ACVA Committee Meeting

    Order.

    Good morning, Mr. Davies, and thank you very much for taking the time.

    I apologize for whatever stake we had in the technical aspect of this. Our technical team has been extraordinary in our G-8 study of veterans services, as well as the Commonwealth countries, and we're so glad you're willing to be part of it and be a witness here today.

    Can you give us an idea how long your initial presentation will be?

     I intend to be very brief, just to set the scene and explain who I am, what I do, and in very broad terms how the U.K. operates and where pensions and compensation fit in. That should take no more than two or three minutes.

    Okay. We usually allow about 10 to 15 minutes, so if you want to go into more detail that may help the questioners here. We've studied a broad spectrum of countries that have quite different veterans services, so give as much detail as you like. Then we'll probably have more cogent questions as well.

    You have the floor, sir. Thank you very much.

     I'm a senior civil servant in the Ministry of Defence and have policy responsibility for service pensions, no-fault compensation, and wider veterans policy. I'll go on to explain what each of those parts means.

    I work for part of the organization that's headed up by a three-star military officer, who is the deputy chief of defence staff for personnel. I assume you're familiar with the wider U.K. model of who's in the MOD and how all of that works, but we can touch on that if that's helpful.

    Basically, since 2000, when the British government for the first time established a Minister for Veterans, wider veterans policy has fallen to the Ministry of Defence. As for the reason it's in the Ministry of Defence, I'm not entirely sure. We might speculate on that if it's helpful.

    Our model is one of integrated support across government departments, as well as local authorities and devolved administrations, in terms of wider health care, social care, employment, and wider benefits. What the MOD is responsible for in regard to veterans is pensions and no-fault compensation. That is for those who have been injured or made ill as a result of their military service. They would be able to claim under one of our no-fault compensation schemes--and I'll go into those in a moment--that provide additional support over and above that which is available to them as citizens.

    In the U.K., we have had universal health and social care provided free at the point of delivery to all residents since 1948. That might explain, for many reasons, why we have not had a veterans minister for very long. It was more a realization, perhaps, that more coordination across government was required and that the MOD was a reasonable place to put the minister.

    In departmental terms, what the Ministry of Defence delivers for those who've left the service is pension for those who are eligible, compensation on top of that for those who are injured or made ill as a result of service, and, I suppose, wider recognition. That's sort of the commemoration dimension and making sure that due respect is afforded to those who have served this country over the past years, including right back to the First World War. I think we have now in the U.K. three surviving veterans of that war.

    In policy terms, the wider veterans piece is more about coordination and encouragement of other departments to provide appropriate services to veterans. Mostly, that means to ensure they're just getting what they're entitled to as citizens, and in some small cases, which we can perhaps go into, there is special treatment for veterans. That's principally in terms of health care. There is something called priority treatment for individuals who may have been injured as a result of service and who've now left. If they have an ongoing health need, they can get priority treatment through the National Health Service. The first test is one of clinical need. The second test, then, is priority, with the preferential treatment for the veteran, second to the clinical need of all patients.

    I don't intend to say much more about the wider veterans piece unless that comes up in questions, but I'll give you a little insight into how we deal with pensions and compensation. I'll deal with pensions first. Really, what I mean by that are ordinary occupational employment benefits as part of a wider remuneration package. You're starting, obviously, with pay and terms and conditions of service. There may be access to preferential housing--certainly in service a provision of housing--and other wider benefits, but a significant part of the package is the pension.

    As I say, that's something that every serving person is eligible for at the moment. There are various rules about eligibility, but really, anyone who does more than two years of service is vested in the scheme and therefore accrues benefits related to service. It's what we call a defined benefit scheme, so it's a kind of final salary scheme. I can explain what that might mean in more detail if that's necessary.

     It's provided for on what we would call an unfunded or pay-as-you-go basis. There is no pension fund that's invested in and sort of held in stocks and shares and bonds. The actual pension is paid out or made from the general exchequer. In effect, the government holds those liabilities. I can talk about the size of that liability if that will be helpful. I'll just focus on the big principles for the time being.

