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Lord Brookes: The amendments address the obligations, the honour of patriotism and of blood freely, nobly and gallantly given. Such debts and such obligations are not diminished and are not eroded by time. Time is with us tonight. Let a Government, who I believe will want to respond to reason, to honour and to duty, act now.

Baroness Park of Monmouth: I, too, should, like to support the amendments of the noble Lord, Lord Freyberg, very strongly. Successive defence reviews from Options for Change right through to Front Line First have had much to say about equipment, armaments, weapons, capacity for defence and men and women as resources, and all too little so far about morale, incentives for recruitment in the future and what holds the services together—tradition, pride and the sense of being valued. It is vital that service widows should retain their pension for life rather than forfeit those in many cases far from generous pensions if they get a second chance to marry. It is surely bad enough that the pension itself is far lower as a proportion of the husband's service retired pay or pension than in a dozen other countries. I shall not give details as they have already been given.

If the Government want to send a further signal to confirm the low esteem and value which in the eyes of many in the services they place on service to the country by rejecting this amendment, I feel that that would be a grave mistake. I do not think the Government have begun to take in the quite widespread feeling of rejection and the feeling that the country thinks of the forces solely in terms of perks and so-called empty ceremonial. That is contributing to low morale within the services and will certainly affect future recruitment.

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The Government believe in value for money. Let them recognise the equal importance of money for value. Service widows have a special claim on decent and equitable treatment and the means to lead a normal life with normal access to companionship and happiness. I hope the country will do the honourable thing and agree to these proposals.

Viscount Slim: I see no reason why there should not be a special clause for war widows. I am afraid I take issue with the noble Lord who wanted to generalise the matter. I am sad that Her Majesty's Government have not come forward with a gesture already in this particular year. That would have been strategically sensible. Every government need all the friends they can get, and this one particularly so perhaps.

I hope that the Minister will listen to what has been said today—I shall not repeat the arguments—and I hope the Government will come forward with something now. It would not cost much. The widows are dying every day. The Minister is aware that I have an interest in this subject through my business helping charities and veterans' associations. I would say to the Government of the day, "Here is your chance". Here is the time for the Government to do something that will be recognised throughout the country as the proper gesture in this particular year of commemoration so that the war widow will be remembered and made safe for ever.

Lord Boardman: My wife (whom I married happily 46 years ago) was then a war widow. I therefore consider that if the House should divide on these amendments I would be precluded from taking part in any such Division. The purpose of my intervention is merely to place on record that such an abstention would not be for any lack of support for the amendments that have been so ably moved and which I fully endorse.

Lord Craig of Radley: I rise to support the three amendments which have been so ably moved by the noble Lord, Lord Freyberg. In particular, I wish to speak to Amendment No. 191B. The merits of the case have been well argued on moral and humanitarian grounds; on grounds of equity; and on grounds of comparison with other countries. This surely is a good case. There are not too many war widows and the measure should not cost too much. If the Government are worried that a low cost settlement today could become expensive if we were ever to be involved in another major conflict, all I say is that the cost of that conflict would make the cost of war widows' pensions following it shrink into very small sums.

War widows who seek renewed happiness and companionship are faced with a difficult dilemma. It is indeed impossible for them to get a proper definition of cohabitation, as the noble Lord, Lord Chalfont, has explained. I was amazed when looking at the figures to note the cost to the taxpayer of war widows who feel that they cannot remarry or cohabit. Take the case of a young 25 year-old widow with children, a widow perhaps of the Gulf War. At the time of her bereavement she will receive an MoD attributable pension, index linked and taxable, plus a DSS war widows' pension, index linked but not taxable. If she decides to remain single and lives to the age of 80—assuming an inflation

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of 4 per cent. per annum—she will have cost the DSS budget alone in the region of £800,000. If the widow were persuaded, or decided to remarry, she would receive a lump sum payment of one year's pension from the DSS and no further right to claim a DSS war widows' pension, whatever her circumstances.

