RESERVISTS PERSONAL PENSION PLANS (Hansard, 6 May 2004)

§ Mr. Julian Brazier (Canterbury)
I beg to move, That the clause be read a Second time.
I declare an interest, Mr. Speaker, as I served for 13 years in the Territorial Army, as you yourself did. Indeed, as background to our debate on pensions, I might say that my grandfather served throughout both world wars as a reservist officer. His health was ruined as a result and, although he was decorated for gallantry, he never received a pension of any kind. The proposal in new clause 1 does not relate to the past, but aims to address an injustice that exists today.
In connection with the point of order raised by my hon. Friend the Member for Mid-Sussex (Mr. Soames), Operation Telic involved the largest deployment of reservists since the war, so this is a good time to focus on the issue. They constituted a huge proportion of the overall personnel, with 5,000 out of a nominal total of 45,000 reservists—only 35,000, however, were trained and available for service—being deployed. Even today, the Library tells me, we have 989 reservists in Iraq, 230 in Afghanistan and about 300 in the Balkans. Recently, the first military cross since 1945 was awarded to a territorial.
Nearly all those are people who have civilian jobs. They give of their time during peacetime and for many years serve at annual camps, weekends and evenings in the Territorial Army and its counterparts in the other two services. There is no pension provision for reservists, however many years they serve, except in one respect. Those who are called up for full-time service can have payments made into an employer's pension fund, if they have an employer. If they happen to be self-employed—a large and important category of reservists—there is no provision. The new clause seeks to address that, for two reasons.
First, the current arrangements are grossly discriminatory against self-employed people; why, I cannot imagine. I served in three different TA units and self-employed people played a vital role in all of them. As call-outs become more burdensome and onerous, and as employers become reluctant to allow employees to serve in the reserve forces, the proportion of self-employed people, if they can be found and are able and 1510 willing, may have to rise. It is very unfair that such discrimination exists.
The second point relates to all reservists. No matter how long they serve, there is an absolute lack of provision for their general service outside full-time deployments. I was one of those who argued strongly and many times in the House for more use to be made of reservists, preferably in formed units. I welcome the fact that just before the last Conservative Government fell, we passed the Reserve Forces Act 1996 and started the process of making more use of reservists. I did not envisage at that stage that there would be huge cuts in the number of reservists and an enormous increase in the scale of work required of them. That is what happened.
When we consider pensions for those who are not on full-time service, it is important to recognise the sacrifices that they make. Overtime opportunities are greatly reduced if one is spending weekends away and spending training evenings as a reservist. Even in the old days, career opportunities were somewhat jeopardised by reserve service. I well remember conversations in which people said, "We really wanted so-and-so to take such-and-such a job, but he finally felt unable to do so because it would have meant giving up a promotion, as the job is so busy." Today, with the prospect of being called out in peacetime for periods of as long as six or even nine months, perhaps as often as once in every three or four years, the reduction in people's earning prospects, and consequently in their eventual pension prospects, is considerable. That is not reflected at all, outside the periods of full-time service.
I shall not detain the House with a long argument because that would not strengthen the case. However, it might be for the convenience of the House if I explained in a few sentences how the national guard scheme works. It is a good scheme and a cheap one. Bearing it in mind that reservists provide defence on the cheap, much of it funded by their employers—or their own business where they are self-employed—it is a scheme that the Government would do well to consider. Such a scheme is envisaged by new clause 1.
The scheme is governed by three simple rules. First, leaving aside the full-time deployments, there is no contribution for anyone who serves fewer than 20 years, so the scheme applies only to a small proportion, but it applies to those people who are the very backbone of every unit—the company commander, the company sergeant-major and the long-serving non-commissioned officer. In America, when such people have done 12 or 13 years and feel that they have had enough, they realise that in another six or seven years they will be eligible for a pension. The scheme affects a fairly small class of people, but a critical one for maintaining unit quality. Secondly, one does not receive a pension at the age where one's regular counterpart would. The pension starts at state retirement age, which, from memory, is 67 in America, so the provision is relatively cheap. Thirdly, it is entirely related to the amount of time spent serving.
At a time when the defence budget is stretched, I know that there is no huge willingness to consider spending extra money on anything, but when the burden is being disproportionately borne by members of the 1511 reserve forces, the very small sums that the scheme would cost would be good value for money and would represent justice.

