Mr. Leonard Pell (Hansard, 23 May 1991)

§ Mr. Eric Illsley (Barnsley, Central)

I am grateful for this opportunity to raise the case of my constituent, Mr. Leonard Pell, who lives in Carlton, near Barnsley. The case is rather complex, as I will explain.

Mr. Pell is a war pensioner and I hope that this short debate will highlight the erosion of the various benefits that have been paid to war pensioners over the past few years. In particular, I shall refer to the difference in pensions paid to service personnel who retired from the services before 1973 and the benefits paid to those who retired after that date. The difference is due to improvements to the scheme initiated between 1971 and 1973. I shall also refer to the level of disregard applying to war pensions. Although the Minister who is to reply will concentrate on the armed forces pensions scheme, I shall refer to the level of disregard operated by local authorities when taking account of benefits for the purpose of community charge benefit.

As I said, Mr. Pell's case is rather complex. It encompasses several different issues and benefits. He qualifies for several different benefits because of his substantial disability. Perhaps I should explain Mr. Pell's present circumstances.

Mr. Pell served in the RAF until he was invalided from the service with a 70 per cent. disability assessment. No doubt the Minister will agree that a 70 per cent. disability assessment is substantial. Since then, Mr. Pell has had surgery and is unfortunately diagnosed as suffering from chronic atrophic gastritis which might lead to cancer in later years. Mr. Pell has also suffered a mild heart attack and is therefore considerably disabled. His disabilities are compounded somewhat by his wife's disabilities. Unfortunately, she is diabetic and was recently discharged from hospital after an operation to remove a tumour. It is clear that Mr. and Mrs. Pell are experiencing considerable financial strain as a result of their joint disabilities. Their financial needs include a special diet for Mrs. Pell because she is diabetic, and the provision of extra clothing and the cost of extra heating which they both require. Mr. Pell's major complaint is that the level of war pensions over the past few years has deteriorated in relation to other benefits and in relation to the 1973 improvements.

It has long been accepted by Governments that pensions in respect of injuries inflicted during war time or during periods of service in Her Majesty's forces—and for that matter injuries at work—are paid at a slightly higher level than pensions for ordinary social security beneficiaries. That is based on the idea that people injured during their service in the forces were serving the country or the economy in war time. That principle has been eroded by the Government, who no longer maintain that that distinction is entirely valid. Over the past few years, Social Security Bills have tended to remove the distinction between war pensioners and industrial injuries pensioners over and above normal social security pensions. Changes to the social security benefits which came about as part of the 1986 review have also eroded the comparable value of war pensions in relation to other benefits.

Mr. Pell pointed out in his letter, a copy of which was forwarded to the Minister, that with the introduction of benefits such as income support, war pensioners do not qualify for or are not entitled to some of the benefits for 1122 which income support beneficiaries qualify. It is interesting that, for service personnel injured during peace time or at a time other than in war, there are no support funds such as the Gulf support fund or the South Atlantic fund. My constituent does not qualify for any of the charitable benefits that have been made available following recent conflicts.

In 1973, the armed forces pension scheme introduced service-attributable benefits. Since 1973, pensions for service personnel have been drastically improved. However, no retrospection was allowed to service personnel who qualified for pensions before 31 March 1973.

In his letter to me, the Minister was good enough to outline arguments about retrospection. The cost of retrospection is quite substantial in relation to all service personnel. It has long been a condition that a person can benefit from a pension scheme only if he is a current serving member. I appreciate the Government's arguments, but the House has also recognised those arguments in the case of women who were widowed and qualified for armed forces pensions before 1973. As we know, action was taken for that special group.

Special consideration should be given to Mr. Pell and others who were invalided and severely injured during their service for the country. Mr. Pell's disablement is so severe that his working ability has been restricted. Over the past few years it has been totally restricted—he has been unable to work at all. As he could not continue in the service until his scheduled discharge date, he does not qualify for a full pension, but he would have done had he not been injured. As Mr. Pell pointed out in his correspondence, had he not been so severely injured but allowed to continue his service until his discharge date, he would have been well looked after with pensions and benefits.

Mr. Pell's disability was so great that, initially, he could take up only light work, which he had to give up. He has been unable to build up an occupational pension to add to the pension benefits that he receives from the forces. He was forced to give up employment during the early 1980s and he has been unable to build up any occupational pension provision to compensate him for his inability to work.