The average number of war widows in this category created year by year is between only 40 and 50. At present few remarry but most are reluctant because they fear for their future security and they fear possible poverty. If they could be assured that they would retain their Armed Forces pension, more perhaps would take the step, and the saving to the DSS budget could be very large indeed. The Armed Forces attributable pension should be seen, I believe, as compensation and therefore not be withdrawn. The contributions have been paid not only in financial terms through the pay packet but also in the loss of life of the servicemen and in the sacrifices made by the service wife and widow. Thus the constraints made on widows wishing to remarry are not only seen as an injustice and deeply resented but also are not cost effective. We have before us a Bill to amend the law on pensions. Surely this is now the time to amend these difficulties.

Viscount Montgomery of Alamein: I feel that I, too, should intervene briefly in this debate for the fairly obvious reason of the name that I bear. But on this occasion I have another reason in that my mother was widowed in World War I. Her husband was killed at Gallipoli, and some 12 years later she made the rather extraordinary decision to forfeit her rather modest pension to marry my father—a fact for which I must be eternally grateful because otherwise I would not be able to speak here this evening.

The arguments have been put forcefully in this Chamber by Members of the Committee who have spoken. The amendments put forward by the noble Lord, Lord Freyberg, are worthy of support.

Lord Palmer: After the moving speeches we have heard I do not believe that the Government have a moral leg upon which they can stand, particularly if one thinks of pensions awarded to civil servants. The Government are on record as saying that they are a caring government. Let us hope and pray that tonight we will see full evidence of that caring.

6 p.m.

Lord Mackay of Ardbrecknish: I feel a little like the spectre at the feast. Never mind. It is not the first time, and I expect it will not be the last. I have little doubt that some of my noble friends and other Members of the Committee who have spoken in the debate understand well the position in which I find myself, because I presume that when they had responsibility for this issue, either directly because they were in my department or indirectly as members of the government, they defended the position taken by their government—whichever it was. No doubt that was similar to mine this evening.

First, I should like to make the position clear because, although I do not suppose that anybody intended it, there was some wandering between two quite different

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pension schemes during the course of the debate. We are talking about two separate provisions. Each of the three amendments stands alone. They address quite different problems and two different schemes. The first proposed new clause addresses the Department of Social Security's war widows pension scheme, which is related to the rather larger scheme we run for war disabled servicemen. The other two new clauses refer to the Armed Forces pension scheme, which is the occupational pension scheme for servicemen and servicewomen. I should like to address the two schemes and each of the amendments separately.

Amendment No. 191B seeks to amend war pensions legislation so that a widow may continue to receive a war widow's pension even if she remarries. It has always been the case that the very preferential DSS war widows' pension is awarded for the maintenance of the widow of a man whose death is attributable to service in the Armed Forces, not only in warfare but when serving as a member of the Armed Forces. That applies if he dies due to an accident, disability or disease contracted due to his service in the Armed Forces. In those circumstances a war widow's pension will be paid. Therefore, the death does not have to be due to war or even to active service. The rationale behind the pension is to assist with the loss of support a widow could have expected from her late husband. The pension is not in any way intended to compensate for his loss.

Remarriage alters the widow's status. She is no longer a widow and, as a consequence, her war widow's pension is withdrawn. A gratuity equivalent to one year's pension is awarded, which for many war widows would be about £7,000. Should she be unfortunate enough to be widowed again there is, as has been pointed out, no provision under the war pensions scheme for the restoration of the pension. Like other widows, there is the provision for widows in those circumstances to look to the social security system for support.

I said that I thought that I was being cast as the spectre at the feast. While Members of the Committee may say that the Government are less generous than they ought to be, nobody should be left with the view that the DSS war widows pension scheme is other than generous. I am grateful to a number of speakers, including the noble Lord, Lord Freyberg, who pointed that out. Our disagreement relates to issues outside the payments involved.

It may be worth my while reminding the Committee that the war widows' tax free pension paid currently to most war widows is £140 a week. That is more than double the basic national insurance widows' pension, which is £57.60. There is the additional difference that the basic widows' pension is taxable income, whereas war widows receive their pensions tax free. If my arithmetic is right, that is equivalent to £178.50.