    Defined benefit means that there is certainty but what you're going to get out in the end is not reliant on the performance of the stock market. For those who serve a full career, there's a very generous pension at the end. Our pension system is designed so that it has the twin effect of encouraging people to serve longer. So the longer you serve, the more pension you will get. In our various schemes we have something to encourage people to around the age of 40. To give about 15 or 20 years of service, if one were to leave at that point, then there would be an income stream available and a lump sum as well, to ease the transition into people's second career. At the age of 40 one would reasonably expect people to do exactly that. Your state pension age for men and women is equalizing at age 65, so one would at least expect that the normal soldier who leaves, having had a full career with us, will have almost the same amount of time again in a second, third, fourth career. We provide what in one scheme is called an immediate pension, payable about the age of 40. There are slight differences between offices and other acts, but basically it's a device to pull through people to that point.

    Those who serve longer continue to accrue additional benefits. Those who don't serve as far as that point will get what we would call a preserved pension or a deferred award. They might, let's say, leave service having done five or six years with the military. They will not leave with any immediate benefits but will have to wait until age 60 or 65 to start drawing down that preserved or deferred pension. In the crudest terms, the majority of service personnel leave their preserved award, but it's our senior long-commissioned officers, our warrant officers, who will get to that age 40 point, and around half of the officer cadre will get to that point. As I say, it's designed to pull through people to that point, because we are, as most military systems, bottom-fed. So we grow our own staff. We want to encourage people up the pyramid, but we don't have room for everybody at the top of the pyramid, so the device that we have for the immediate pension around age 40 allows an easy departure at that point with some encouragement and thanks and eases that transition into their second or third career.

    Our principal scheme started around 1975, and we closed that to new entrants in 2005. We have a new scheme with some slightly different benefits, but overall it's about the same. We can go into the variations if that will be helpful. Basically, it provides similar sorts of benefits in a slightly different package. It costs us broadly about the same amount of money as an employer. That's the new entrants who have enrolled in the armed forces since 2005. Those already serving have a choice. They can stay with the existing pension arrangements or switch to the newer arrangements in 2005.

    In terms of how that's paid for, it's a non-contributory scheme. Members in the armed forces do not contribute to their pension. It is entirely paid for by the government, which is part of the unique package that we offer to those who serve their country in the military. Other public sector employees, whether they're police, teachers, or workers in a national health service, or civil servants like myself, are in some kind of contributory pension arrangement. That is one of the distinct elements that we offer with the remuneration package to recognize the unique nature of military service. So that's the pension arrangements. We have about 300,000 pensions in payments. We have a similar sort of number of deferred pensioners, those not yet drawing their pension but no longer working for the military. We have about 200,000 people in service who are accruing benefits.

     So that's a broad outline of the pension arrangements.

    Regarding the no-fault compensation schemes, we had a legacy scheme that ran up until 2005 that was for those injured before that point. So it continues to pay out for new claimants but only for injuries that occurred before April 2005. That's what we call the war pensions scheme, and it has its origins back in the First World War. It's kind of a mini welfare state. So in addition to a pension payment in recognition of loss of earnings and pain and suffering, it also has a whole suite of allowances that actually were there because there was no welfare state. So there are health provisions, additional benefits in terms of you might need support carers to perhaps help one dress or with those daily life functions and there are allowances that provide for that. But all of that was because that provision was not there for every citizen. So the new scheme that came in 2005, which is called the armed forces compensation scheme, only focuses on the pain and suffering component; for those who have a loss of earnings impact due to their injury, it pays for that. What it doesn't do is have a broad suite of allowances for health or social care, because those are provided for every citizen already.

