Defence Reform Bill

Lord Palmer of Childs Hill Excerpts

Tuesday 11th February 2014 Grand Committee

[Lord Rosser (Lab)]

Clause 46 deals with the issue of additional payments to employers of members of the Reserve Forces. This amendment would enable regulations to provide for a variation in the size of the payment made by specifically including provision for larger payments to be provided to small and medium-sized companies.

An Answer to a Parliamentary Question in 2010 revealed that at that time 15% of current TA members came from large organisations employing 500 people or more, 17% came from medium-sized organisations employing between 50 and 499 people, and 17% came from small organisations with between one and 49 employees. Self-employed people made up 5%, with unemployed people, including students, making up 42%, and the mobilised TA making up the remaining 4%.

When the Minister responds, perhaps he could say whether the percentages that I have just quoted are basically the same today, some four years later, in respect of where current TA members come from. If that is the case, are the Government looking to change that breakdown by employment of sources of Reserve Forces recruitment, bearing in mind that one of the key roles of the reserves in future will be to provide key specialist skills needed to support our Regular Forces to a greater extent than today?

I should like to raise a question about reservists who are unemployed—in particular, to ask the Minister how Jobcentre Plus views unemployed potential reservists going off for extended periods, in light of the requirement that they should sign on and apply for jobs on a regular basis. Presumably we should be encouraging the unemployed to consider reservist occupations; so the question of how that fits in with the requirement to sign on for benefits is of some importance.

The figures given in the Parliamentary Answer to which I referred indicate the importance of small and medium-sized firms as a source of reservists. The additional payment proposed over and above the current arrangements is, I believe, £500 a month for each month in which a reservist is mobilised. The question is: will that prove to be a sufficient incentive for smaller firms, bearing in mind that the impact on them of one or more of their employees being reservists, and away from the workplace for periods of time, could be greater than for a large firm that has more resources, both human and financial, at its disposal to cover for employees away on Reserve Forces commitments?

I appreciate that we want to draw the attention of employers to the benefits to them of their employees being reservists and the positive impact that this can have on career development, but that may not necessarily be the first point that will strike a small employer when faced with the potential problem of covering for an employee away on reserve duties; there are many small employers in the IT field, which is a skill that we look to reservists to provide. A survey by the Federation of Small Businesses in 2012 suggested that this might be an issue, but I hope the Minister will say whether that is proving to be the case in respect of small and medium-sized firms.

We believe that there is a case for flexibility over the size of the additional payment in relation to small and medium-sized businesses, but we want to hear what the Government’s intentions are on the points I have raised, including how specific or otherwise the regulations relating to these payments are likely to be. I beg to move.

[Lord Palmer of Childs Hill (LD)]

My Lords, I am not happy with this amendment. Having listened to the explanation by the noble Lord, Lord Rosser, I shall explain why. Small and medium-sized enterprises—I was the director of one for many years—are concerned not so much with the money but with replacing the person. The noble Lord, Lord Rosser, touched upon that. I do not think that money is the problem. Giving SMEs a bit more money does not solve the problem that a key person in a very small organisation is not there. The argument for larger payments to smaller companies will only annoy larger companies which are the source of reservists—or territorials, at the moment.

The amendment in the name of the noble Lords, Lord Rosser and Lord Tunnicliffe, also mentions the self-employed. The idea of the self-employed going into the reserves under the new arrangements is that they will receive £500 a month, or whatever it is, to substitute for their self-employed earnings. That is a decision that they would need to make, and I hope they will make it positively; but the self-employed person is not so much worried about the £500 per month substitute for earnings from their customers or their clients as about keeping their customers and their clients while they are away, and money does not solve that.

I was interested in the comment made by the noble Lord, Lord Rosser, about the unemployed. It was a point that I had not thought about, and I, too, would welcome the Minister’s reply on that point.

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)]

My Lords, the Bill proposes granting the Secretary of State a power, by regulations, to make payments to the employers of reservists over and above those which may currently be made. The current scheme allows employers to recover costs incurred in covering the work of employees who are mobilised. Those costs may include the hiring of temporary staff or the payment of overtime.

The new power is intended to allow the Secretary of State some flexibility as to the provision to be made in regulations made under it—for example, as to which employers may receive a payment and which Reserve Forces activities trigger entitlement to a payment. However, the current intention is that the regulations will authorise the making of payments only to employers in small and medium-sized enterprises whose reservist employees are mobilised. The Secretary of State will be required to consult various bodies before making the regulations, including the Reserve Forces and cadet associations and a body representing the interests of employers.

