Benefit Entitlements: War Pension and Armed Forces Compensation
Debate between Torsten Bell and Josh Babarinde(1 day, 6 hours ago)
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The Minister for Pensions (Torsten Bell)
I join other Members in congratulating the hon. Member for Eastbourne (Josh Babarinde) on securing this debate on an issue that I know he has championed passionately for some time. I also congratulate him on how he has gone about it, both today and over the past few years in which I have been engaging with him on the issue. Indeed, I think he first raised it with me a month into my time as the Minister for Pensions, when I met him and his constituents, including the late Staff Sergeant Pauline Cole, and members of his team. It was nice to hear him paying tribute to them today. They have obviously worked hard on this issue.
The hon. Member’s speech included a touching and fitting tribute to Pauline, who served our country and campaigned not only for herself but on behalf of other veterans. I was very glad to meet her and to have the chance of knowing how accurate the hon. Member’s description of her was, and again I offer my condolences to her family, who have continued to support the campaign that she championed. I have corresponded with at least one of her sons about this case.
As well as paying tribute to all our armed forces and veterans, I want to acknowledge the work that the Royal British Legion does on their behalf, working to promote and secure the welfare of veterans, campaigning on issues involving armed forces personnel such as the one we are discussing today, and securing a wider recognition of what our armed forces have given to this country. I should also recognise the work of veterans’ hubs beyond the Royal British Legion, including the one in Swansea, where I have discussed this and many other issues with veterans face to face.
The hon. Member has been a fierce and determined campaigner on this issue. He mentioned the first question that he asked during Prime Minister’s Question Time—always a stressful but meaningful moment for a new MP. He has also persistently raised the subject of the interaction between military compensation and the benefits system, and I note that his private Member’s Bill was reintroduced in the House today. I have listened to him and to others, including Members in the House today, and, as I am sure he knows, my colleague the Minister of State in the House of Lords met representatives of the Royal British Legion in November and discussed the matter.
Let me now turn to the long-standing policy issues in this area, and try to do justice to the matters that the hon. Member has raised. He is right to say that there is no single rule for how compensation payments are treated in the benefits system. Treatment depends on the nature and purpose of a payment, whether it is in the form of a regular income or a lump sum capital payment, as well as the legislation governing the relevant schemes. In pension credit, most income is taken into account, because the benefit is intended to top up the retirement income that a person already has. Pension credit is intended to do something different from any other element of the benefits system: to provide a guaranteed minimum level that our pensioners will always have to live on. During the 2000s, it drove the halving of pensioner poverty that was such a big feature of the previous Labour Government.
Pension credit rules already recognise veterans’ specific circumstances. As the hon. Member said, the first £10 of specified war pension scheme and armed forces compensation scheme income is disregarded. I should add—because this is important and it has not been discussed in the debate so far—that the armed forces independence payment and specific additions to the war disablement pension are disregarded in full, in recognition of the different nature of those payments. Lump sum payments under the armed forces compensation scheme are treated as personal injury capital, which can remain protected through a trust or annuity under the applicable rules. Those arrangements are more favourable than the treatment of other similar schemes with disablement elements. For example, the industrial injuries disablement benefit is taken fully into account for pension credit, and the fire and police service schemes also have no disregards applied.
However, I think that the centre of the hon. Member’s argument is the different treatment in respect of universal credit. That is the point that he dwelt on, so I will try to do justice to it. Universal credit was introduced with no partial disregards, which is what drove the initial change. Pension credit predates the introduction of universal credit and does retain the partial disregard structure that all the legacy benefits had. A more important point is that the two benefits serve very different purposes: one takes work incentives into account, while the other is intended to provide that minimum guaranteed income.
What is probably more relevant to this specific case is the fact that pension credit rates are significantly higher than the standard allowances in universal credit, because the House decided, in passing the legislation, that our aim was to more or less guarantee pensioners’ incomes up to a minimum level. Pension credit is also more generous in its treatment of capital: the first £10,000 has no effect on entitlement and, unlike universal credit, it has no upper capital limit. That is for the obvious reason that pensioners tend to have larger savings, and those savings provide other contributions to people’s income. By contrast, capital above £6,000 can affect universal credit entitlement, and that entitlement normally ends if somebody has over £16,000 of capital.
Comparisons with civilian personal injury compensation should be made carefully. I know why the hon. Member makes that point, but I want to be clear that lump sums paid under the armed forces compensation scheme are treated as personal injury capital, so they would be treated exactly the same as the payments that I think he said were more generous. That would not be the case; they would be treated identically. By contrast, ongoing war pension scheme payments, and guaranteed income payments under the armed forces compensation scheme, are income payments. That is the fundamental point on which there is probably disagreement. Comparisons can sometimes involve payments with different legal status, but they are not like-for-like payments.
