Government claims war pension victory

Leaders of the Royal British Legion were upset last night at claims they were ready to run up the white flag following a meeting with Peter Lilley, theSecretary of State for Social Security, over cuts in war pensions.

The Department of Social Security caused deep annoyance at legion headquarters after saying they had produced no expert evidence to discredit the medical findings on which cuts were based. "They didn't disagree with the medical evidence or the legal advice we have taken and they have gone away to think about it. Our position remains unchanged. We have taken medical advice and we are legally bound to accept it," said a DSS spokesman.

The Royal British Legion officially described the meeting as "constructive" but privately one source said: "We had our own medical advice and it changed. We had to take it on the chin, but it would not be true to say we have run up the white flag. We will fight on."

The Independent has learned that the legion had planned to challenge the medical evidence produced by the Government by taking three medical experts to the meeting with Mr Lilley. However, before the meeting took place, one of the key witnesses changed his mind after consultations with DSS officials. Yesterday, he was in hospital, and out of reach of the legion, which is waiting to have further discussion before deciding its next course of action.

The Government, however, appeared confident that it had won its battle with the legion, which threatened to blow up into a full-scale row involving Tory backbenchers when it was first announced late last year.

The row arose when the Government was advised that deafness could no longer be attributed to gunfire once a serviceman or woman had left the armed services. That resulted in a change of rules backdated to last March, stopping war disability payments of pounds 35m a year.

Leaked papers obtained by The Independent showed that Mr Lilley had asked for four further measures to buy off the pensioners' lobby in talks with William Waldegrave, the Chief Secretary to the Treasury, including a payment for funeral expenses for disabled pensioners costing pounds 60,000 a year.

The disclosure that payments for deafness were to be cut led to angry clashes in the Commons between Tony Blair, the Labour leader, and John Major, with Tory MPs saying it was the worst performance from the Prime Minister in months.

The legion threatened to cause a humiliating climbdown in the cuts, with ex-service groups warning that the Government would risk a defeat in the Commons. But the measure has been approved by order in council, and is unlikely to be stopped. There was a threat that the legion will seek judicial review but last night Tory MPs said they were "holding their fire" to see how the legion would react to the meeting with Mr Lilley.