Local Overseas Allowance (Hansard, 26 November 1985)

§ 1. Mr. Terry Lewis
asked the Secretary of State for Defence what representations his Department has received concerning Her Majesty's forces local overseas allowance; and if he will make a statement.

§ 5. Mr. Speller
asked the Secretary of State for Defence if he is satisfied with the present levels of local overseas allowances for British forces in Germany; and if he will make a statement.

§ The Minister of State for the Armed Forces (Mr. John Stanley)
A number of representations were received from hon. Members and from service men in Germany following the reduction in local overseas allowance in Germany earlier this year. The reasons for this reduction were explained fully by my hon. Friend the Parliamentary Under-Secretary of State for Defence Procurement when answering the debate on the Adjournment on 20 May.
I am satisfied that the LOA system represents an extremely important financial protection for service men when they are asked to serve in countries overseas that have a higher inflation rate than that in the United Kingdom.

§ Mr. Lewis
I am grateful for the right hon. Gentleman's answer. The reduction in the local overseas allowance for BAOR troops has a certain pin-stripe logic in Whitehall, but it means a pay cut for the troops. I have discussed this with the troops. They tell me that single men in particular have suffered a pay cut of between £20 and £30 a month. [Interruption.] Conservative Members do not like having to listen to this, but I am afraid that they will have to. Will the right hon. Gentleman address himself to that matter?

§ Mr. Stanley
I must say to the hon. Gentleman and to those right hon. and hon. Members on the Opposition Front Bench who support him that the pin-stripe logic to 730 which he referred commended itself to the previous Administration. They operated the same LOA system as we operate. Where the differences in the cost of living narrow between the United Kingdom and an overseas country, the LOA is bound to be reduced. I ask the House to bear in mind that our service men in Germany, following the Government's adherence—unlike our predecessors—to the provisions of the armed forces pay review, have had a pay increase this year in excess of 7 per cent., although they are living in a country which enjoys an inflation rate of less than 3 per cent.

§ Mr. Speller
While I understand the reasons for the change in the LOA, its effects upon BAOR are becoming quite frightening. A number of young, highly-qualified technical soldiers have given notice that they wish to leave the Army. These soldiers may or may not accept the argument about a lower rate of inflation, but their greatest argument relates to transportation back to the United Kingdom, since transport charges are a complete "fix" under the cartel.

§ Mr. Stanley
I am glad to be able to tell my hon. Friend and the House that in the last few days we have announced an important concession. It will enable all service men to have the costs of the third school visit of their first child, for which at present they have to pay, met out of public funds. That concession will apply as from the school Christmas holidays. It has been widely welcomed in Germany.

§ Mr. McNamara
As it costs £2.8 million to train a fast-jet pilot for the central front, and as we are seeking to save only £17 million on the local overseas allowance, only eight pilots have to leave the Royal Air Force for all the savings that the Ministry of Defence hopes to make to be lost. The commercial airlines are recruiting vigorously among jet-trained pilots. Is this not another example of the Government being penny wise and pound foolish? They are seeking to make short-term cuts without considering the long-term interests of the Royal Air Force.

§ Mr. Stanley
The hon. Gentleman is confusing two completely separate issues. He rightly referred to the very considerable cost of training a fast-jet pilot. However, the relatively small adjustments of the LOA at the margin will not have a material effect upon the ability of the civil airlines to recruit trained RAF pilots.

§ Mr. Conway
Most people understand the reasoning behind the change, but I suspect that there would have been a great deal more support for it had there been an elongated introductory time scale to give service men a chance to adjust. Will my right hon. Friend assure the House that this is not a false dawn for savings and that we are not losing the savings involved in this change to those who are opting for unaccompanied tours and the greater financial benefit that that involves?

§ Mr. Stanley
The reduction in LOA in Germany had some phasing in, which was designed to get over the particular problem to which my hon. Friend refers. I remind him that it is important to ensure that normally there is immediate application of LOA changes, because a large number of them are upwards, and we want to give the service men the benefit of the LOA increases, such as those that have recently taken place in Cyprus, Italy, Sardinia, Gibraltar, Portugal, the United States, Denmark Belize, Norway and Hong Kong.