HC Deb 25 May 1994 vol 244 cc410-8

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Robert G. Hughes.]

8.34 pm
Mr. John Wilkinson (Ruislip-Northwood)

It is a privilege to be able to raise the subject of compensation awards to former service women dismissed from the armed forces on grounds of pregnancy.

My hon. Friend the Minister of State for the Armed Forces will not be surprised that I should return to the subject, which other hon. Members on both sides of the House and I have previously raised in debate on the Floor of the House and which has provoked gradations of press outrage, from headlines such as All at sea on compensation in The Daily Telegraph of 31 January 1994 to "What a Barmy Army" in the Daily Record of 12 April 1994 and to a headline that looks as if it might be a report from the European election campaign— Cash claims open old wounds"— but is something rather different.

It is an ironic and heartbreaking juxtaposition of two cases. The first is of Abigail Kirby-Harris, a captain in the Royal Army Educational Corps until she was dismissed from the service on becoming pregnant in 1982. She is now suing the Ministry of Defence for more than £500,000 in compensation. She is likely to get it", says The Sunday Telegraph of 17 April 1994.

Michael Cooke was among the top Royal Air Force fighter pilots of his generation and a member of the aerobatic team that preceded the Red Arrows. During a rehearsal for the 1963 Paris air show, his Lightning F1 was involved in a mid-air collision and his ejector seat failed to work properly, leaving him paralysed from the neck down. He was 25. Before that, the Royal Air Force had used his photograph on its recruitment advertisements, but he did not get any compensation; nor was he able to claim any. As he observed,

I was paralysed and got nothing. She's getting £½m for her normal function. The Government are disbursing taxpayers' money to meet compensation awards, many of which have run to five-figure sums, to compensate former service women for loss of earnings and career prospects upon dismissal from the armed forces by virtue of pregnancy—for not being able to fulfil the military duties for which they were trained, even though they knew when they signed up that dismissal without compensation would be the consequence of pregnancy during service. By their own estimation, the Government's total bill for compensation for those women eligible could run to £30 million. The Library research paper, 94/27 of 11 February 1994, entitled "Compensation for Discrimination", stated:

The total bill could turn out to be £100 million rather than the £30 million estimates. The Ministry of Defence will appeal against the size of these awards to the employment appeals tribunal, but the list of awards cited in the Library research document to have been granted to ex-service women between the crucial interpretation by the European Court of Justice in August 1993 in the case of Marshall v. Southampton and South West Hampshire Health Authority and the research document's compilation in February 1994 suggest that, unless action is taken, well over £100 million of taxpayers' money will have been wasted by the time all the claims have been settled.

It is not as if the women are unfit or have received an injury in the course of their military duties that might have precluded them from continued service. They have merely proved the physiological fact that if they are old enough to bear arms they are usually of an age to bear children. They have been rewarded, in their relative youth, with compensation awards far larger than the gratuity or terminal grant that they could expect at the end of their service.

Estimates of the number of women dismissed from the armed forces between the relevant dates of 1978 and 1990 vary, but The Independent of 6 April 1994 said that the maximum figure would appear to be 5,700. Of those, 2,000 women have settled their claims and about 2,500 claims against the Ministry of Defence remain outstanding.

The Times reported on 2 February 1994 that about 1,000 claims had yet to be made, citing the views of the armed forces pregnancy dismissal group, which calculated a high estimate of the total cost of £200 million. That correlates with the figures that I mentioned from research paper 94/27, for the period August 1993 to February 1994. The figures for named individuals are as follows: £200,000 for Fiona Hadley; £172,000 for Nichola Cannock; £133,000 and a pension entitlement for Patricia Prior; £54,000 for Deborah Miller; £62,000 for Jacqueline Peel; £46,550 for Esther Dill; £24,000 for Angela Howell; £17,000 for Kim Castledine; and £22,000 for Jacqui Thornber.