The hon. Member has argued that pension credit and service-related compensation meet different needs—again, that was an important part of his speech today. I actually agree with him on that point, but I think I need to explain what that means. Pension credit is a means-tested income safety net, and it provides a guaranteed minimum income. That is why we take people’s other income into account when assessing eligibility and need. Pension credit operates in a totally different way from universal credit, which sets a level of support and then tapers that away as other income comes in. It is not really about double funding; it is about the level of support that the state provides in addition to the income that a person already has. That was the nature of how pension credit was introduced.
The hon. Member draws a parallel with the LGBT+ compensation payments. I hope that he will agree that the circumstances surrounding the Government setting up that financial recognition scheme are quite different and involve a different set of considerations.
More broadly, no one is ever going to say that everything about the benefits system is perfect—certainly not anybody who spent a long time working on it and trying to help people navigate it prior to coming into Parliament, and who, like all hon. Members, has helped their constituents to navigate it—but I will try to give an explanation of what sits behind the logic. I absolutely recognise that, as Pauline set out clearly, it feels like an arbitrary system to people.
Where there are lump sums or extra cost payments, those are disregarded within pension credit. Where there are regular payments that support income—one type of such payments is the focus of the debate and relates to how Pauline received her treatment—those are treated as income, and then the legislation requires us to partially disregard them. I appreciate that that is a technocratic explanation that does not do justice to Pauline’s individual circumstances, or to the circumstances of veterans with whom we all engage every day.
Josh Babarinde
In Pauline’s case, she did not choose whether to receive monthly instalments or a lump sum. If she had had a choice, she may have preferred a lump sum—first, because it was a big amount of money to do something with, and secondly, because she would not have fallen foul of the rules. Why should whether payments are disregarded be a lottery that is based on whether someone receives a lump sum or instalments?
Josh Babarinde
I thank the hon. Member for Leeds South West and Morley (Mark Sewards) for his point on the armed forces covenant. The DWP’s position in relation to the covenant has changed in the light of the Armed Forces Act’s new legal duties that the DWP will have to adhere to come January. What assessment has the DWP made of its obligations with respect to that change in the context of this pension credit disregard?
Torsten Bell
The answer to that is the legal position I have just set out, which is that the DWP does take that seriously, has considered it and is content that this is consistent with our obligations under the armed forces covenant. I think the hon. Member is trying to go beyond that to say that there are other things we should take into account, including arguments in this place, the position of veterans and the rest. However, narrowly on the legal question, the answer is yes. That has been tested, and our position is that it is consistent with the armed forces covenant. The fact that that is our position in no way undermines the powerful arguments that he has made and other hon. Members have supported, or those we have heard from our veterans, and I want to put that clearly on the record.
I should finish by emphasising again the Government’s deep-felt gratitude to our armed forces for their professionalism, bravery and dedication to duty, and to those in such a position previously. Veterans now represent large parts of all our communities, and we continue to honour them for the work they did while they were serving, but also for being active citizens supporting all kinds of work. I have mentioned the veterans hub in Swansea, where I see brilliant work being done by people day in and day out.
Question put and agreed to.
Oral Answers to Questions
Debate between Torsten Bell and Josh Babarinde(7 months ago)
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Josh Babarinde (Eastbourne) (LD)
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I am glad that the hon. Member and I have had the chance to discuss this issue on a number of occasions, and, more importantly, that we had the chance to do so with his constituent Staff Sergeant Pauline Cole, who served our country and campaigned on behalf of other veterans. I know that she has sadly passed away since our meeting, so I wish to put on the record my condolences to her family—not least to her son Les, on whose behalf my hon. Friend the Member for Hemel Hempstead (David Taylor) has been in touch in recent days. As the hon. Member for Eastbourne (Josh Babarinde) is aware, exactly because of the service of our armed forces, £10 per week of any armed forces compensation scheme award is disregarded when calculating pension credit entitlement.
Josh Babarinde
The Minister will remember that Pauline was a veteran who was awarded military compensation for injuries sustained in her service, but that led to her pension credit being cut from £77 a week to £10 a week, because military compensation is considered income by the Department for Work and Pensions. I have introduced Pauline’s law—the Armed Forces Compensation Scheme and War Pension Scheme (Report) Bill—to ask the DWP to correct that injustice and disregard military compensation in those calculations. Will the Minister work with me, and with Pauline’s sons, Les and Simon Haffenden, to conduct a review into the merits of disregarding that income in order to protect our veterans in future?
Torsten Bell
I recognise the powerful arguments that the hon. Member and Pauline made in our meeting. Our position today reflects the balance between recognising service injuries and being consistent across the welfare system. Pension credit is a means-tested benefit, the goal of which is to top up pensioners’ income to a guaranteed minimum level, so in order to ensure consistency, most forms of income—including those he refers to—are taken into account. However, as I said, there is a partial disregard in order to recognise veterans’ service, and the value of lump-sum payments received in respect of personal injury are fully disregarded.