Over the past few years we have taken steps to improve the position of war widows. For example, the real value of war widows' pensions has been fully maintained in the uprating statements in line with RPI. As I mentioned earlier, the war widows' pension was made completely tax free in 1979. Previously half of it

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was taxable. The war widows' age allowance was significantly improved in 1984 with extra help for those over the age of 80. MoD special payments of £40 a week for pre-1973 war widows were introduced in April 1990, tax free and completely disregarded for income-related benefits. That was uprated to £48.70 and is an important part of the £140 a week tax free payment I have mentioned. In addition, £10 of the basic war widows' pension is disregarded in claims for income-related benefits, and local authorities have discretion under their local schemes to disregard more than that sum in claims for housing and council tax benefit.

My predecessor before I took over this job, my noble friend Lord Astor, announced extra money for British widows with New Zealand war widows' pensions, who were found to be badly off, and some Northern Ireland war widows. That change was announced on 23rd June last year and took effect from October last year.

I would not like anybody to be left with the idea that we are not mindful of the position of war widows and the special way in which we ought to treat them. I hope that by indicating briefly what we have done since 1979 I have demonstrated that we are mindful of that and have reacted. I hope that no Member of the Committee will accuse us of being Scrooge-like because those are fairly generous provisions. Indeed, exceptionally, a war widow is also able to receive a retirement pension based on her own contributions without any diminution in her war widow's pension. That would increase her income to nearly £200 a week, irrespective of any other resources she may have.

Amendment No. 191B proposes that the law should be changed to permit that very preferential pension to continue for life, regardless of any change in the widow's marital status. Even if that were justified—and I believe strongly that it is not justified—it would be very expensive. We know that since 1939 about 90,000 war widows have remarried. We do not know how many are still living and would claim restoration of their pension but, with the help of actuaries looking at life expectancy of people in that group and so on, we have estimated that the cost could be of the order of £60 million a year. "Small beer", I hear some noble Lords say. Those who have taken part in the debate who have been involved in government know the competing demands from that group and from other groups on governments and on taxpayers, who are always reluctant to pay even higher taxes. There is no bottomless pension pit. I do not suppose that anybody believes that there is.

We fully appreciate the sacrifice that the late husbands of these widows made on behalf of their country. We have ensured that the rate of the war widows' pension fully recognises those circumstances. That is no more than the country or the Committee would expect while the state of war widowhood remains. However, to continue to pay this very preferential pension when a war widow has remarried and either still has or has had the support of a second husband is neither justified nor fair to the widow who loses her national insurance widow's pension on remarriage. And it would be totally regardless of the

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income and wealth of the second husband and, in the event of widowhood again, the pension and other assets left to her by him.

As the debate has clearly shown, this is a difficult and emotive area. We have to strike the right balance and I believe that we have done that. Bearing in mind the original rationale behind the provisions for the war widows' pension, we see no justification for amending the legislation so that the pension may be received after remarriage when the widow is no longer a widow.

I turn to the other two new clauses which address, and would make changes in, the provisions of the Armed Forces pension scheme. Here we are discussing an occupational pension scheme similar in character to other public service schemes and broadly subject to the same principles, although with markedly different terms and benefits. My noble friend Lord Dean of Harptree drew attention to the fact that the characteristics complained of by the noble Lord, Lord Freyberg, in both new clauses are in fact common to other public service schemes. I think it might be helpful if I explain how the current Armed Forces pension scheme actually works.

Service personnel do not have a monthly deduction on their payslip for superannuation, as many other people do. However, their rates of pay are abated—currently by 9 per cent.—to take account of the pension benefits so that in any comparison with outside earnings that abatement is brought into play to look at the total earnings of servicemen. The minimum term for an immediate benefit—in other words, an immediate pension—for an officer is 16 years' reckonable service, and for other ranks 22 years' reckonable service. At that point or thereafter up to 55 years of age, the serviceman can retire on an immediate pension, not uprated until 55, then uprated in full to account for the intervening years, then uprated annually thereafter. Those who do not qualify for an immediate pension because they do not have that length of service are treated in the same way as other deferred pensioners and receive a pension depending on rank and years of service at the age of 60. Widows and widowers are treated similarly and are eligible for a pension of one-half the spouse's rate. This provision includes those who marry after retirement.

That is the current position, but, like all pension schemes, these improvements have been introduced over the years and count only for service after the date of introduction. If retrospection is made available it is done on the basis of the person "buying back" some or all of the preceding years.