§ The Parliamentary Under-Secretary of State for Defence (Mr. Ivor Caplin)
May I take the hon. Gentleman back to the US system that he was explaining to the House? For comparative purposes, will he tell us about other pension provision? For instance, is there a state pension provision across the United States that national guard members would receive as well?

§ Mr. Brazier
The Minister knows that pension arrangements in America are extremely complicated, with variations between states. The crucial issue is the return that reservists get from giving up time to do reserve service, which other civilians who do not give up time to do reserve service do not get. What pension return are reservists getting? In the national guard, the US army reserve or its counterparts in the other services, the small proportion of people who are the backbone of the organisation get the benefit if they do more than 20 years, and those who choose not to sacrifice their time and make the other sacrifices involved do not get it.

§ Angus Robertson (Moray) (SNP)
The hon. Gentleman is making a powerful case, which I am sure he has also found is popular among people in the Territorial Army and reserves more generally. They think it would be a fair way to go. Is he aware not only that such a scheme exists in the United States, but that Canada has been developing a similar scheme over recent years? Perhaps the Ministry of Defence could look at that for inspiration.

§ Mr. Brazier
I am grateful to the hon. Gentleman, who is more up to date on the situation in Canada than I am. I know that the Canadians were evaluating a scheme, but I do not know how much progress has been made. I can say, however, that, as the House knows, the turnover figures, or the wastage rates, which are a significant measure of the state of a unit, in all our counterpart English-speaking countries—America, Canada, Australia and, I believe, New Zealand—are much lower than those for the British reserve forces. That should concern us.
There are two separate injustices that the clause seeks to address. The first is the lack of a pension to cover the full service of a long-serving reservist. The second is the immediate crying need to sort out the discrimination against the self-employed. I urge the House and the Government to support new clause 1.

§ Mr. Colin Breed (South-East Cornwall) (LD)
As there are currently reservists in theatre, it is right that we should think about their future welfare and the benefits that we provide for them. In Committee, the hon. Member for Canterbury (Mr. Brazier) explained in greater detail why we should do so. We should look after reservists for the right reasons, not because other countries may be introducing their own schemes. We should properly address the discrimination issue and find a means of reflecting in pension terms the service 1512 that they have given. The principle of paying a contribution to reservists who receive an occupational pension has already been established, so the Government cannot argue against it.
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On that basis, why should we not pay those who have personal pension plans? In Committee, the Minister explained that a reservist averages about 30 days' service a year, so the pension would be very small. However, that is an argument in favour of new clause 1, because extending the scheme would have little effect on the overall cost—I understand the cost-neutrality problem. The change would cost a small amount and affect relatively few people, so finance should not be an issue.
We have agreed the principle and that extending the scheme will not cost very much, so why are the Government making such a great fuss? The hon. Member for Canterbury suggests an elegant solution to enable the Government to address discrimination and recognise the valuable service that reservists give, and it would hardly register as a blip in the budgetary process.

§ Mr. Mike Hancock (Portsmouth, South) (LD)
I am delighted by the new clause moved by the hon. Member for Canterbury (Mr. Brazier), but I was disappointed by the Minister, who sought to tarnish it by criticising the system in America and suggesting that people gain an advantage by having two pensions. The issue is about fairness to people in the reserve forces, who give their time and, in some instances, their lives or their well-being on behalf of their country, and new clause 1 allows this House and the nation as whole to recognise that commitment.

§ Mr. Caplin
As the hon. Gentleman is a member of the Defence Committee, he did not participate in Standing Committee, where hon. Members were able, free and willing to ask questions about different points as we debated the issues. I intervened on the hon. Member for Canterbury (Mr. Brazier) to raise an interesting point about the US scheme, and I cannot see anything wrong with that.

