Armed Forces Pay — [Steve McCabe in the Chair]

Part of the debate – in Westminster Hall at 3:31 pm on 14th September 2017.

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Photo of Tobias Ellwood Tobias Ellwood The Parliamentary Under-Secretary of State for Defence 3:31 pm, 14th September 2017

I am going to do everything I can to make sure that we do our best to have the remuneration package that our armed forces deserve, but we have to bear in mind the context and the backdrop, which I have spelled out. There has to be fiscal recognition of the place we are in, but I agree with the hon. Gentleman that we should all work as hard as possible to make the case and ensure that personnel get the salary they deserve and need.

There is also a non-contributory pension scheme, subsidised accommodation and food, and access to free medical and dental care. Service personnel also have access to an allowance package that provides financial assistance towards additional costs incurred as a result of their service. Throughout the pay restraint period, many personnel in the armed forces have received an annual increase in pay of well above 1%.

During the period of pay restraint, armed forces pay has not stood still. In 2016 we introduced a major revision to armed forces pay in the form of the Pay 16 pay model, which was designed to simplify an individual’s pay journey, enabling them more accurately to predict their future career earnings. That has also rebalanced pay to reward armed forces personnel more effectively in line with their skills, while addressing many of the concerns raised by the AFPRB regarding the previous Pay 2000 structure.

We also employ remunerative measures to address issues of recruitment and retention, which have been mentioned, to ensure that our armed forces are manned to the required levels and with the requisite skills. Where there are particular issues in recruiting or retaining personnel, for which career management action by the services has had limited impact, we have the option of introducing targeted payments. Those payments can range from time-limited financial incentives, to longer-term recruitment and retention payments that recognise the particular challenges we face in retaining certain defence specialisms, such as military pilots or submariners.

Armed forces pay is subject to annual review by the Armed Forces Pay Review Body and the Senior Salaries Review Body, which are independent bodies tasked with providing the Government with recommendations on armed forces pay and charges for all military personnel, including the reserves. Their terms of reference require them to give consideration to the need of the services to recruit, retain and motivate suitably able and qualified people, taking account of the particular circumstances of service life.

As part of its review, the AFPRB undertakes a detailed and comprehensive programme of work each year, which consists of a package of both written and oral evidence from the Secretary of State for Defence, senior officials and service families federations, representatives of which I had the pleasure of meeting only yesterday. The AFPRB also undertakes a series of visits to military units to hear directly from service personnel about their views on pay. In 2017, the AFPRB met more than 2,300 service personnel and 154 spouses and partners during 186 discussion groups. It visited establishments both in the UK and overseas, including operational theatres and ships.

In addition to the evidence it receives from Government, the AFPRB also commissions its own independent analysis and research, including on the pay comparability of the armed forces within the wider UK economy. A programme of visits has just concluded and the Government look forward to receiving the AFPRB recommendations next year.

Turning to the 2017 report, which the hon. Member for Caerphilly mentioned, in January this year the AFPRB and SSRB recommended a 1% pay increase for service personnel, taking into account the evidence received and independent pay comparability data. Those recommendations took into account the need to recruit, retain and motivate high-calibre people; the Government’s policies on the public services; inflation targets and the public funds available for Defence. The AFPRB reported that it believed that a 1% increase in base pay would

“broadly maintain pay comparability with the civilian sector.”

We need to bear that in mind, because that is the competing area.

The Government accepted in full the recommendations of the AFPRB and SSRB. I take this opportunity to thank the members of both pay review bodies for their work; it is greatly respected.

Turning to future pay, on which we want to focus, as I stated previously the detail of the 2018-19 pay remit for the pay review bodies is still under consideration and will be agreed as part of the budget process. As the Secretary of State said this week at the Defence and Security Equipment International conference,

“we will have greater flexibility to respond to the recommendations of the Armed Forces Pay Review Body.”

I hope that answers directly the question posed by the hon. Member for Caerphilly. It is for the AFPRB to make its recommendations for 2018-19, and as I mentioned earlier its remit allows it to consider any specific recruitment and retention issues that may apply to the armed forces. I am sure it will consider some of the issues raised in this debate. Over the coming months, the Chief Secretary will write to all the pay review bodies setting out the Government’s pay policy. The Defence Secretary will submit formal evidence to the AFPRB, setting out any specific recruitment and retention issues.

The armed forces are among the most extraordinarily talented and hard-working people in our society. The Government are committed to ensuring that the overall package that they and other public sector workers receive reflects the value we place on their work. The last spending review budgeted for 1% average basic pay awards, but the Government recognise that in some parts of the public sector, particularly in areas of skills shortage, more flexibility may be required, as reflected in this week’s announcement. There does, however, need to be pay discipline over the coming years, to ensure the affordability of the public services and the sustainability of public sector employment.

I make a personal statement that I will do all I can, as Minister for Defence People and Veterans, to make sure that the remuneration package that our gallant armed forces personnel get is what they deserve.