I welcome the noble Lord’s desire to recognise that while all employers may feel some impact from the medium or long-term absence of staff, it is small and medium-sized enterprises that are likely to feel the greatest effects. We listened to employers during the Green Paper consultation and seek to reflect this concern in the regulations.

Amendment 17A would allow the regulations to make provision in such a way that the sums payable could vary depending on the size of the employer’s business. In particular, it would allow larger payments to be made to small and medium-sized businesses and to employers who are self-employed. The effect that this amendment seeks to achieve is already achieved by new Section 84A, taken together with the amendments made to Section 85(1) of the Reserve Forces Act 1996. Sections 84A and 85(1) already give the Secretary of State the flexibility to provide in the regulations so that the sums payable vary depending on the size of the employer’s business. The current intention is that the regulations will authorise the making of payments to employers in SMEs only. This is because larger companies are more likely to be able to absorb the costs and disruptions associated with absences from work to undertake Reserve Forces activities.

We have not made provision for the making of payments to the self-employed in respect of their own Reserve Forces activities, as such payments are made in recognition of the impact placed on employers. The self-employed reservist has elected to become a reservist and so accepted the risk of being mobilised themselves. Were we to pay them, we would, in effect, be handing the self-employed reservist a pay rise of up to £500 per month when mobilised. I do not believe that that would be a good use of taxpayers’ money, or would be well received by those reservists who are not self-employed, or by regulars.

I would like briefly to highlight what current payments we make to both the reservist and their employer when we mobilise a reservist. Reservists are entitled to claim for a “reservist award” and to make an allowable expenses claim. The reservist award consists of a salary top-up—a payment made to reservists whose military salary, when called out for operations, is less than their civilian earnings. Reservists can also claim for benefits in kind—benefits that have been suspended or withdrawn by their employers while the reservist is mobilised. The benefits covered include, but are not limited to, health or medical insurance, life insurance, accommodation, education fees for dependent children and the loss of a company car used by the reservist’s dependants. The resulting payment for all these elements of the reservist’s award, taken together, is subject to an upper limit or cap—less their service pay—of £548 per day, or £822 per day for certain medical officers. When, in connection with their mobilised service, a reservist chooses to remain in his occupational pension scheme and continues to make his employee pension payments, any contributions withdrawn by his employer will be paid by the MoD.

The allowable expenses claim consists of additional payments for the care of a dependent child or relative, additional expenses for the care of a pet, additional home insurance premiums and payments for the essential maintenance of the reservist’s main residence and garden for security purposes to ensure that the property looks lived-in. The resulting allowable expenses claim is without limit, but is subject to providing clear documentation of claims.

Employers are entitled to claim certain costs related to the mobilisation of an employee. The “employer’s award” consists of up to £110 per day—in other words, approximately £40,000 per year—which is the amount by which the following “replacement costs” incurred by the employer exceed the reservist’s earnings. These replacement costs are limited to pay for, if appropriate, the replacement of the reservist, and, if relevant, any overtime payments to existing employees and an increase in salary for an existing employee, as well as certain non-recurring or one-off agency fees and advertising costs—VAT exclusive only, where the employer’s business is registered for VAT purposes. An employer may claim the cost of retraining a reservist on return to work, where needed, for the reservist’s re-employment. There is no provision for additional administration costs and the extra costs of training an external replacement for the reservist or, indeed, one of his colleagues now doing his work. The capped amount—that is, £110 per day—is intended to represent the quantifiable extra costs, above the reservist’s normal pay, of employing a temporary replacement. The employer is not, of course, paying the reservist during their mobilisation.

Depending on their personal circumstances, a self-employed reservist may claim under SI 2005/859 as a reservist, as an employer, or both. However, such a reservist cannot make a claim for an award to recover the same cost as a part of the reservist’s or employer’s award.

We recognise the importance of reserve service and have sought to address the financial issues for both reservists and employers that mobilisation brings. In relation to the power to make further payments that we are bringing in with Clause 46, I can assure noble Lords that we will keep the payments under review and, if we need to make alterations and adjustments in future, we will have the flexibility to do so.

I am grateful to my noble friend Lord Palmer for his support, and I very much agree with the points that he made. I will try to answer his question along with the answer I will give to the noble Lord, Lord Rosser.

