BAOR (Local Overseas Allowances) (Hansard, 4 July 1979)

§ Mr. Pym

Local overseas allowances—LOA—are paid in Germany and other overseas stations to enable Service men and women to maintain their standard of living wherever they may be posted. In 1977 the last Government placed a moratorium on changes in the real value of LOA because they were aware that reductions in certain of the rates were due and that to impose these at a time when the pay of Service men had been allowed to fall so far behind under their incomes policy would have had a disastrous effect on morale. At the same time they ordered an examination of the basis for calculating the allowance. Following their undertaking last year to restore pay to its proper level in stages, they announced that a review of the allowances in Germany would take place at the beginning of 1979 and that decicisions on the future of the allowances would be taken in April.

The result of the prolonged moratorium has been that rates of LOA in many overseas stations, including Germany, have become increasingly unrealistic, with many Service men being over-compensated and many others under-compensated, for the extra living expenses which they necessarily incur.

Having fully restored the pay of the Forces the Government have now decided to introduce the new criteria which have been worked out as a result of the re-examination of the LOA system. The effect will be to distribute the allowance more fairly and to take more account of the actual needs of those—especially married men accompanied by their families—who are posted overseas. I have placed a brief examination of the new system in the Library of the House. The changeover to the new rates in Germany will be made gradually, with staging on 1 October and 1 January next year.

Meanwhile, from 1 July, other changes in the rules for the payment of LOA are being introduced which will benefit significantly all those who move temporarily from an overseas station for short or emergency tours in the United Kingdom and who now suffer an immediate loss of LOA. In future they will be allowed 600W to keep in full their allowance for 20 days after posting or 30 days if they have left a family behind, to help them meet their continuing long-term commitments at their overseas station.

Also from 1 July, the eligibility for "sea-going" rates of LOA will be extended to include the companies of Her Majesty's Ships in Northern European waters who hitherto have received no compensation whatever for the additional expenses which they incur when visiting Northern European ports.

Reviews, also using the new system, will be resumed on other overseas stations starting in September. It is not possible to forecast the outcome of these at this stage.

The Government believe that the new system of calculating LOA, together with the two important extra benefits to which I have referred, will be generally welcomed by the Forces throughout the world, even though in some rates it will involve reductions.