    In terms of numbers in the war pensions scheme, there are about 180,000 people drawing a war pension and another 35,000 what we call war widows, those who lost their husband as a result of service or whose husbands died subsequently from a service-related injury. Most of those numbmers are actually in relation to the World War II generation. So the population for the war pensions scheme is decreasing about 5% per annum, and there are new people joining the scheme, because one of its features is that you could only get a war pension when you left service. The new compensation scheme, the armed forces compensation scheme, provides for much more immediate benefits. So one can claim within five years and get the lump sum element, the pain and suffering component, in service. Then for those who have an impact on their earnings capacity after they leave service, that would become payable immediately upon leaving service.

    There are relatively small numbers of claimants under AFCS. I think we've paid out around 3,000 to 4,000 claims. And it's a growing scheme because it's for injuries that have been sustained after April 2005. People have five years to claim, so we're still receiving claims for injuries sustained in 2005. It's a scheme that we're keeping under review. There have been some changes made to it in the last year or two, most significantly last year as a part of the service personnel command paper, which is a cross-government-wide paper. One of the commitments in there was to enhance the amount of lump sum awards available under the compensation scheme, which we did, and we went back to the start of the scheme for all that.

    I should provide a bit of context. Most of the claims that we've paid out since 2005 have actually been for relatively modest injuries, mostly musculoskeletal breaks, back pain, damaged knees, ligaments, and those sorts of things. I believe only 10% of the awards we've paid out have attracted a guaranteed income payment, which is what we call the income stream for loss of earnings. So the vast majority of claimants.... Despite what one might hear in the headlines of very large numbers of casualties in Iraq and Afghanistan, the reality is that, yes, there are very serious injuries being sustained there, but in scale terms they are actually relatively small, and the scheme accommodates for that too.

    One further point I wanted to make about the compensation scheme is these are no-fault compensation schemes. This isn't a negligence-based scheme. The test is simply whether the illness or injury was caused or made worse by service. That might mean, in some cases, conflict-related injuries and casualties. It might mean training-related accidents. It might mean an illness that someone has acquired as a result of their military service, wherever that might be.

    So it's not linked to conflicts. It's not linked to particular areas. If you're in the services and are injured as a result of service, then you're eligible for payments under the scheme.

    That is not to say that if a degree of negligence is involved--for example, perhaps we haven't provided the appropriate equipment in certain circumstances--then service men and women are available in some circumstances to actually sue in tort for negligence. If that were to occur, we would take into account what we might have already paid under the no-fault schemes when we reached a settlement. But that's sort of to one side, not the principal issue. As I say, successive governments have been concerned about making sure that whether you're injured in training, on operations, or as part of your normal duty, then you've suffered. Appropriate compensation should be payable.

    That's probably as much as I wanted to say in terms of setting the scene. I'm more than happy to take questions on any of that or on any further points you might have. I hope you've also seen the material I provided in correspondence beforehand. There's a wealth of material available there.

    Again, I'd be happy to attempt to answer any questions you may have.

    Mr. Davies, thank you very much. That was a very good introduction.

    Yes, we did get the materials. They've been translated, and are in both official languages here. They've been distributed to our committee. We appreciate that work on your part.

    Now we'll be proceeding to questions. It works on a rotational basis between the different political parties. For the first rotation, we have Madam Sgro from the Liberal Party, for seven minutes.

    Thank you very much.

    I'm sorry to interrupt you, Madam Sgro.

    I should say to you, Mr. Davies, that you don't have a time limit, but our members do.

    I very much appreciate the information today, as we move forward on a study of trying to compare the benefits in the major countries.

    Your comments are quite interesting, and I have a couple of questions. I'll be pretty specific, if I can.

    You mentioned 2005 as the year that you introduced these changes. What happens to someone who was injured in 2004 and is under the old plan? Are they provided opportunities to apply under the changes you made subsequent to 2005?

    If your question is about compensation, then no. When we introduced the new scheme, it was for prospective injuries. If someone is already injured as a result of service, then they're covered by that scheme. Whilst the benefits are provided in different ways, you have to wait until you've left service to make a claim, and then you only get your money by way of an income stream as opposed to, in the new scheme, a lump sum and an income stream.

    So for those injured before the new scheme came into force, they are eligible for the benefits that were applicable at that stage.

