.

Comparisons with civilian personal injury compensation should be made carefully. I know why the hon. Member makes that point, but I want to be clear that lump sums paid under the armed forces compensation scheme are treated as personal injury capital, so they would be treated exactly the same as the payments that I think he said were more generous. That would not be the case; they would be treated identically. By contrast, ongoing war pension scheme payments, and guaranteed income payments under the armed forces compensation scheme, are income payments. That is the fundamental point on which there is probably disagreement. Comparisons can sometimes involve payments with different legal status, but they are not like-for-like payments.

The hon. Member has argued that pension credit and service-related compensation meet different needs—again, that was an important part of his speech today. I actually agree with him on that point, but I think I need to explain what that means. Pension credit is a means-tested income safety net, and it provides a guaranteed minimum income. That is why we take people’s other income into account when assessing eligibility and need. Pension credit operates in a totally different way from universal credit, which sets a level of support and then tapers that away as other income comes in. It is not really about double funding; it is about the level of support that the state provides in addition to the income that a person already has. That was the nature of how pension credit was introduced.

The hon. Member draws a parallel with the LGBT+ compensation payments. I hope that he will agree that the circumstances surrounding the Government setting up that financial recognition scheme are quite different and involve a different set of considerations.

More broadly, no one is ever going to say that everything about the benefits system is perfect—certainly not anybody who spent a long time working on it and trying to help people navigate it prior to coming into Parliament, and who, like all hon. Members, has helped their constituents to navigate it—but I will try to give an explanation of what sits behind the logic. I absolutely recognise that, as Pauline set out clearly, it feels like an arbitrary system to people.

Where there are lump sums or extra cost payments, those are disregarded within pension credit. Where there are regular payments that support income—one type of such payments is the focus of the debate and relates to how Pauline received her treatment—those are treated as income, and then the legislation requires us to partially disregard them. I appreciate that that is a technocratic explanation that does not do justice to Pauline’s individual circumstances, or to the circumstances of veterans with whom we all engage every day.

[Josh Babarinde]

In Pauline’s case, she did not choose whether to receive monthly instalments or a lump sum. If she had had a choice, she may have preferred a lump sum—first, because it was a big amount of money to do something with, and secondly, because she would not have fallen foul of the rules. Why should whether payments are disregarded be a lottery that is based on whether someone receives a lump sum or instalments?

--- Later in debate ---

[Josh Babarinde]

I thank the hon. Member for Leeds South West and Morley (Mark Sewards) for his point on the armed forces covenant. The DWP’s position in relation to the covenant has changed in the light of the Armed Forces Act’s new legal duties that the DWP will have to adhere to come January. What assessment has the DWP made of its obligations with respect to that change in the context of this pension credit disregard?

[Torsten Bell]

The answer to that is the legal position I have just set out, which is that the DWP does take that seriously, has considered it and is content that this is consistent with our obligations under the armed forces covenant. I think the hon. Member is trying to go beyond that to say that there are other things we should take into account, including arguments in this place, the position of veterans and the rest. However, narrowly on the legal question, the answer is yes. That has been tested, and our position is that it is consistent with the armed forces covenant. The fact that that is our position in no way undermines the powerful arguments that he has made and other hon. Members have supported, or those we have heard from our veterans, and I want to put that clearly on the record.

I should finish by emphasising again the Government’s deep-felt gratitude to our armed forces for their professionalism, bravery and dedication to duty, and to those in such a position previously. Veterans now represent large parts of all our communities, and we continue to honour them for the work they did while they were serving, but also for being active citizens supporting all kinds of work. I have mentioned the veterans hub in Swansea, where I see brilliant work being done by people day in and day out.

Question put and agreed to.