The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever)
My Lords, I should like to start by congratulating the noble Baroness, Lady Dean, on securing this important debate. This is a subject about which she is well informed, having chaired the Armed Forces’ Pay Review Body until 2004, as other noble Lords and noble and gallant Lords said. As a result of her important work, service men and women trust the AFPRB. As the noble Baroness, Lady Warwick, said, that is very much down to the important work of the noble Baroness, Lady Dean. She has influenced Governments—not just this Government but the previous Government—and they have listened to her.
She is well aware of the independence of the pay review body. It retains a fundamental independent role in ensuring that the remuneration package of our service personnel is sufficient to recruit and retain the right people. We value its work, as do the Armed Forces, and the House can be assured that there are no plans to change this important principle.
The 41st report that noble Lords mentioned was published in March this year, and I am pleased to say that the recommendations have been agreed in full, with many of the changes taking effect from 1 April this year. However, we cannot ignore the financial crisis and the need to exercise restraint, and that is why it is necessary to freeze pay. None the less, pay for those earning less that £21,000 has increased, and it is important that we ensure that those who are experiencing the greatest challenges receive additional money. For those deployed for an average of six months, individuals will receive the tax-free operational allowance to the value of £5,280, and, as my right honourable friend the Chancellor announced in his Budget, council tax relief has doubled to some £600.
With Afghanistan in mind, the deployed welfare package has been increased. However, our forces are deployed not just to Afghanistan, and the noble Baroness mentioned in the title of this debate the operational tempo. It is true that some service personnel are now on a third or even a fourth tour, and it is testament to the work of the strategic defence and security review that we had the required capabilities to achieve what we did in support of the Libyan uprising. The increased separation from loved ones has been recognised and, as recommended by the pay review body, the qualifying period between increases in levels of the longer separation allowance has been reduced from 240 to 180 days. This means that progression through the 14 levels, ranging from £6.69 to £28.24 for each day separated, is attained more quickly.
We do understand that prolonged periods away from home impact on morale—an important point made by the noble Baroness. We do all we can to minimise this and use harmony guidelines to allow for operational rest. However, there will always be occasions where specialist skills are needed, often at short notice. This may mean that for some, harmony guidelines cannot be prescriptively followed, but we will make every effort to return the individual to their unit as soon as possible. The noble Baroness, Lady Dean, discussed morale at length. We recognise that this is a very difficult time for Armed Forces personnel and their families. Some tough policy decisions that may have had an effect on morale have had to be made as a necessary part of the department’s contribution to the overall government programme to reduce the United Kingdom’s deficit.
As my right honourable friend the Prime Minister has repeatedly set out, our combat troops will withdraw from Afghanistan by the end of 2014. Between now and then we will be able to reduce our numbers. This process has already begun. However, there cannot be some sort of cliff edge in 2014 when all remaining troops come out at once. The rate at which troops can be reduced will depend on transition to Afghan control in the different parts of Afghanistan. Although we will maintain a presence for some time after 2014, we would expect the frequency of deployment to reduce.
Armed Forces pay is frozen, as is the case for all public sector workers, with the exception of those earning £21,000 or less, to whom we have given £250 in each of the last two years of the pay freeze. Pay has also increased incrementally each year for those who are not at the top of their pay scale—some 75 per cent of personnel—a protection introduced for the Armed Forces to ensure that they were not disadvantaged by their lack of contractual entitlement. This is in accordance with the principles of the Armed Forces covenant and has meant that most service personnel will have received an increase in pay during the freeze period.
Increase in pay for the next two years will be limited to an average of 1 per cent each year. The pay review body has already begun its programme of visits to service personnel in the United Kingdom and overseas to gauge their views on pay and related issues. We always welcome the advice of the pay review body and, as we did this year, we will give due consideration to its recommendations.
The noble Baroness, Lady Warwick, mentioned pensions—in particular, the publication of the final report of the Independent Public Service Pensions Commission of the noble Lord, Lord Hutton, on 10 March last year, which resulted in a number of recommendations that were accepted as a basis for discussion on the design of new public service pension schemes to be introduced from April 2015. My department has now commenced its consultation process with service personnel and is conducting briefings throughout the service community. The consultation period ends on 20 June. However—I address the question raised by the noble Baroness, Lady Warwick—personnel have now been assured that any changes to the scheme will not affect the value of pension benefits that they earn up to 1 April 2015, and that those aged 45 or over on 1 April this year will see no change to the amount of pension that they will receive or the time at which it can be drawn.
My noble friend Lord Palmer mentioned accommodation, a subject in which I know my noble friend and all other noble Lords who have spoken take a close interest and which we discussed in the House on 1 March. We continue to examine accommodation provision but, in terms of making improvements, the Chancellor has made an additional £100 million available for service accommodation from the financial year 2013-14. It will be used by the MoD for repairing and refurbishing 650 family homes and buying a further 25.
While it is necessary to increase the daily charge in respect of accommodation, these increases range from a modest 2p per day through to 76p for accommodation in the highest standard. Increases are in line with the rental component of the retail prices index and are broadly comparable with the costs faced by civilians, but with a discount that reflects the disadvantages of living in service accommodation. This means that, for a typical three-bedroom property in the highest standard for occupation, occupants of other ranks pay some £306 per month.
The very basis of the covenant is to tackle disadvantage incurred as a result of service and to consider special treatment where appropriate. The covenant and the pay review body are not related. However, we ensure that the pay review body is kept informed of our commitments and changes.
In the two minutes left, I will very briefly address questions. The noble Baroness, Lady Dean, asked about troops coming back from Germany. The Defence Infrastructure Organisation is currently considering the likely housing requirements of those returning from overseas, including Germany.
My noble friend Lord Palmer asked about the three-year pause in the accommodation improvement programme from April 2013. As part of the MoD’s work to reduce the funding gap and balance defence priorities, from April 2013 there will be a three-year pause in the programme to upgrade lower-quality SFA homes. While this is regrettable, 96 per cent of service family accommodation properties and 42 per cent of single living accommodation bed spaces are now in the top two condition standards.
My noble friend also asked about medals. We worked constructively with the noble and gallant Lord, Lord Craig, on the issue of the PJM, and I congratulate the noble and gallant Lord on the resolute line that he took on that issue. The coalition Government have agreed to a fresh review of medals, and I hope that further details will be announced soon.
The noble Lord, Lord Ramsbotham, mentioned that my department was late in providing evidence to the pay review body. I was not aware of this, and I give him an undertaking that I shall look into it. I will write to him and copy in all other noble Lords who have spoken today.
The noble Lord also mentioned the timing of the Secretary of State’s report to Parliament. The covenant report will be produced each year and will consider the comments made by the PRB. I will pass on the noble Lord’s recommendation about the timing.
My noble friend Lord Lyell asked me to write on the issue of service families’ accommodation, particularly in Colchester. I will look into the issue and write to him and send copies to other noble Lords.
The noble Lord, Lord Rosser, asked me to give an assurance that the financial situation of Armed Forces personnel would be looked at when the financial position improves. That is, of course, the case; it will be looked at.
I hope that I have answered most questions but, if I have not, I undertake to write to all noble Lords with answers to questions that I have not answered. This has been an interesting debate and I am grateful for noble Lords’ contributions. The Committee can be assured that we will continue to listen very carefully to the pay review body, and we greatly value its work in support of service personnel and their families.
The Deputy Chairman of Committees (Baroness Fookes)
My Lords, that completes the business before the Grand Committee today. The Committee stands adjourned.