Armed Forces (Pensions and Compensation) Bill

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Mr. Howarth: May I say that the way in which the amendments are laid out on the selection list indicates the problems that all hon. Members, as parliamentarians, have had with the Bill, which is an enabling measure with little for us to discuss? That criticism has been raised across the House. This is not a partisan issue, and I fully expect concern from all parties in this Committee. I do not expect the debate to be dominated by Opposition Members. I suspect that the hon. Member for Falkirk, West (Mr. Joyce), who was a beneficiary of the scheme and will no doubt be experienced in these matters, will want to express his view. The hon. Member for Glasgow, Anniesland spoke movingly in the House on Second Reading.

I believe that on both sides of the Committee there will be concerns that the Government have drafted a Bill with very little in it. We have therefore tabled various amendments designed to write the Government's two framework documents on pensions and compensation into the Bill in the form of new schedules 3 and 4. If it is not out of order, Mr. O'Brien, may I thank the Public Bill Office team for its assistance in enabling us to do so?

Without the amendments, there would be very little for us to debate. Everyone has expressed concern that this is an extremely important issue that affects us all. We all have constituents who are beneficiaries of the scheme and others who are putting their lives on the line for our country. These are not dry and dull matters, but are of very immediate concern to every Member of Parliament. There was a difficulty, however, in that we could not debate anything without tabling the amendments, and without the new schedules in particular.

Mr. Caplin: I hear what the hon. Gentleman says. If I may say so, this is part of a rerun of what we had in the House on 22 January when we debated in detail the issue of enabling legislation as against the other issues. Will he address the point that my right hon. Friend the Secretary of State and I made to him and his colleagues about changes that it will be necessary to make to pension schemes? Two or three changes a year are

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made to the current pension scheme through secondary legislation to enable the scheme to be up to date. Does he propose that we make no changes at all to the pension scheme unless we can find primary legislation slots?

Mr. Howarth: The Minister makes an entirely fair point, which I freely confess I did not make in my winding-up speech in the House on Second Reading. Of course the Opposition are not suggesting that every nuance should be subject to primary legislation, because clearly that would be unworkable. However, the Government have offered no alternative but have simply suggested that we give them the power to make whatever changes they want. The Bill contains no constraint on the Government once we have agreed it, so we seek to introduce the Government's own document to reflect outside concerns. It is not a document of our creation, although we have made some relatively modest changes to it. If we had not done so, the Government would have had carte blanche. I believe and I hope that my hon. Friends and the hon. Member for South-East Cornwall will also agree that it is incumbent on the Government to explain why they need these sweeping powers.

The Government would be entirely right to say that the Naval and Marine Pay and Pensions Act was passed in one day in the House on 1 June 1865 without any debate whatever. However, I have never seen the Minister in a Palmerstonian light.

Mr. Andrew Robathan (Blaby) (Con): More gunships.

Mr. Howarth: There are fewer gunships under this lot than under Palmerston, so the Minister will not be keen to take that as a precedent for wider publication outside the Room. It may suit him to have limited debate and unfettered powers, but I do not believe that he will pray in aid the precedent of the Naval and Marine Pay and Pensions Act 1865. The Committee might be interested to know that on the day on which that Bill went through the House without debate, so did the Trespass (Scotland) Act 1865. I have not yet done the research to find out what that Act was about; it was probably about keeping the English out. No doubt the hon. Member for Glasgow, Anniesland will be keen to brief us on that.

John Robertson (Glasgow, Anniesland) (Lab): I have to bite there. Could the Act possibly have been to keep us in, and not to keep others out?

The Chairman: Order. We will not discuss the Trespass (Scotland) Act 1865; we will stick to the amendments on the amendment paper.

Mr. Howarth: I note your strictures, Mr. O'Brien, and I would not dream of going down the route that the hon. Gentleman offered. I shall simply say that I am an Anglo-Scot, and therefore straddle the border.

Before I go on to the detail of our amendments, which are extremely wide-ranging, I should say that my hon. Friend the Member for Canterbury has raised an important point. He said that not only was the early departure scheme not available before Second

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Reading, but it was not available to the Defence Committee, which was extremely sensitive about criticism on that point. It felt entitled to that information. After all, I remind the Committee that the scheme is to be the source of substantial savings, and that the money saved is to be redirected to provide the other benefits that the Government claim will so greatly enhance the qualities of the new armed forces pension scheme. The EDS is a critical part of the Government's proposals—I do not say of the legislation, because it is not part of that at all.