Taken into account are not only loss of potential earnings but pension rights, and back interest on notional lost earnings. Millions of men and women would dearly love to have their anticipated pension entitlements commuted into a generous lump sum payment made in the prime of life, as has been the case with those ex-service women who were dismissed on grounds of pregnancy.

Often, when apparently inexplicable nonsense—and expensive nonsense at that—is being perpetrated by Her Majesty's Government's Departments of State, the malign and meddlesome influence of European Community institutions is at its root. So it is in that notorious abuse of compensation provisions by ex-service women. Section 85(4) of the Sex Discrimination Act 1975 rightly excludes the armed forces, presumably on the grounds that all who attest their loyalty to the Queen to serve in the defence of the realm in Her Majesty's armed forces have to be fit for whatever duty, wherever they are assigned, at the behest of the Crown. But that exclusion has been overturned at the behest of the European Community, although an industrial tribunal is hardly an appropriate body to adjudicate loss of employment compensation for those subject to military discipline.

How did that extraordinary and remarkably expensive aberration occur? In early 1990 two members of the forces nursing service who had been dismissed on pregnancy grounds initiated legal proceedings against the Ministry of Defence. The Equal Opportunities Commission argued on their behalf that the EC equal treatment directive overrides that exclusion in British law, so the MOD policy to dismiss pregnant women from Her Majesty's armed forces was in direct breach of the directive.

It is often stated—it was most recently stated from the Treasury Bench during the passage of the Bill to ratify the treaty on European Union signed at Maastricht—that the United Kingdom has retained national sovereignty in matters of defence. Yet nothing could be more fundamental to national defence than service manpower policy—for example, whether a country has conscription, or large reserves, what proportion of its armed forces are women, the terms and conditions of employment of people in the armed forces, and so on. We judge a nation's worth in part by the quality of its armed forces.

Yet when the case was due to start in the High Court on 16 December 1991, the Ministry of Defence conceded the case and agreed to pay the two women compensation of £15,000 and £10,000. At a stroke, the MOD had conceded the primacy of a European Community directive over British law on service personnel, and in the process had extended the competence of industrial employment tribunals to matters relating to military terms and conditions of service, and discipline.

Then the European Court of Justice set aside, as contrary to European law, the old upper limit of £11,000 in discrimination cases. The sky became the limit for retrospective compensation awards for ex-service women from the entry into force of the European Community directive in 1978 until August 1990, when the Ministry of Defence finally instituted a sensible policy of maternity leave for service women who became pregnant, and flexibility of employment for service women in those circumstances.

In conclusion, the whole sorry, expensive and ridiculous episode perhaps deserves no better final commentary than the measured observations of The Daily Telegraph's editorial entitled, "At sea on compensation", dated 31 January 1994. The Daily Telegraph is not a paper prone to hyperbole and exaggeration, but the editorial finishes with the following observation: Few civilians could claim anything remotely similar. Yet ministers and officials seem mesmerised by the vast cascade of wealth they have released. Only now has the Ministry of Defence decided to appeal against the largest settlements, and they are still fighting shy of contesting the legal grounds on which compensation is being granted. They should shake themselves out of their trance, before the situation gets further out of hand. The mere fact that a manifest abuse of the public purse has been condoned for so long does not justify its perpetuation any longer.

8.46 pm
The Minister of State for the Armed Forces (Mr. Jeremy Hanley)

I congratulate my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) on securing an Adjournment debate on a subject that has aroused considerable interest and, unfortunately, an element of ill-informed speculation. I pay tribute to my hon. Friend for his chairmanship of the Back-Bench defence committee and for his lifelong commitment to the defence of the United Kingdom. I am also grateful for the opportunity to explain the Government's position on a difficult issue.

I must admit that I am surprised that no Labour or Liberal Democrat Members are present on an issue of such great importance. Not only is the debate important, but it is on a matter that those parties have raised from time to time.