If Mr. Pell had been able to continue in the service despite his disability, he could have built up an occupational pension provision and his entitlement to pension. He argues that the Government should seriously consider improvements in the benefits given to service men who left the services before 1973 and were so seriously disabled that they could not work outside the services. These are men who were invalided from the service. I support Mr. Pell's argument that they should be looked on as a distinct and deserving group.

Any retrospective action taken by the Government would have to exclude service men who retired from the services before 1973 but were able to complete their term of service, or those who were disabled or qualified for incapacity pensions but were able to work outside the services in civvy street and continue their service term until they reached their retirement date.

Mr. Pell's other complaint is about the war disability pension, which is regarded by the Department of Social Security as a maintenance benefit. It is subject to the statutory disregard of £10 for the community charge 1123 benefit. But the DSS regards such pensions as having "a special nature" because they are awarded in respect of service in the armed forces.

The £10 disregard is now too low as a proportion of the war pension, the maximum level of which is about £76. In 1971 the maximum pension was about £7.50 and the disregard was about £4, so the disregard was about 53 per cent. The level of disregard has fallen in real terms during the past 20 years. The disregard should be increased to take account of that.

Several other issues which affect war pensioners are not the responsibility of the Ministry of Defence, but I shall touch on them in my concluding remarks. They include the community charge and the disability rate allowance for adaptations and special fitments. Many war pensioners qualified for rent rebates for alterations to their properties. When the community charge was introduced, that rebate was removed, so again war pensioners suffered a fall in income.

My constituent is considerably disabled as a result of his service to the country. His earning capacity was severely eroded and now he believes that his pension entitlement is also being severely eroded. I call on the Government to consider carefully the small group of war pensioners who were so severely disabled as a result of their service that they could no longer work. The Government should perhaps look on them in the same way as they considered the pre-1973 war widows.

§ The Minister of State for the Armed Forces (Mr. Archie Hamilton)

I congratulate the hon. Member for Barnsley, Central (Mr. Illsley) on securing this Adjournment debate. I confirm that the disregard for the community charge is not one of my responsibilities. However, I shall show the essence of the hon. Gentleman's remarks to my hon. Friends in the Department of the Environment and I am sure that they will communicate with him on the matter. I am responsible for the armed forces pension scheme. We all want those who have served in the armed forces, and have experienced some disability as a result of that service, to be appropriately provided for. I am sure that we all recognise the value of the service that they have given to their country. I will address the points which the hon. Member raised in a moment, but first I should like to set out the background against which those points must be considered.

In dealing with service pensions we should recognise that there are two separate sets of provision under which benefits may be paid to ex-service men and their dependants. There is the war pension scheme, which is administered by the Department of Social Security and provides benefits specifically in those cases where a member of the armed forces is injured or dies as a result of his service. There is also the armed forces' own pension scheme, which is administered by the Ministry of Defence. It is mainly the provisions of that scheme which provide the basis for this debate.

The armed forces pension scheme is an occupational pension scheme and is broadly similar in nature to other public service pension schemes, although there are a number of features designed to reflect the somewhat different characteristics of service in the armed forces compared with the majority of other types of employment, and the relatively short careers which apply to many 1124 service men. There is also special provision for the greater physical risks which may arise whether through war-like operations, training for such operations or, indeed, many other types of duty that service personnel may be called upon to perform. Those risks are catered for today by a combination of appropriate provisions within the occupational scheme, in addition to the important and longstanding provisions of the war pensions scheme.

As with any other provision, money has to be found to pay for the benefits. In the case of the armed forces pension scheme, there is no standing fund from which these costs are met. There are no direct contributions and benefits are paid for, as they arise, from money allocated to the defence vote each year. Service personnel are not, of course, completely insulated from the cost of providing for their pensions. The review body on armed forces pay, in establishing pay rates to recommend to the Government, takes into account the greater value of armed forces pension scheme benefits over those of comparator pension schemes. A reduction is then made from comparator rates of pay to reflect this, and for the overwhelming majority that reduction currently stands at 9 per cent. While this provides an invisible offset, the cost of pensions and any increase in commitments associated with them have to be met within the overall allocation for defence each year. Those costs are continually rising, not least because benefits have been improved from time to time, and the estimated figure for 1990–91 was £1,408 million. They represent an increasing proportion of total defence expenditure, and will of course remain a commitment for many years to come.