§ Mr. Hancock
The point would be relevant only if the Minister provided evidence that people in the reserve forces in the United States can claim other benefits. The US system is a good example, because it works and offers reserve forces a pension scheme, and it could easily be adapted and made available to reserve forces in this country. The point that many reserve service personnel in the United States probably do not have other pension facilities is valid, but it does not relate to this issue, which concerns fairness to our reservists.

§ Mr. Brazier
The hon. Gentleman makes a powerful point. Pensions paid to members of the armed forces and, indeed, other state sector occupational funds are not welfare payments; they are a reward for service.

§ Mr. Hancock
The hon. Gentleman is dead right. The issue concerns the recognition of those individuals' commitment to the nation. New clause 1 will not break the MOD bank, and it is a way to honour reservists and recognise their dedication.
1513 During the past year, I have talked to many people who have returned from active service in the Territorial Army and other reserve forces in Iraq, many of whom have been on long deployments for the third time in three years. Reservists who have served on three separate deployments are not unusual, and many of them return to face difficult employment situations, which is a point that the Minister has recognised.
New clause 1 is a major step in the right direction—it is a small financial step, but it is a big step in honouring a debt that we should have considered long ago. I hope that the House is inclined to support it unanimously, and if the Government were to agree to it, it would mark their commitment to our reserve forces.

§ Mr. Caplin
I can safely say that unanimity will not be achieved on new clause 1.
I pay tribute, as I have on a number of occasions, to the work of all our reserve forces, whether they are deployed in Iraq, the Balkans or Afghanistan. The hon. Member for Canterbury was good enough to acknowledge that we have made changes to reserve forces during the past few months to recognise their greater importance. I told the Standing Committee the news about the Duke of Westminster a couple of weeks before the London Gazette announced it, but not to worry—I suppose that was my privilege in that situation.
Since we debated the issue in Standing Committee, I have met a number of reservists in Basra. As I expected, they are a fully committed and very determined group of men and women, and they are dedicated to Britain's cause in south-east Iraq. They are particularly committed to the reconstruction of Iraq and to their work with the local Iraqi community, which is testament to their skills. Many members of the reserve forces, which are doing a superb job in Iraq, are becoming increasingly frustrated at the lack of attention shown by the newspapers and television to their work developing water stations and sewers and helping schools and hospitals. Owing to the work of all our British troops, including our reserve forces, the public infrastructure of south-east Iraq differs significantly from its condition 18 months ago.
The hon. Member for Canterbury began the debate by discussing the current size of our reserve forces, and he does not see the Reserve Forces Act 1996 as a reason to reduce numbers. If we go back 10 years to 1994, however, the Territorial Army contained about 100,000 people.

§ Mr. Brazier
No it did not.

§ Mr. Caplin
It was very large, but it was seldom deployed or deployable. Today, the TA contains some 40,000 people and is deployable, which is something that Government and Opposition Members welcomed in an excellent Adjournment debate on the issue in Westminster Hall. The capability of the TA and the reserve forces in general is more significant today because they are more likely to be deployed.

§ Mr. Brazier
I am listening to the Minister carefully. After the TA was cut by about one third, the Government announced that it was more deployable, 1514 and it has been deployed more often. Apart from the introduction of the mobilisation centre, which was announced by the previous Conservative Government, can he mention one single change that has made the reserve forces more deployable? More reservists are being deployed, but the resources to train them for deployment have been reduced.

§ Mr. Caplin
I do not accept the basis of the hon. Gentleman's question. I went to Chilwell to speak to reservists as they were mobilised and found that the system is effective. I have talked to reservists in both Chilwell and Iraq, and they welcome the training and development that is part of the mobilisation process.
I make those points about deployment because it determines the pension issue. The House will not take a unanimous view on new clause 1 because, as the hon. Gentleman knows, voluntary reserve service, such as weekend training and annual camp in the TA, is not pensionable under the armed forces pension scheme. Service is pensionable when people are deployed. I entirely accept the point that the hon. Member for Portsmouth, South (Mr. Hancock) made about fairness to those who are deployed in Iraq or Afghanistan. Under the Reserve Forces Act 1996, we do, can and will use the power to make pensionable payments for those people, because they are deployed, or mobilised, and therefore acting in theatre.