    Is there a significant difference in benefits for someone prior to 2005 and in the new system, which is a lump sum payment and a monthly pension? Just from listening to you, it sounds to me as though there's a considerable difference if someone is injured prior to 2005 versus after.

     It's very difficult to make precise comparisons because the package of benefits is different. Broadly speaking, the arrangements aren't that different. For most injuries there is little difference, but the package of benefits is different. The war pension scheme only provides its money, broadly speaking, through an income stream that's payable for life. The armed forces compensation scheme, in volume terms for the majority of injuries, only pays out a lump sum, so there is no income stream. One provides almost exclusively an income stream, and the other provides mostly a lump sum.

    It's quite difficult to make precise comparisons, but one of the changes we made last year in the command paper was in recognition that perhaps more should be made available by way of a lump sum for the most seriously injured. The changes we made last year doubled the lump sum available under AFCS at the very top of injuries, but it was a graduated scheme. The increase at tariff level 15 is only 10%, so instead of £1,000 it's £1,100. The top end was £285,000, and it's now £570,000. So there is a significant difference there, but when one looks over a lifetime for those in the most seriously injured categories, most of the value to them comes from the income stream. Even though we've doubled the lump sum at the top, the significant value is still in the income stream.

    We introduced the lump-sum element and made it in-service to make it much closer to the point of injury. In the old scheme one might have suffered quite a serious injury, continued to serve for another 10 or 15 years, and then received some compensation for that injury. We made it much closer in time. The income stream for both schemes applies after you leave service.

    From my understanding of your comments, they could apply within a five-year span of when they completed service. On the post-traumatic stress disorder issues that we're currently dealing with, as I'm sure you are, what happens to someone who starts having difficulties six or seven years after completion of their time of service? Are they ineligible to make a claim at that point?

    I spoke in general terms about the five-year point. There is a general rule of about five years. However, there is a class of exceptions for late onset diseases. For example, some cancers might not appear until 20 years after the trigger event. So there is a list of exceptions, including post-traumatic stress disorder, that may fall outside the time limit. We recognize that not everything will materialize within five years of the incident, but those are the exceptions rather than the norm.

    How are you dealing with individuals who suffer from post-traumatic stress disorder?

    Perhaps I'll preface my comments by saying that of those in service and post-service who suffer from mental health problems as a result of service, post-traumatic stress disorder is a very rare occurrence. It's not even nearly the most common kind of mental health problem. Depression and other issues are more common. My military colleagues in service have been working hard to improve the level of provision for mental health services in service.

    We have two elements to that. One is a program called TRiM. It's not a medical intervention but it's an awareness program, a support network that soldiers use among themselves. There are trained staff to help facilitate this. One element is prevention, understanding, and raising awareness, and that's through a program called TRiM. But we equally deploy specialist teams to operational theatres to help support people in theatre, as well as remove people from operational theatres if that's a more appropriate course. So in service there is the whole normal range of medical interventions one might expect to be provided on a normal evidence base to support people in service who have suffered mental health problems.

    When people leave service that becomes the responsibility of the National Health Service. We have a range of programs in place with them to improve the provision that's available there.

     I have one last question. Do you have a definition of post-traumatic stress disorder that you could forward to the committee?

    I can certainly do that. I won't go into detail, but we use what is clinically recognized as post-traumatic stress disorder. We have found that even among medical professionals who aren't perhaps trained in psychiatric matters, it's a label that's easy to choose. If someone has a mental health problem as a result of service, it is often labelled as PTSD when it actually may be something else in terms of a clinical diagnosis. Of course, I can send you the details.

    Thank you very much.

    Thank you, Madam Sgro.

    Thank you, Mr. Davies.

    Maintenant, M. André du Bloc québécois, pendant sept minutes.

    Good morning, sir. It's a pleasure to listen to you this morning. I have some questions about health care.

    From what I understand, a large portion of health services are provided by your public health service. How are those services to veterans coordinated in your country? Some services are also delivered by the military sector. How do you divide up the services provided to veterans in specialized military hospitals and those offered by the public system? What is the cooperative arrangement between the military and public services in providing services to veterans? What is the cooperative arrangement?