I readily admit that the subject has caused great concern and feelings of unfairness among many people who feel that the size of the payments are out of all proportion, and in stark contrast to the levels of compensation paid in many cases of serious injury and the like. Indeed, my hon. Friend graphically illustrated that argument. I completely understand those feelings, but we must also consider the legal rights of the women involved.

It may be helpful, therefore, if I begin by explaining the background to the compensation payments currently being made by my Department to women who were dismissed from the armed forces when they became pregnant.

Until August 1990, it was the Department's policy to discharge service women who became pregnant. As know hon. Members will be aware, service in the armed forces sometimes places much greater demands on individuals than civilian employment. Personnel in the armed forces are regarded as being on duty 24 hours a day, seven days a week and can be required to serve anywhere in the world at any time, often at short notice.

Because of the special conditions of service life, it was considered at the time that service women who became pregnant would be unable to meet their service commitments and that they should therefore be released. If service women wished to return to duty after the birth of a child, they could apply to re-enter. They did not, however, have a right to return.

In 1990 the policy was challenged by two former service women who, with the support of the Equal Opportunities Commission, sought judicial review of the decision to discharge them on grounds of pregnancy. They cited the EC equal treatment directive as the legal basis for their case. Up to that time, the policy of compulsorily discharging service women on pregnancy had been considered lawful by virtue of the exemption for the armed forces in section 85(4) of the Sex Discrimination Act 1975. However, new legal advice given to the Department in connection with the former service women's legal challenge was that the directive applied to the armed forces and displaced the exemption granted in the Sex Discrimination Act.

As a result of that advice, my Department immediately changed its policy so that service women who became pregnant did not have to leave the services. They were given the right to return to work after a period of unpaid leave, should they wish to do so, in line with the statutory provisions for civilian women. In fact, as part of the widening of women's career opportunities, the Ministry of Defence was already considering the introduction of maternity leave to make it easier for service women to resume their careers after having a child. The unpaid leave scheme was enhanced in December 1991 to match that for female civil servants and now offers 48 weeks leave, of which 14 weeks is on full pay.

The case brought by the two former service women was heard in the High Court in December 1991. The court ruled that the former policy of discharging service women on pregnancy was discriminatory and a breach of the equal treatment directive. The Ministry of Defence agreed an out-of-court settlement with both women and accepted liability to pay compensation to other women dismissed from the services on grounds of pregnancy between 9 August 1978—that was when the equal treatment directive came into force—and August 1990, when the policy of compulsorily discharging pregnant women was discontinued.

My Department estimates that around 5,700 women left the services on pregnancy during that period and, so far, claims for compensation have been received from nearly 4,000 of them. The offers of compensation made by my Department are based on the loss of earnings and pension benefits from the date of discharge to the day before confinement, plus a sum for injury to feelings. Since service women were not stopped from applying to re-enlist after the birth of a child, we would normally only consider paying compensation for post-confinement loss of earnings and pension benefits where a woman has applied to re-enlist, but was turned down.

Mr. Wilkinson

I intervene merely to define what my hon. Friend meant by "injury to feelings", or words to that effect. Surely pregnancy in most circumstances is a cause for rejoicing.

Mr. Hanley

I must admit to my hon. Friend that one of the matters that has been brought—obviously—to the attention of the newspapers was that people's offence at the size of the payments had been accentuated by the fact that many of them felt that there was no real loss involved to the particular service woman becoming pregnant and that perhaps the service woman now had a happy family life, with healthy children and a future ahead of her. However, the injury to such service women is that of being forbidden from carrying out their chosen careers, which was regarded in law as being discriminatory. In other words, the injury was the legal injury of being required to leave the services when it was determined that the directive applied to them. In other words, the injury to feelings is more that of being dismissed from their chosen career, rather than that of having a happy and healthy family.