In order to comply with the Social Security Pensions Act 1975, provision was made in the Armed Forces pension scheme for the payment of pensions to widows of service pensioners who married (or re-married) after retirement. I believe that this is the issue which the third new clause addresses. But this change benefits only the widows of those giving service on or after 6th April 1978 and only service on or after that date is taken into account when calculating the level of pension due. Thus, in time, as the entitlement extends over the years, the wives of those sevicemen who married after their retirement will increasingly come to share the same rights on widowhood as other service wives. Like the

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Armed Forces pension scheme, other public service schemes also now provide for widows' pensions where the marriage has taken place after retirement.

Before the introduction of improvements in the early 1970s, public service pension schemes provided for an eligible widow to receive a pension at one-third of the rate of her husband's own pension. The proportion was increased to one half; for the Armed Forces pension scheme the operative date was 31st March 1973. Coupled with the change, which applied to service given from that date, opportunities were provided for those serving on or after that date to make direct contributions so as to qualify previous service for half rate widows' pensions also. For those who did not choose to contribute, previous service continued to count at one-third rate and subsequent service counted at one-half rate. I am sure that some noble and gallant Members of the Committee, having been given that option and being sensible men, took it and bought in the years prior to 1973. But some probably decided for a variety of reasons that they did not wish to do so.

The principle of non-retrospection is fundamental to the issue of not extending the option to "buy in" to those who have already left the service—those who had left before 1973. The "buy in" opportunities given to those serving on that date in 1973 were at rates which were actuarially assessed. Similar arrangements applied in other public service schemes which made the change at about the same time. A "buy in" for those who are ineligible would be a clear breach of non-restrospection, since it would apply new provisions to those who had retired before the operative date. I almost said the "actuarial date" but the two are related because, if those persons are no longer active members of the scheme, they cannot be asked to buy in.

The option for members of the Armed Forces serving on or after 31st March 1973 to buy in their previous service if they wished would in itself make it impossible in equity to extend the half rate pension to widows whose husbands had left the service before that date and who had not, as a result, contributed financially towards the improvement. That would also apply to those serving on that date who chose not to buy in.

When it comes to the remarriage of a widow, the Armed Forces pension scheme, like other public service schemes, ceases to pay. On subsequent divorce or re-widowhood, a simple test is applied by the Armed Forces pension scheme. It is not a complicated means test. It is simple: has the second widowhood left the widow better or worse off than if she had not remarried? If worse off, then the Armed Forces pension scheme widow's pension is restored in full.

Therefore the second and third new clauses would make considerable changes to the normal rules governing all public service pension schemes. The costs to the Armed Forces pension scheme would be considerable. However, the read-across to other public service schemes would impose very substantial additional burdens on the taxpayer. As I have said, it would be very unfair to those who bought in years prior to 1973 to give their widows one-half pension if those

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who chose not to do so were now to be given, if I may use the word, a "free" improvement. And re-opening the buy in is not practical.

All of us in occupational pension schemes—that is what the Armed Forces pension scheme is—know and accept that improvements made either after we leave or during our service are not backdated. I urge the Committee not to break that important principle when it comes to the second and third new clauses before us.

On the first new clause, I simply reiterate the arguments I made about the generosity of the scheme and the very considerable amount of concern and detail that we in the Department of Social Security and, I know, my noble friend Lord Henley and his colleagues in the MoD give to making sure that we have a fair and equitable scheme.

I believe that in both the DSS scheme and in the Armed Forces pension scheme we have a fair and equitable scheme. It is clear from the speeches that everyone understands the emotive reasons underlying wanting to make the changes. However, I believe that they are not sensible when considered across the broad aspect of public policy and when considering the generosity of the schemes themselves. I hope that, when he reflects on what I said, the noble Lord, Lord Freyberg, will be able to withdraw his new clauses.

6.15 p.m.

Baroness Jeger: Before the noble Lord sits down, perhaps I may speak from personal experience. After all we had been through, it was difficult for many of us to be told on remarriage that we would lose our pension if we were under 60 when we remarried again. That is an awful penalty on all widows. Many of us were in that age group when, unhappily, we were widowed. We then remarried, accepting that we had to abandon our war widow's pension. However, if we remarry, and the husband then dies, we are told that if we are under 60 we cannot reinstate the pension. What is left for us?

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