    In another perspective, considering the number of current conflicts—your country is taking part in the war in Iraq and Afghanistan—there are probably increasing numbers of wounded, new patients as a result of those wars. Have you increased or decreased your budgets for veterans services. If more veterans have been wounded, I suppose there is greater demand. Have you rationalized or increased budgets?

    With respect to post-traumatic stress disorder, have you developed screening tools to prevent people from suffering from that disorder for a number of years, which often has harmful consequences for society?

    Thank you.

    I'm not sure that I understood the last question. I'm quite happy with the other points, but I'm not quite sure I understood the last point. Could we come back to it?

    Yes, that would be good, Mr. Davies.

    I'll come back to that question later.

     Right.

     The first point is that there are no military hospitals in the United Kingdom—none, not even for in-service soldiers. In the U.K., primary care is provided by military personnel. Overseas, for example, we have deployed field hospitals in Afghanistan and Iraq. That is more like, I suppose, accident and emergency and sort of dealing with the immediate issues. So if someone were traumatically injured they would be dealt with in theatre, stabilized, and then brought back to the U.K. Where they're treated in the U.K. is a place in Birmingham called Selly Oak Hospital. This is actually an NHS hospital. There is a military unit within it, but it's sort of embedded within it. There is something called the military managed ward where the care would be predominantly provided, but the reason it is there is that Birmingham is one of Europe's leading centres for trauma. Our care is provided by the in-service. Our secondary care is provided by the National Health Service because they have the expertise.

    In the past, Britain used to have military hospitals for serving people. We closed all of those because we found our medics were not getting sufficient exposure and expertise to actually be competent to do their jobs. So for the serving population, we have a mixture of care that we provide front-line. But also, then, if someone needs secondary care, whether it is elective surgery or otherwise, that is provided in a range of hospitals where there is something called a Ministry of Defence hospital unit as part of it. The care provided might be by a military doctor or a military nurse, but if the care you need is better provided for by the civilian surgeon, that's what you get.

    There isn't that divide between military hospitals and other public hospitals, because there are no military hospitals. That's the in-service component. That is already embedded within and alongside the National Health Service.

    In the veterans space, care is provided to all citizens free at the point of delivery. So wherever you live in your community, if you have a health need you will go to your general practitioner, who will then refer you on to specialist care if that's what you need, whether that is community-based or in-patient or on a day basis, like any citizen. Whether one is a veteran or just a citizen who is entitled to those benefits, there is no difference. We don't have veterans affairs hospitals or military hospitals. We have none of that. We have the National Health Service.

    In a way, that is the origin of all of this in Britain. When the welfare state was introduced in 1948, when universal health care for all was introduced, at that stage there were a number of what we called Ministry of Pensions hospitals. They were responsible for the health care of those injured, actually from the First World War and indeed the Second World War, those who had left service. In 1953, those remaining hospitals were transferred into the National Health Service, so there has been no separate provision for veterans since 1953. It just doesn't work that way.

    That is not to say that someone with an injury or illness caused by service, who needs care.... What they get extra is what I touched on earlier, priority treatment. They might be at the head of the queue. If there are two people with equal clinical needs and one happens to be a veteran and one doesn't, the veteran will go first.

    The system is very different from how it works in Canada or Australia or the United States because of that universal health care provision for all citizens. Veterans are part of that community and will get access to the health care through that route.

     Thank you very much.

    Mr. Stoffer now, for five minutes.

    Thank you very much, Mr. Chairman.

    Mr. Davies, thank you very much for appearing before us today.

    Sir, on the amount that is given in the compensation scheme, I notice that in December 2008 you literally doubled the amount of the compensation lump sum that an individual can receive. Is that taxable?

     No, that's tax-free.

    Now, in Canada, if a person joins the military, they have to do 25 years of service. So they could be 20 years old when they start, and at age 45 they could retire and get a certain percentage of their pension for the rest of their life.