Mr. Caplin: The hon. Gentleman makes an interesting point about the early departure scheme. I want to put on record what we said in response to the Select Committee. In paragraph 10 on page 5 of the response, the Government say:

''We agree that further detail on the EDP scheme should be available to inform Parliament during its scrutiny of primary legislation''—

that is what we are doing today. We go on to say:

''We regret that this information has not been available earlier but further discussions are needed to agree an acceptable alternative to the early IP, compatible with the Inland Revenue's proposals''.

I hope that the hon. Gentleman accepts that the Government took seriously the points made by the Select Committee. We published that response so that it could inform the Second Reading debate, in about four weeks, in parliamentary time, as opposed to the eight weeks that we could legitimately have waited before publishing it. The response is there to be helpful.

Mr. Howarth: I am grateful to the Minister. Of course, we realise that he is relatively new to his post and has moved pretty fast in producing the proposals.

Mr. Swayne: Quite right—well deserved.

Mr. Howarth: The Minister obviously has my hon. Friend's approval.

The Minister would have been in considerable difficulty had he not been able to produce the scheme in advance of today's Committee sitting, but in fairness, he has produced it. I hope that we can deal with the scheme later under new schedule 2, which you have arranged to be considered towards the end of our proceedings, Mr. O'Brien. I thank you for that, because it means that the Committee will have at least a couple of weeks in which to examine the details of the early departure scheme promulgated by the Government. I do not want to spend too much time on it now, because frankly I have not really had a chance to go through it. However, as my hon. Friend the Member for Canterbury said, it is at the heart of the Bill, because it will deliver the savings that the Government are looking for under the Bill.

I congratulate the Minister on getting the scheme to us last night, but I think that he will agree that overall, given that this review began in 1998, it has taken the Ministry of Defence a hell of a long time to produce

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this detailed arrangement. It has done so at the 59th minute of the eleventh hour. However, greater joy is there in heaven over the one sinner that repenteth.

3 pm

A report appeared in the Sunday Express last weekend that follows on from a parliamentary question that I tabled last month and which the Minister responded to on 21 January. I asked him

''what arrangements he intends to make in relation to the Armed Forces Pension Scheme and compensation to ensure that (a) a beneficiary is guaranteed five years' worth of payments notwithstanding earlier death and (b) lump sum payments to give effect to such a guarantee are not taxed at a 35 per cent. rate.''

I acknowledge that this is fairly dry territory. I will use the terms ''widow'' and ''husband'' throughout, although I hope that the Committee agrees that they are interchangeable with ''widower'' and ''wife.'' I understand that if a serviceman dies within five years of being in receipt of their pension, their widow is entitled to a lump sum that is aggregated over those five years less any pension she has already received.

The Minister replied:

''The decision of the new Armed Forces Pension Scheme includes a provision to allow a lump sum payment to a spouse or partner of up to five years' pension payments, less the lump sum received on retirement and pension payments up to the date of death, if a member dies after retirement but within five years of the pension coming into payment. The Government propose in ''Simplifying the taxation of pensions: the Government's proposals'', published on 10 December 2003, that such payments should be taxed at 35 per cent. The Ministry of Defence will be considering the benefit proposal further in the light of the taxation arrangements.''—[Official Report, 21 January 2004; Vol. 416, c. 1244W.]

I understand from my hon. Friend the Member for Havant (Mr. Willetts) and a report in last weekend's Sunday Express that, unfortunately for the Minister, it is untrue that these payments are to be subject to a 35 per cent. tax. A spokesman for the Ministry of Defence is quoted as saying:

''The Government has been alerted to the fact it has laid an inaccurate answer to a parliamentary question . . . mistakenly suggesting the Government proposes to tax lump sum payments to bereaved spouses of members of certain pension schemes . . . It was never the case that such lump sums would be taxed and the Government will correct the record at the earliest possible opportunity.''

 

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Prepared 3 February 2004