The noble Lord asked whether percentages were still the same, and broadly the answer is yes. He asked about the Jobcentre view of reservist training; it is provided for and is counted as being available for work. He asked whether financial assistance at £500 would be enough for small businesses. The Federation of Small Businesses said that it was more than it expected. It is always a judgment and if we need to be flexible, we can be.

--- Later in debate ---

[Lord Rosser]

Amendment 18E seeks to amend the Criminal Justice Act 2003 so that physical or verbal assault upon a member of the Reserve Forces or a member of their family would be classed as an aggravating feature of the crime and should be reflected in the sentence handed down where the prosecution could establish that service in the Reserve Forces was the motive for the assault. We know from surveys of Armed Forces personnel that physical and verbal assaults on them motivated simply by the fact that they are service personnel run at a surprisingly high rate. On a much more severe scale, we have had a recent example of a member of our Armed Forces being murdered on our streets simply because he was a member of our Armed Forces.

Attacks on service personnel, whether physical or verbal, are totally unacceptable, do nothing to assist recruitment and retention, and run contrary to the esteem in which members of our Armed Forces are held by the overwhelming majority of the population, who recognise that they are willing to put their lives on the line in defence of our country’s people and interests. We need to do as much as we can to reduce the incidence of assaults, particularly at a time when we are seeking to recruit substantial additional numbers into our reserves. I say once again that if the Government do not believe that this amendment is the best way to achieve that objective, I hope that the Minister will indicate in his reply whether they regard the issue that I have raised as a real problem and, if so, what courses of action they are taking or intend to take to address it. I beg to move.

[Lord Palmer of Childs Hill]

My Lords, I hope that the Minister will include in his reply what instances there have been of confusion about what a “service person” should be. I would have thought that under existing legislation “service person” would include all the things that are included in proposed new subsection (7) in the amendment. Has there been any experience that “service person” has not been taken to include the people mentioned here? It seems a rather worthy thing to protect people even more and make sure that they are included in the criminal justice legislation, but I wonder whether there is reason to believe that any of this has been necessary in the past.

[Lord Davies of Stamford]

My Lords, when in 2007 I chaired the national inquiry into the national recognition of the Armed Forces, this was one of the recommendations that we made. We made 40 recommendations, 38 of which, including Armed Forces Day, automatic parades for units returning from combat missions and so forth, were accepted. Two were not, and this was one of them. The other one was having an officer of the Armed Forces permanently available in the House of Commons, probably in the Library, to inform people about any military matters that they might have questions about. In that report, to which I refer the noble Lord, Lord Palmer, we cited a number of cases of grievous assaults perpetrated on members of the Armed Forces, and I am afraid that the problem has not gone away. Over the past six years or so, there have been other incidents which the Committee will know about. I retain my support for this amendment.

It has one curious feature but I think I know the explanation. It is that the protection seems to be designed merely for members of the Reserve Forces but does not currently exist for members of the Regular Forces. I imagine that it is because including all members of the Armed Forces could have been outside the scope of the Bill. I therefore imagine that my noble friend, with whom I have not discussed this matter, had this in mind as a probing amendment to try to push the way forward to achieve what we really need, which is the kind of legal protection for all members of the Armed Forces—all those who wear the Queen’s uniform—who are prepared to lay down their lives for the rest of us. The least we can do is to make sure that they do not suffer discrimination or, in this case, violence, potentially, when they are in their home country.

[Lord Palmer of Childs Hill]

My Lords, perhaps I may ask for some elucidation. I accept all the points that the noble Lord has made about his time in the MoD and his knowledge of this subject. Obviously these incidents have happened, but do we need legislation such as this to identify it or were the perpetrators of these actions against the service people he mentioned dealt with by the law at the time?

[Lord Davies of Stamford]

My Lords, I do not know that I should get into the habit of answering questions across the Floor. I would love to be a Minister again but that has not happened to me so far. I shall have to wait a bit longer. However, I shall of course respond to the noble Lord. There are the normal legal protections against assault from which he and I and every other citizen benefit. Clearly, it is a criminal offence. However, the purpose of this amendment, as I understand my noble friend, is to make it an exacerbating factor if the reason for the assault is that the victim is a member of the Armed Forces. That provides a special protection for those who might otherwise be especially vulnerable to this kind of attack. It is similar to the exacerbating factor that we already have of the motive, or part of the motive, for an assault being racial. We introduced that for a section of the community whose members might be innocent victims of gratuitous attacks which otherwise would not occur. Therefore, there is a complete analogy there and I think it was the analogy which, rightly, inspired my noble friend—if I may be so bold as to presume to answer for him—to conceive this amendment.