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Mr. Caplin: The hon. Gentleman raises an important point about financial advice. He will be familiar with the Financial Services and Markets Act 2000, and the fact that neither the Ministry of Defence nor any member of our chain of command is licensed to give independent financial advice. It is important for the whole House to understand and accept that. I accept his point that we could think about that in further detail, but I want to make it clear that the choice of whether to transfer to the new scheme after April 2005 is an individual one, for individual members of our armed forces to take.

Mr. Breed: I thank the Minister, who is absolutely right. We should make it clear that people have to be properly qualified and authorised to give financial advice, but it would not be beyond the wit of the MOD to authorise half a dozen or 10 well known and authorised independent financial advisers whom servicemen could approach for the financial advice that they need. Rather than saying to them that they are all on their own and must undertake their own reviews, we should acknowledge that they need a bit of help. Of course in the end it is their decision, but they need access to such advice because it is so important for their later lives.

Reference has also been made to the fact that the Bill is enabling legislation. I must admit that when I first received the Bill and started to read through it, I became alarmed about what we were going to debate, because all the meat is in the adjoining papers. The whole issue of enabling legislation concerns me, and several other Members present. It appears in so many Bills, with the possibility of changes being made through the statutory instrument process. I understand why that is so—clearly, as the Minister has explained, there will be changes—but bearing in mind the fact that we have not had a review for 30 years, and given the process that has gone on, the enabling legislation is deficient. I recognise the difficulty of having to make small changes in primary legislation, but surely a way can be found. For instance, a mandatory review could take place periodically—every 10 years, say—so that there was a clear intention to introduce new primary legislation to refresh such measures properly.

We might also consider setting up some kind of independent review body. We have independent bodies for reviewing pay, so why should we not have an

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independent body for a pension review? That might be another means of providing oversight. At present, the Defence Committee appears to be performing that task admirably, but that it is not necessarily its raison d'être.

Sir John Butterfill: The hon. Gentleman is making a valuable point. That is what happens elsewhere, including in this place. The review of Members' pay includes a review of their pensions. The Senior Salaries Review Body performs both those functions.

Mr. Breed: I am grateful to the hon. Gentleman. May I, too, add my congratulations to him on his knighthood?

There are ways in which we can consider this matter, and perhaps an independent review body and a mandatory review might elevate the importance of these issues and prevent them from being consigned to the statutory instrument process. There are no trustees, as has been said. Trustees do not simply manage funds; in fact, most delegate that responsibility to somebody else. Trustees look after the interests of the beneficiaries of any pension scheme, to which their legal obligations precisely refer. As I said, management of a fund is often delegated to banks and investment managers, such as those that employed me before I came to this place.

As for the questions of accountability in relation to the manning control scandal, which have been raised in the House from time to time, there are lessons to be learned. Pensions arrangements and the issue of cost neutrality have centred on that, and the notion of cost neutrality seems to run through the entirety of the proposals. It may be acceptable for an overall MOD budget to have some sort of cost neutrality. In the light of some of the incidents in Iraq recently, however, even that may be debatable. It might also be acceptable for the whole of remuneration policy—pay, benefits, pensions and the rest—to have some kind of cost neutrality. It seems extraordinary, however, to have a cost neutrality policy specifically within a pension fund or policy. Today, pensions are part of a total remuneration package. Anyone who enters employment considers all the benefits, bonuses and perks, and the pension, in the totality of their remuneration package. Perhaps the MOD would have been able to provide some of the additional benefits, and preserve some of the benefits that are currently available, had they considered the remuneration of the armed forces on a cost neutrality basis rather than concentrating on pensions alone. Effectively, that has meant that the costs of any new scheme to the Exchequer would have to be exactly the same as the costs that would have arisen under the old scheme. In anybody's language, it will be difficult to provide a modernised enhanced scheme while being saddled with that constraint.

All pension schemes and all those who provide pensions will have to cope with increased longevity. That is not unique to the MOD. All pension funds are under that pressure, and the actuarial reports on many large public companies that have suddenly found a great hole in their pension schemes show that that is nothing new. Most of those companies have recognised that they must put in more money. They have done reasonably well in recent times, and most pension funds for larger companies must now receive greater contributions. The MOD, however, having recognised that longevity has

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caused greater cost pressures, has decided that it will not put in more money, but will try to keep the envelope the same and adjust the benefits within the scheme. That is not fair—that is the thrust of the issue that the Defence Committee has raised—and we will examine that closely in Committee.

A great opportunity has been missed with this package, after 30 years and all the things that have happened in the past year or so. The increase in the age for preserved pensions from 60 to 65 has meant that the Government will save that additional five years of RPI-linked pension. That will be the result—they will not pay out during those five years. They may have to pay it out later if people live longer, but that savings exercise will take place in the early days. As for widows' and widowers' pensions for life, many will worry that the new scheme, although removing the distinction between attributable and non-attributable, will produce a small group of aggrieved people—non-attributable widows and widowers who will lose their benefit if they remarry or co-habit. It would have been easy to accommodate the relatively small number of people concerned, and the relatively small amount of money, had we not had that cost constraint.

Other legacy issues that have been raised this afternoon could and should have been addressed, because the armed forces are a special case, and no real provision has been made for some of the past injustices that have come to light, which could have been dealt with. We have seen cases of Gulf war illness reported, including a couple in my constituency. We should note with deep suspicion the growing numbers of former soldiers who intend to sue the MOD for unfair dismissal over the abuse of manning control policies. Morale is bound to be affected. If there has been wide consultation, and if the armed forces generally have apparently been prepared to accept the proposals, I am somewhat surprised. There is some difference between that and what was heard from those whom the Defence Committee interviewed. I do not think that the proposals will be welcomed in a way that would show that many of our armed forces felt that they were receiving the pension and compensation payments that they deserve for their service.

We must also remember that some people have been directly affected by the current pension and compensation arrangements. We particularly remember the widows of those who have fallen recently. When we praise our armed forces and take great pride in their exploits, professionalism and courage, and salute them in that way, we must also take responsibility for some of the failures that the Ministry of Defence has experienced in recent months. The failures as well as the successes are important, and we must put right some of the problems that have arisen through individual cases.

I end with an analogy. As I said earlier, before I entered the House, I used to work in the financial industry. One of the jobs that I regularly had to do was to examine many public company annual reports—quite boring reading much of the time. The last few paragraphs of most annual reports often used to say something along the lines of, "We believe that our greatest asset is our staff." Great tribute was always paid to that, but when one examined further what the companies actually did to the staff—in respect of recruitment, retention and benefits—one wondered how much they really cared for them.

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We should adopt a similar approach in recognising that our armed forces are our greatest asset, but also ensure—in peace as well as war—that how we recruit and look after staff, how we provide for them and their families, and the benefits, compensation and pension schemes that we offer them, are all a demonstration of the value that we put on them as our greatest asset.

I hope that this opportunity to legislate will—after some 30 years, and now that we are close to the end of the process—truly demonstrate that we believe that the armed forces are our greatest asset and that we are prepared to reward them throughout their service lives and beyond.

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