Lord Davies of Brixton (Lab)

I welcome this opportunity to discuss the scope of the Armed Forces covenant. I thank the noble Baronesses for the speeches they have made. I found what they said convincing, although I look forward to the response from my noble friend the Minister and expect I will find his reply even more convincing. I want to take the opportunity to raise a practical example of where I hope the provisions in Clause 2, with or without the amendment, might make a difference. I suspect it will come as no surprise to the Committee that it relates to the role of the covenant in relation to the Armed Forces Pension Scheme. I should mention here that, in the past, I have been a paid consultant to the Forces Pension Society, and I thank the society for providing me with a briefing on the matters I am going to raise. I should add that it was when working with the society that I became aware of the practical significance that members of the Armed Forces place on the covenant. It is significant not just as some general principle but as applying to practical situations. By way of background, the Armed Forces Pension Scheme provides a world-class pension, and it is an important bond in the relationship between those who govern and those who serve—otherwise known as the Armed Forces covenant. It is designed to incentivise service, maximise the human element of defence’s operational effectiveness, facilitate servicepeople’s transition to civilian employment and provide for a dignified retirement. That is why I have been concerned by the recent reports of veterans being told that they must repay substantial sums of pension that they have received because those pensions were calculated incorrectly at some point in the past. The issue has received considerable coverage on the BBC, and in the Times, the Telegraph, the Express and the it Paper. Please bear with me in explaining the problem, because the scheme’s administrative arrangements are a little complicated. Defence Business Services is responsible for the scheme through Veterans UK. It has contracted in turn Sopra Steria to deliver the pensions. Sopra Steria has in turn sub-subcontracted Equiniti as its paymaster, and the system is overseen by the Armed Forces Pension Board, supporting the Secretary of State for Defence as the scheme manager. There are clear doubts about how Defence Business Services, Veterans UK, Sopra Steria and Equiniti should be held to account. There are other problems, but I want to highlight the disappointing pattern of overpayments in areas such as pension sharing on divorce, early departure payments, guaranteed minimum pensions and national insurance modifications. Between 1,000 and 2,000 members have received such overpayments, which indicates a lack of rigour in calculation, inadequate training, a lack of oversight and paucity of quality assurance. I will give the Committee two examples. I will not name the individuals involved, but the circumstances illustrate the problem. One is a 72 year-old veteran who served in the Army for 31 years, reaching the rank of warrant officer class 1, but who faces having to repay a pension overpayment of £37,500. This arose from four separate errors in the calculation of his pension. The second example is a 70 year-old former RAF flight lieutenant who was overpaid by £32,000. He queried the increase when he first received it but was told it was correct. Years later, he has now been told that there was indeed an error, and it is he, not the administrator, who is liable for repayment. It is worth noting that there are many cases with higher overpayments, but these cases illustrate the complex nature of the problems members face.