Select Committee on Defence Minutes of Evidence


Examination of Witnesses (Questions 60 - 79)

WEDNESDAY 6 DECEMBER 2000

MR JOHN SPELLAR MP AND AIR MARSHAL MALCOLM PLEDGER

60.  Would you envisage at some point in the future, you said you are not adverse to such changes, you would spell out what a partner is would or leave it to the discretion of the Commanding Officer?

  (Mr Spellar) You are even getting difference within the Committee. We had a clear view from the Member for Canterbury, he was clear on having a fairly defined view. These are some of the difficulties that we will be having to resolve, but we are not at that stage yet.

61.  It is my view but you would have to do it. That is why I asked the first question about what definitions you have or what work you have done on definitions.

  (Mr Spellar) We have not as yet. We need to a get greater distillation of the views of the Service community. We discussed this at some length at the last consultation meeting I had with the families' federations representatives and that will undoubtedly come up in the next meeting.

62.  Can I move on to pay? I cannot work out the logic of Pay 2000 being paid in April 2001, does that have any PR benefits or not? By doing that I suppose that does give you a chance to iron out some of the problems in the pay review structure. What further enhancements are you likely to be making in the system before April 2001?

  (Air Marshal Pledger) When you say iron out some of the problems, Pay 2000 or Pay 2001 is a completely new pay structure. We start from a new baseline. We will not be dealing with issues that arose from the current complex arrangements. It is an incremental pay system that recognises experience through the rank and also allows for accelerated progress if people get additional qualifications. It is a completely new structure. What we have to do is, first of all, put it on to the legacy systems we are currently using to deliver this accurately and efficiently from the very first date. We would not want to go into this until we have proven to ourselves it was deliverable. We are currently in the acceptance testing stage of that process and, therefore, still on track for 1 April 2001. You should not see it as amendments to what we have because it is a completely new pay structure.

63.  These were really problems in the current system, in the old system, things like skills and qualifications not really being properly rewarded, length of service not really being recognised and, indeed, the actual job and the content of the job that an individual had to do not being reflected in the pay. Would that be properly reflected in the structure?

  (Air Marshal Pledger) As I said, experience will be reflected by incremental pay levels. Particular skills that are added can result in accelerated increments. The whole new system is heavily underpinned by comprehensive job evaluation across the various trades and specialisations.

64.  You are bound to have a lot of people saying, "It does not reflect those things", or "It is not fair" when it is paid. Will you have a review of it? How quickly will your review be or will it be a five-years-down-the-road review?

  (Air Marshal Pledger) First of all, a huge what we call IPR, Internal PR Processes, is going on to remind people of the benefits associated with Pay 2000 structures. The fact that the rates will be announced in conjunction with the AFPRB award this year and to show them how this the transition goes we will be paying them on, shall we say, the new system but at the old rate to show them how the transition worked, before then applying any AFPRB award for this year. The whole thing is being made very transparent to them. There are teams going out to explain the whole process. Subsequently we will evaluate it within two years to determine whether or not the benefits that we associated with this have been delivered.

65.  Within two years! Can I ask you about the administration of pay. There have been complaints that it is not very good. Certainly it has not been very good at times and members of the Armed Forces have not been paid the full amount they are entitled to at the proper time. Although that does get rectified it relies on them pointing out the errors. Will Pay 2000 have an element which vastly improves administration in these areas?

  (Air Marshal Pledger) I have said we have spent a whole extra year checking the systems that do this to make sure that we have better accuracy from the new structure than we had in the past. A huge process of testing has gone on to try to achieve those outcomes you describe.
  (Mr Spellar) Can I just say on that, my experience has been that there has been a considerable reduction in the number of complaints about pay not being put into people's accounts. About two years ago there was a horrific position, particularly when we had a lot of people in Bosnia and Kosovo, husbands, in particular, out there, and the wife back in the Barracks in Service accommodation here finds there is no money going into the account. That was causing a considerable amount of anxiety to our Forces and also adding considerably to their telephone bills as well. Fortunately this was the time when we increased the amount of telephone availability. It was a serious situation, one which, as far as I can ascertain, we have reduced quite dramatically, not just from what I am hearing on the management side but I am not getting those complaints when I go around units.

66.  Can I put a suggestion to you that the Government are quite good in terms of pensions, having hotlines for pensioners to contact if they have any queries about what they are entitled to. Why can you not have a hotline, a direct line, for people who have pay queries that can be picked up and dealt with right away.

  (Mr Spellar) You do have pay units who are very much in direct contact with the pay centre. They work extremely hard and effectively in resolving a number of these matters. What particularly concerns me, particularly with the Army, where soldiers are away from home and it is the families back home who have to deal with the bills and the money not going into their accounts, is they are not sure what is happening and they are trying to make contact with their husband to find out about that and he is trying to talk to the pay unit. All of that is causing very considerable distress there. A lot of work was being done by the units back home to try and deal with that as well. That seems to have largely gone now and I think all credit to those who put a lot of work into rectifying that.

67.  Not withstanding that, I appreciate it is not as bad as it was, why can not the families, the spouses, phone directly a hotline and get information as to why the money has not gone into the account?