As I say, it is a legal matter, but before the Ministry of Defence continued with its current policy, it began to issue offers of compensation back in September 1992 through the Advisory, Conciliation and Arbitration Service—known as ACAS—which ensured that claimants received independent advice before deciding whether to accept legally binding settlements. Any claimant who is dissatisfied, however, with the amount of compensation offered by the Department has the right in law to apply to an industrial tribunal for settlement of her claim.

In fact, many of the claimants sought postponement of their cases, pending a judgment by the European Court of Justice in the case of Miss Marshall v. Southampton and South West Hampshire Health Authority. That was a sex discrimination case totally unrelated to the MOD claims. However, it had a significant implication for the level of compensation payable in such cases.

I shall at this point go into some of the details of that case to explain its significance for our service women's claims.

Mr. Michael Stephen (Shoreham)

Before my hon. Friend goes into the detail of the cases, will he tell the House whether, when the Labour Government in 1978 accepted the European directive, they knew or ought to have known that it would result in such massive claims against the public purse?

Mr. Hanley

I readily admit to my hon. Friend that a previous Government adhered to the directive, but I do not believe that they knew the level that the claims would reach because of a subsequent declaration—in fact, the very one to which I am now referring—in the Miss Marshall case. I shall explain to my hon. Friend exactly why.

Between 29 December 1975, when the Sex Discrimination Act came into effect, and 22 November last year, there was an upper limit on the amount of compensation that an industrial tribunal could award by way of compensation for sex discrimination. That upper limit was increased from time to time and, in June last year, it was increased from £10,000 to £11,000.

The two issues before the European Court of Justice in Miss Marshall's case were whether an upper limit on compensation for sex discrimination was compatible with the requirements of the equal treatment directive and whether the directive requires that industrial tribunals should have the power to award interest—a point to which my hon. Friend the Member for Ruislip-Northwood correctly alluded—running from the date of dismissal, should it consider the award of interest appropriate.

In August 1993, the European Court of Justice announced its decision in favour of Miss Marshall. That meant that the upper limit on compensation awardable by industrial tribunals in sex discrimination cases would have to be abolished and that interest could be payable from the date of the discrimination Act. Interest is invariably awarded by industrial tribunals, which can have the effect, because of the distance between the date and the discrimination Act and the award, of doubling the size of payments.

In other words, in answer to my hon. Friend the Member for Shoreham (Mr. Stephen), during the previous Labour Government, an upper limit was adhered to for acts of discrimination. That has since been removed and that is the reason for the large amounts to which my hon. Friend the Member for Ruislip-Northwood referred.

The Government acted subsequently to amend United Kingdom legislation to bring it into line with the court's interpretation of the equal treatment directive. On 16 November, my right hon. Friend the Secretary of State for Employment laid new regulations before the House, including the method of calculating interest payable. Those were approved by the House and came into effect on 22 November. My Department duly recalculated the outstanding offers of compensation for dismissed service women in line with the new regulations and issued revised offers to claimants. As at 19 May, 2,150 claims had been settled at a cost of £15.5 million.

The high awards, which have attracted so much publicity and which were referred to tonight, were made by industrial tribunals. I need hardly tell the House that those are independent judicial bodies, and that their constitution and rules of procedure are governed by UK statute. Their decisions are, of course, legally binding and my Department is obliged to comply with them.

I acknowledge the concern expressed by my hon. Friend the Member for Ruislip-Northwood and my other hon. Friends who are here today about the substantial sums of public money which have to be found to meet the compensation awards and which come out of the defence budget. However, it is not possible at this stage to forecast the total cost to my Department of meeting the claims for compensation. We do not know how many claimants will reject the revised offers and apply to industrial tribunals for settlement of their claims. Nor can we anticipate the level of compensation that future tribunals will award. I emphasise to my hon. Friends that those awards have been made by independent judicial bodies exercising powers granted them by Parliament and applying the relevant law, as interpreted by the European Court of Justice.

It is my Department's policy on post-confinement compensation that is disputed by many claimants because they maintain that they did not know that they could apply to re-enter the services.

