§ Mr. Robert Atkinsasked the Secretary of State for Defence if he will make a statement on local overseas allowance payable to Service men in Germany.
§ Mr. BlakerLocal overseas allowance is a tax-free compensatory allowance paid to Service men and women overseas in addition to their pay to meet the essential extra cost to them of serving abroad rather than in the United Kingdom. This extra cost is bound to change, for example in response to different price movements at home and abroad, so rates of LOA must be kept under review. A recent review in Germany has shown clearly that LOA rates there are now too high. Because evidence then available already indicated that a reduction would be necessary the Forces in Germany were warned in February that reductions should be expected from 1st April 1982. The Forces in Germany are now being told that reductions are to be made, which range from 10 per cent. to 27 per cent. of the existing allowances. But because it would be unfair to Service men and women to impose a sudden and significant cut in their allowances, the reductions for those most affected will be phased over nine months, from April 1982 to January 1983. There will be a further review later in the the year.