  (Mr Spellar) Partly because they are not our employees, we would need to look at that, as any employer would, at the relationship between the people whom they pay directly and others. I can envisage some difficulties and we would have to look at that.
  (Air Marshal Pledger) Can I also point something else out here. Of course, the employer is the unit. The paying agent is the organisation I think you are focusing on but, of course, they are responding to the unit pay inputs, so the hot line is exactly the right one. We have identified the focus and who owns the activity and we have put in place opportunities through the welfare officers in the Army and through designated points of contact in the Air Force. When individuals are deployed their spouses can contact them directly and access through that methodology.

Chairman

68.  Thank you. Just on salaries or wages for young recruits. Imagine a young recruit, married, living in a God awful place where there are not any jobs available for his wife, not on a high wage, where Family Tax Credit appears to be an option that is pursued. That is almost like getting another government department to reward low pay. I would not expect an answer now but it saves putting another Parliamentary Question; how many families do you think are claiming Family Tax Credit because perhaps they feel they cannot manage with the wages they are being paid? That would be helpful, Minister.

  (Mr Spellar) We will certainly write to you.[4] I think it is a combination of wages and family circumstances at a particular point, but we have looked at that in response to some of the queries that have been made and I will certainly look at what data we have to back that up as well.

Dr Lewis

69.  On Monday week we will be having an informal briefing from the Officers' Pensions Society. They rang me this morning in the hope that I could raise the question I am now going to do and, by coincidence, I see that it is well addressed in my brief here as well. This is the review of the Armed Forces Pension Scheme. The review was announced almost exactly three years ago this month and it was supposed to be completed in the middle of 1998 so it is running two and a half years late. Why is that?

  (Mr Spellar) I think we are really looking at the various complexities on pensions. There have been some interim measures that have been taken. For example, on the attributable widows' pension, the Secretary of State made an announcement in July and the necessary regulations were made on 31st October. But on the broader pensions area and also related to compensation on injuries and the inter-relationships between these, this is a fairly complicated area and the work has not been as easy as originally envisaged.

70.  Surely something that is taking between five and six times as long as was originally envisaged you cannot put down to a few added complexities, can you? Is it not a matter of insufficient priority being given to this work?

  (Mr Spellar) I do not think it is, but it is a complicated area. It is obviously part of the public sector pensions, although obviously with many unique characteristics which have also to be taken into account. I think that combination has meant that the work is complicated and difficult. We hope to be launching a consultation document on that but I cannot give an exact time on that.

71.  So even the date of December 2000 is now slipping, is it?

  (Mr Spellar) I cannot give an exact time on that.

72.  So it is not going to be December 2000?

  (Mr Spellar) I would think that would be less likely.

73.  One of the problems is that, as you say, the idea is that there should be an opportunity for full consultation of interested parties following publication of the review findings. Although you pointed out in your earlier response that this particular measure has been taken on an interim basis and so has that one, until the review actually comes out with its findings you are not going to get input from concerned specialist representative bodies like the Officers' Pensions Society, are you?

  (Mr Spellar) My recollection is that they have been making representations and putting input into our discussions as we have been going on.
  (Air Marshal Pledger) That is absolutely right.

74.  But they are hoping to be able to enter into the formal consultation process and they cannot do that, can they, until we get these findings?

  (Mr Spellar) That is true but they have, quite rightly, been making regular representations on a number of issues. As I said, for example on the attributable widows there has already been action taken in that regard.

75.  Is one of the areas in which they have been making representations the possible reinstatement of pensions to war widows who became war widows during the Second World War, who subsequently remarried and have now outlived their husbands but who have not had any restoration of pension?

  (Mr Spellar) I cannot recall as to whether they have raised that issue. We would have to write to you on that.

76.  What I have in mind is a constituent of mine, who himself holds the DSC, who came to see me recently about his sister-in-law who was originally widowed when HMS Hood went down and, in a similar situation to that I have described, has now outlived her second husband and is finding life at the age of 81 difficult, and surely to stretch out a review of schemes of this sort, which might have some bearing on the situation in which World War II widows find themselves, is, shall we say, a little bit inconsiderate?

  (Mr Spellar) If I can be clear, you are referring in this instance to someone who had been in receipt of a war widows' pension

77.  Which then ceased.

  (Mr Spellar) Which is actually the responsibility of the Department of Social Security who are responsible for the administration of that scheme.

78.  Do you not anticipate as a result of this review there would be some bearing on the way in which such payments would be made?

  (Mr Spellar) That is absolutely right. All I am pointing out is in the first instance those are questions that would need to be referred to the Department of Social Security with regard to a case such as that.

79.  What then are the key issues that you expect your review to address? We do not expect to be told any likely conclusions because those may be well over the horizon by the sound of it, but what are the key issues you are examining in this extremely slow review?

  (Mr Spellar) One of the key issues is when pensions are paid, which is an issue that has been of interest to this Committee, and indeed was raised earlier during the course of these proceedings. That is obviously a major and significant issue and arises from the Bett Report.


4   See Appendix 9. Back


 
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