§ Mr. Hancock
The Minister makes an interesting point, which he has obviously researched. Will he give details of how many people over the past three years have been compensated in the way that he describes?

§ Mr. Caplin
I cannot do so today, but I look forward to the parliamentary question that will naturally follow.
When the reservist is mobilised, he or she can ask the Ministry to make pension contributions to his or her civilian pension plan. That is how the 1996 Act works. New clause 1 is unnecessary, because we already have that power to make payments to civilian pensions.
I cannot tell the House how much it would cost to extend the scheme as the new clause proposes. It was suggested that it would not cost a lot, although we were not given any figures—that would have been interesting. I have a feeling that such non-mobilised reserve service pension arrangements would end up costing millions of pounds, but we can certainly look into the potential costs.
I want to draw some differences between those who are employed and those who are self-employed. Those who are employed are protected under the safeguards in the Protection of Employment Act 1977, which were enhanced by the Reserve Forces Act 1996. I accept that the situation is slightly different for self-employed people. As hon. Members will know from the debate in Westminster Hall, this is one of the areas to be considered in the review that I am undertaking with regard to statutory instrument 309, which will take account of the differences between employed and self-employed status. I explained the timetable for the review process, and I hope in next week's debate to be able to say more about where it stands and to give hon. 1515 Members clearer time lines. [Interruption.] I can see the hon. Member for Canterbury edging towards the front of his seat.

§ Mr. Brazier
I thought that the Minister was about to sit down.

§ Mr. Caplin
I should like to make a couple more points first.
The new clause would add nothing to the powers under the Reserve Forces Act, which allows us to make such contributions. The Bill ensures that reservists' arrangements will continue to be properly governed by the 1996 Act when we move to the new armed forces pension scheme. Two schemes will run, and the 1996 Act will be relevant to both. The powers that we have in those schemes will ensure that people are not out of pocket in terms of their pensions. That is because, as the hon. Member for Portsmouth, South said, they are doing a crucial job for our country, whether in Iraq, the Balkans or Afghanistan. If the new clause is pressed, I shall ask my hon. Friends to resist it.

§ Mr. Brazier
I hope that it is in order, Madam Deputy Speaker, for me to say that when I moved the new clause I did not explain that my hon. Friend the Member for New Forest, West (Mr. Swayne), who has just come back from the Gulf, was unable to move it because he is at his father-in-law's funeral. He asked me to pass on his apologies to the House.
Although I am not persuaded by the Minister's arguments, I acknowledge that he made two helpful commitments: that the Government will consider the whole issue of the way in which the self-employed are looked after; and that he is willing to look into how much it would cost to introduce a wider scheme. It would perhaps be uncharitable to remind him that he still owes me a letter, because he promised to write to me about the points that I raised on unit structures during the Westminster Hall debate.
On the basis that we have those two pledges, I am happy to withdraw the motion.

§ Mr. Breed
In view of what the Minister said about next week's debate, it would be extremely helpful if we could have by then some very rough figures on costs. I am sure that the actuaries could produce something in time.

§ Mr. Caplin
Perhaps I should clarify the commitment that I gave. I did not say that I would provide figures on the proposed pension arrangements; I said that I would update the House on our review of statutory instrument 309 and reserve forces generally, which I detailed in the Adjournment debate in Westminster Hall four or five weeks ago. Nice try, though.

§ Madam Deputy Speaker (Sylvia Heal)
Order. I must now put the Question. I am afraid that we have had speeches after the withdrawal of the new clause. I must now put the Question but, of course, Members may decide not to vote on it.