Mr. Toby Jessel (Twickenham)

I apologise to my hon. Friend the Minister and to my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) for not having been here for the whole of the speech by my hon. Friend the Minister. Is he willing to venture an opinion on whether either the statute or the courts' interpretation ought, in the interests of justice, to be altered in future? A great many of all our constituents think that it is quite wrong that a judgment should by made by the courts on a statute that is so manifestly distorted in favour of making it easy for a woman in the armed services simply to decide to have a child and then to get whopping great compensation from her fellow taxpayers.

Mr. Hanley

As my hon. Friend may know, the Ministry changed its policy in 1990, so there is no possibility of any woman now deciding to join the armed forces and then deliberately to get pregnant so that she can not only have her child, but eat a lot of cake afterwards. The simple reason for that is that we now treat service women on exactly the same basis as we treat service men. In other words, there is no discrimination on the ground of sex. Women are deployed equally as men are in the armed forces, except in a very few instances, such as submarines and minesweepers, as my hon. Friend will know, because of accommodation problems. There is, therefore, no possibility that women can set out on such a course of action at the expense of the Ministry of Defence or, indeed, the taxpayer.

Mr. Jessel

They could before?

Mr. Hanley

I have no evidence that any woman tried to secure vast payments in the way that my hon. Friend intimates, inasmuch as the development of the law was very much after the event. I do not believe, especially with the upper limit of £11,000 on tribunals, which was increased from £10,000 only last year, that there was a vast fortune ready to be planned in the circumstances. My hon. Friend cannot, therefore, feel that financial planning was as much in the women's minds as family planning perhaps should have been.

If industrial tribunals accept claimants' arguments that they would have returned to duty and completed their commissions or engagements had they known they could do so, the result can be large awards, particularly when it is accepted by tribunals that claimants would have reached a senior rank.

Mr. Vivian Bendall (Ilford, North)

Do the Government have any right of appeal against the amounts being paid?

Mr. Hanley

My hon. Friend raises an important point. I shall very soon cover it fully.

It may be accepted by tribunals that claimants might have reached a senior rank. My hon. Friend the Member for Ruislip-Northwood referred to examples of women who might have achieved a very senior rank. Senior rank can give extra money, I am afraid, to the settlement. Interest can also have a large effect. Although appeals against tribunals' decisions cannot be made simply on the amount of compensation awarded, it is possible to appeal on points of law. Such appeals are made to the employment appeals tribunal and beyond that to the Court of Appeal. I have made it quite clear on previous occasions, and will do so again, that my Department will appeal against tribunals' decisions wherever it believes that it has good grounds for doing so. Indeed, appeals have already been lodged with the employment appeals tribunal in a number of cases and are to be heard in July. We hope that the EAT will give guidance to industrial tribunals on the relevant criteria to be taken into account in assessing compensation.

The Government gave careful consideration to the court's judgment in the Marshall case and amended the United Kingdom law accordingly. We now accept that the armed forces exemption in the Sex Discrimination Act was inconsistent with the equal treatment directive that was agreed in 1976. Furthermore, we believe that the directive fully meets all the subsidiarity criteria. In passing, I refute any suggestions of compulsory or pressurised abortions —or vasectomies, for that matter—as all of our service medical staff and other staff must adhere to the law.

In conclusion, I make it perfectly clear to the House that it is wrong to suggest that the European Court of Justice ordered the United Kingdom to pay unlimited compensation or specified the levels of compensation payable in sex discrimination cases. What it did do was to rule that individuals must be adequately compensated and there could not be an upper limit on the amount of compensation payable. We have accepted that ruling. However, I believe that I have now made it clear that the levels of compensation are a matter for the independent industrial tribunals to decide on the basis of the information put to them. I recognise that this matter has caused great offence. As I have also said, where my Department believes that there are good grounds, we will appeal.

Question put and agreed to.

Adjourned accordingly at five minutes past Nine o'clock.