HL Deb 06 June 1985 vol 464 cc937-8WA
Lord Mulley

asked Her Majesty's Government:

On what basis they have concluded that the standard of living in Western Germany has declined substantially as compared to that of the United Kingdom since 1981 so as to justify large reductions in the local overseas allowances paid to HM Forces in Western Germany; and what are the consequences for officers and other ranks serving in BAOR and RAF Germany.

The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne)

The purpose of the local overseas allowance is to supplement the pay of servicemen in those areas where their expenditure on items of day-to-day living is necessary higher than in the United Kingdom. It is a compensatory cost of living allowance and is therefore free of income tax. It is assessed separately for each overseas theatre. The approach to and methods used in each individual assessment are always the same, irrespective of location, and rates will differ as a reflection of local prices and conditions. They will also vary according to the individual's marital status and rank.

A new cycle of LOA reviews began in October 1984 based on the latest data collected from a survey of expenditure by service personnel in the United Kingdom. The new cycle has resulted in some substantial increases in LOA, with exceptions in some cases for single personnel. About 6,000 have benefited from the reviews in Cyprus, Italy, Sardinia, Gibraltar, Portugal, the United States, Denmark, Belize, Norway and Hong Kong. However, in the case of Germany, a review in March based on the same criteria used for reviews in those other countries concluded that LOA should be reduced.

The review in Germany necessitated the employment of two full LOA teams, which undertook a detailed survey during the whole of March. In addition to the armed forces representatives on the team, observers from the British Army of the Rhine and RAF Germany were attached to the team throughout the entire review process. Prices were taken at many locations—in NAAFI and German shops, hotels, garages, messes and places of entertainment. Representatives of service personnel stationed in Germany and their wives were also interviewed, and the findings of the review were considered most carefully before the reductions were announced.

Inflation in Germany continues to remain lower than in the United Kingdom, and the cost of most items for day-to-day living is the same or less in Germany. In addition, the benefits of duty free prices must be taken into account.

The conclusions of the review were that at the average ranks of Corporal and Captain (Army), single and married with one child, reductions in LOA should take place as follows:

£ per day
Single Corporal Single Captain Married Corporal with 1 child Married Captain with 1 child
(a) Current rate 1.97 3.34 5.36 6.43
(b) Review rate 0.70 1.68 4.94 5.43
(c) Difference (b-a) -1.27 -1.66 -0.32 -0.90

Rates of LOA at other rank levels are projected from the above rates and are varied according to the number of children for married families.

We fully understand that many servicemen and women have commitments which they cannot quickly reduce, and although it is made clear that LOA is not intended for the purchase of capital goods, the implementation of the recent LOA reductions has been deferred until 1st August. This is two months later than would apply under the normal rules for this allowance. Increases elsewhere in the world have been put into effect at the beginning of the month following the LOA review.