As an occupational pension scheme, the armed forces scheme is managed in accordance with the same principles which apply to such schemes in general. There are two important and allied points. First, entitlements under the scheme are, for any individual and through him his dependants, derived from the rules of the scheme which were in force at the date of his retirement. Secondly, when rules are changed, those changes do not apply to those who are no longer serving at the time when they are brought into effect.

The detailed rules are inevitably complex, but the main features of the scheme as it stands today are as follows: a pension, paid immediately on retirement, for officers who have given 16 years or more of reckonable service and for other ranks who have given 22 years or more reckonable service; deferred pensions, payable from the age 60, for those who serve for shorter periods, subject to a minimum of two years; pensions for widows, widowers, and dependent children; immediate pensions for those invalided from service on account of injury or ill-health, subject to a minimum of two years' service; enhanced benefits where that injury or ill-health is attributed to service in the forces, with no minimum qualifying period of service; enhanced benefits for the widows and dependent children of those whose death is attributed to service.

All those pensions are index linked. In the case of long-service pensions, the cumulative increases are payable from the age of 55. But for invaliding awards, and widows', widowers' and dependants' pensions, the index-linking comes into effect immediately following the award. Long-service and invalidity pensions are calculated from representative rates of pay for each rank, and on length of service given. For a full career, based on retirement at age 55, the pension is equivalent to about half of the corresponding rate of pay with, in addition, a 1125 tax-free lump sum of three times the annual rate of pension awarded. Because many service men have to retire early, the rate of pension paid for shorter periods of service is enhanced to be better than strictly proportional to the service given. This is to compensate for the short career which may be all that is available, and, as I said, service men can therefore retire on pension by about the age of 40.

I have already referred to lump sums paid on retirement at the end of a full career, and lump sums are also paid on a similar basis where pensions are awarded for shorter periods of service, and where invaliding occurs. Additional lump sums are paid where injury or death is attributable to service.

I have given an outline of the main benefits which are available today. However, as with other pension schemes, there have been developments over the years which have gradually introduced changes and improvements in what is provided. I fully recognise that the benefit provisions have reached their current excellent level over a considerable period. In many cases, changes have been made in step with general developments in occupational pension provisions in this country. Others have been particularly devised for members of the armed forces.

Overall, the changes have included the introduction in 1960 of scales for officers linked to length of service, instead of standard rates for service of at least a minimum length; a substantial revision in 1972 following the introduction of the military salary, incorporating a direct link with representative rates of pay; in 1973, an improvement in the benefits available on invaliding, including where that was attributable to service, and for widows; the introduction in 1975 of deferred pensions for short periods of service; the introduction of pensions for widows of post-retirement marriages in 1978; and, four years ago, the introduction of pensions for the widowers of female personnel, thus ensuring equal treatment between the sexes.

It is against that background of progressive improvement, and the additional costs associated with each new development, that I shall address the points raised by the debate. I understand, and sympathise with, the feelings of those who have retired in earlier years and do not receive benefits at the same level as are available to those who have retired more recently. The fact that there are such differences is not unique to the armed forces scheme and the hon. Gentleman acknowledged that. It could be found in the great majority of schemes, and for similar reasons. As I mentioned earlier, improvements must be paid for. If we had applied every improvement retrospectively, the costs involved would have been significantly greater and it is unlikely that we would have been able to reach the standard which exists today.

The scheme as it now stands is very good. I am afraid that we cannot turn back the clock and confer additional entitlements on those who are ineligible because of their earlier dates of discharge. The position for the Department of Social Security's war pensions scheme is, however, somewhat different. Pensions and other benefits payable under that scheme are at standard rates which apply to all those who are eligible, regardless of when they served in the armed forces or the particular date on which that service came to an end.

1126 I acknowledge the valuable part which is played by the many organisations particularly associated with serving or ex-service personnel in providing help and care for those who have need of them. Such needs are not necessarily financial. They can take many forms. Recently, with the conflict in the Gulf, we have seen how ready such organisations are to help in any way possible. Happily, with the swift and successful conclusion of the Gulf operations, little was needed. But I, and hon. Members present today, will wish to pay tribute to those dedicated people, many of whom are themselves ex-service men and some with their own war disabilities, who do so much which is out of the public eye.