    What is it in Britain now? How many years does a person have to serve before they are eligible for a pension?

     In detail, it's slightly different. In the old scheme, the armed forces pension scheme we call AFPS 75, officers could receive an immediate pension after serving 16 years beyond the age of 21. So the earliest you could get a pension would be around age 37. You could start accruing benefits only after age 21, even if you joined at 18. For other ranks, it's 22 years of service from age 18. So you could retire at around age 40. That's AFPS 75.

     The new scheme introduced in 2005 has one criterion for officers and other ranks, and we call this the 18/40 point. So it's after 18 years of service and at least age 40. You start accruing benefits when you join.

    And when that individual dies, what is the percentage of the pension that goes to the remaining spouse?

    In the old scheme, it was up to a maximum of 50% of the pension. Under the new scheme, it's up to two-thirds.

    When did the two-thirds scheme kick in?

    It was in 2005. So those still serving in 2005 were given a choice: stay under the old scheme or switch to the new one. One of the significant changes in the new scheme was enhanced dependants' benefits—a higher death-in-service lump sum, higher-percentage pensions, and retention of benefits on remarriage. Those who had already left got the benefits they had.

    In Canada, if a young soldier is killed in the line of duty, the soldier's spouse receives about a $250,000 lump sum payment or something slightly higher, but if there is no remaining spouse or child, there is no benefit. Mothers or fathers don't get anything. Is it the same in England, or do you have a different system?

    If a single person were to die in service, then there would only be a lump sum, either to the estate or to someone who had been nominated. Neither scheme pays out if there is no dependant, apart from the lump sum. The amount of that lump sum is a calculation based on the amount of salary they were paid and how much service they'd already accrued. For example, in AFPS 05, the death-in-service lump sum is four times salary.

    So if a person wasn't married or had no children, would the estate receive whatever benefits there were?

    Yes, but there would be no ongoing income stream. Where there is a spouse or dependent children, if they were nominated, they would get the lump sum and the income stream as well.

    Say a 21-year-old person joined the military in Britain, served about two years, went to Afghanistan and was killed. Roughly how much would be paid to the estate?

    Let's say that this was a private soldier who finished basic training and was earning about £18,000 a year. The lump sum would be four times that, which is £72,000. I'm not sure what that is in Canadian dollars. This would be the lump sum that would go to the estate. If the death was due to service and there was a spouse or dependent children, then there would be an income stream to them that would come out of the armed forces compensation scheme. If the death was not due to service—our scheme works on whether it's due to service or not—if the person had invested in the pension scheme, which I think requires two years of service, he would just get the lump sum but no pension.

     Thank you very much.

    Thank you very much, Mr. Stoffer.

    Now, Mr. Kerr.

    Thank you very much, Mr. Chair.

    I see that other members are coming and going here, as other committees are starting at eleven. So I'll just start with one basic question—if we have a quorum.

    Thank you, Mr. Davies, for that. It's a lot of interesting stuff. I'm just going to ask one basic question. I was very interested when you talked about the integration of services. Recently you ended up with a department and a minister of veterans affairs. Can you expand on how that works? It's always very intriguing when you hear how governments can actually work together internally. How do you provide that, and what is the relationship internally that makes that work?

    We do not have a separate department for veterans affairs.

    Didn't you say there was a minister?

    We have a minister within the Ministry of Defence, so his portfolio includes—

    I'm sorry, but I have to stop the questions, because the bells are ringing. It's a standing order that once the bells ring, we need to adjourn the meeting, unless there's unanimous consent not to do so—and I don't think—

    I thought I was on a roll here too.

    I apologize, Mr. Davies, but this is one of the realities of Parliament: we need to rush back to the House.

    I want to thank you for your service today, and please pass on our thanks to your general department, as well, for your participation in this. We may be contacting you again.

    Well, if you have questions by e-mail, we can see what we can do with some of the specific points we can pick up.

    Thank you so much.

    Again, you're welcome.

    Thanks, folks.

    The meeting is adjourned.