I come to the case of the hon. Gentleman's constituent, Mr. Leonard Pell. Mr. Pell's service with the Royal Air Force occurred in a number of stages. He initially joined in May 1943 for air crew training but was released in June 1944. After the war, in 1947, he enlisted on an eight-year engagement, which he completed normally and was released in August 1955. In 1959 he again re-enlisted, this time for a 12-year engagement with the Royal Air Force Regiment, which was subsequently extended, on the basis of his continuing in service until age 55. But, as the hon. Gentleman explained, Mr. Pell was invalided from service in 1967, having fallen below the required medical standard for his branch.

As a result, under the provisions which were in force at that time, he was awarded an invaliding pension under the armed forces pension scheme, and a lump sum. His case was also referred to the Department of Social Security for consideration under the provisions of the war pensions scheme. The claim was accepted and, since Mr. Pell's level of disability was at that stage assessed as being in the range of 6 to 14 per cent., he was paid the appropriate lump sum under that scheme. The hon. Gentleman said that Mr. Pell was assessed at 70 per cent., but that was a later development. The initial assessment was between 6 and 14 per cent. His pension from the Royal Air Force also became tax free.

As the House may know, war pensioners may seek reassessment if their disability appears to increase or if new disabilities emerge. This is what has happened in Mr. Pell's case. His position has been subject to review, with the result that his overall level of disability is now assessed at 70 per cent., covering a number of different conditions. He has also become eligible for a number of allowances under the scheme which, with his basic war disability pension, are today worth just under £200 per week.

I have here the figures showing how this is made up. There is a 70 per cent. war disability pension, unemployability supplement, comforts allowance, invalidity allowance, wife allowance, dependants allowance, age allowance and mobility supplement. Together, they make up a figure of £198.94 per week. That is non-taxable and is in addition to his tax-free pension from the Royal Air Force which, as the hon. Gentleman said, is just under £30 per week. Mr. Pell therefore receives, tax free, about £230 per week. As the hon. Gentleman acknowledged, the war pension provisions are substantially better than those that would be available under the industrial injuries scheme, had corresponding disabilities occurred as a result of civilian employment.

The hon. Gentleman said that Mr. Pell had no occupational pension, but he was working from 1967, although he may have found it more difficult to work recently, and that would have given him the opportunity to 1127 contribute to an occupational scheme or to fund one through the work that he was doing. I accept that Mr. Pell's armed forces pension would have been larger if the improvements made to the scheme in 1972 and 1973 had been in force in 1967. His pension would also have been larger today had he not elected, as he was perfectly entitled to do, to commute part of his initial award shortly after his discharge in order to raise additional capital. As I have explained, there are cogent reasons why we feel unable to make the scheme improvements retrospective, but I hope that the House will agree that the provisions which are available, taken together, represent a very reasonable recognition of Mr. Pell's needs.

The hon. Member referred to the debate in which I was involved on war widows, and we have seen his early-day motion, which is on the Order Paper today, suggesting that we should make special provision for war disability pensioners whose service ended before March 1963 in some similar way to what has been done for war widows whose husbands' service ended before that date. As the House will recall, it was announced on 11 December 1989 that special payments would be introduced for war widows whose husbands had been killed, or whose service had ended, before March 1973. However, the House will also recall that those special payments were introduced in recognition of the view, held widely in this House and the 1128 country as a whole at the time, that the pre-1973 war widows are a unique category for whom quite exceptional measures were appropriate. That was a view also accepted by the organisations representing ex-service men, including those with war disabilities.

There may also be those who recall that I acknowledged in the House on 23 November 1989 that there was nevertheless some correlation between the position of war widows and those with war disabilities, depending upon service ending before or after March 1973. The connection is, of course, that for both widows and the disabled benefits available from the Ministry of Defence are influenced by the improvements made to the armed forces occupational scheme in 1973. As I have said previously, this date has no significance whatsoever for the standard benefits paid under the separate war pensions scheme administered by the Department of Social Security. The benefits payable under the revised occupational scheme are better than those available previously. However, the similarity in origin does not mean that the situation is, in all respects, the same.