Select Committee on Defence Second Report


IV RETAINING THE RIGHT PEOPLE

Providing a rewarding career

PAY

84. The Armed Forces' Pay Review Body (AFPRB) has been responsible since 1971 for providing independent advice and making recommendations to government on rates of pay and charges for members of the Armed Forces. Their recommendations aim to ensure that military pay is broadly comparable with civilian rates, taking account of the difference between Service and civilian life. These differences are reflected in the so-called 'X-factor': which recognises 'the relative disadvantage of conditions of service experienced by members of the Armed Forces compared to those in the civilian sector'. The X-factor was increased from 12 to 13 per cent in the 2000 pay award.[158]

85. The MoD believes that 'Service personnel generally believe that their pay is fair', that they have confidence in the AFPRB and that 'it is predominantly quality of life factors which are influencing decisions to leave the Services rather than pay'.[159] The AFPRB itself agrees that 'quality of life issues continue to be, if anything, more important than pay in attracting and especially retaining well trained and motivated Service personnel'.[160] In our own informal discussions with Service personnel, pay has not been raised as one of the key areas of dissatisfaction. However, financial incentives are one of the most important levers for any employer, and the Services need to use all the levers at their disposal to encourage the personnel they need to remain in the Armed Forces.

86. The AFPRB recommended in their 2000 report an increase in the basic rates of military pay of 3.3 per cent for most ranks and of 3.8 per cent for ranks where pay compared less favourably with civilian equivalents and retention was poorer (privates, lance corporals, lieutenants and captains). The 2000 award was paid in full and without staging, as was the case in 1999. The AFPRB welcome this approach and say 'We cannot over-emphasise the detrimental effect on morale in the Armed Forces caused by staging' which they believed had occurred in the past due to short-term economic expediency on the part of governments rather than to doubts about the Body's actual recommendations.[161] The AFPRB report for 2001 was published on 9 February and recommended a 3.7% increase in basic pay for all ranks.[162] The recommendations are again to be accepted in full and will be implemented from 1 April 2001.[163]

87. More fundamentally, the MoD has developed a new pay system known as Pay 2000, in collaboration with the AFPRB and following recommendations made in the Bett Report in 1995.[164] It will introduce incremental pay for other ranks as opposed to the current system of spot rates. The MoD describes it as a—

    ... more modern, flexible approach to Service personnel pay .... intended to motivate personnel and provide greater incentive to increase experience and qualifications—a feature long sought by Service personnel themselves.[165]

It will link pay more closely with job weight and content so that the more highly skilled and qualified are more appropriately remunerated. The incremental system will resolve some of the negative effects which have arisen in the past where individuals with 10 years in a rank received the same pay as someone newly promoted.[166] The system was due to be introduced in April 2000 but it 'proved to be a more complex activity than originally anticipated'[167] and its introduction has been delayed until April 2001 while full testing takes place. DCDS (Personnel) told us that an internal public relations process is going on in the Services to highlight the benefits of the system to personnel and that its introduction will ensure individuals are aware of the direct advantages to them.[168] It has to be said, however, that attempts to improve motivation amongst public sector personnel by introducing new pay schemes have not been universally successful. Service personnel have recently been given details of how Pay 2000 will affect them on an individual basis. Anecdotal evidence suggests that, certainly in the Royal Navy, this has not been well received by some personnel.[169] The MoD told us that the new system will be evaluated within two years to assess whether the anticipated benefits have been delivered.[170] It is unfortunate that the introduction of Pay 2000 was delayed by a year, thus delaying its benefits. We hope for a successful introduction in April 2001 and expect the MoD to be able to demonstrate through the promised evaluation that the new system is having a positive effect on morale and on retention rates.

88. We have discussed some of the short-term measures the Services are using to address shortages in specific skills areas. Better pay is an obvious means of persuading people to stay in the Services. Extra remuneration in the form of Additional Pay is already used to counter market pressures and is paid to such groups as pilots, hydrographers and submariners. A revised and simplified system is planned to come into effect after Pay 2000 has been implemented.[171] MoD is also carrying out a review of further measures 'to tackle serious short-term retention problems for small groups to prevent manning crises ... by paying retention incentives'. The MOD see this as 'a measure of last resort' and say that its precise mechanisms have not yet been determined.[172] The problems which bonuses are meant to tackle are one area where the 'tolerable variation' of which the AFOPS speaks must be used to ensure that individual services are not excessively restricted in their ability to tackle specific problems. But there does need to be a strategic overview as well. The point was made to us during our informal visits that bonuses cause as many problems as they solve by creating dissatisfaction amongst those who do not qualify. There are related problems with the various allowances paid to personnel, which appear to create perverse incentives in some cases. As we said in our first Report of this Parliament—

    ... we recommend that the MoD consider whether there is any room for further simplification of the allowance system to make it correlate more closely with the troops' sense of what is a hard posting.[173]

The AFPRB too have reservations 'about the use of various forms of bonus payments over the longer term because of their arbitrary nature'. They regret that 'there does not appear to be a consistent policy on which is the best tool to tackle a particular set of circumstances' and have asked the MoD to advise them on its strategic thinking on the use of bonuses.[174] The MoD needs to be flexible but also more strategic in its approach if it is going to use additions to pay as a retention tool, and in particular needs to assess both the negative and positive effects of bonuses.

89. Overall, pay does not seem to be a key issue in the minds of personnel when making the choice of whether to stay in or leave the service. No doubt the AFPRB does, to a large extent, help to ensure that pay is perceived to be 'fair'. However so long as it is not perceived to be positively generous, it will have a broadly neutral, rather than positive, effect on recruitment and retention.

TRAINING AND ACCREDITED QUALIFICATIONS

90. We have highlighted the AFOPS's aim of providing the foundation of a second career for Service personnel. If the Services are looking for retention incentives, this is clearly an area which can be developed. The role and structure of the Armed Forces mean that for the majority of personnel the Services will not be a whole-life career and they will expect, after varying lengths of service, to move back to the civilian world. For other ranks who do not leave at an earlier point, 22 years is the maximum service career unless they are commissioned or selected for continuance. It is right that the Services should accept this reality and approach it in such a way as to encourage people to join the Services as a good career move and to stay on for a period of time which will serve the interests of both the individual and the Armed Forces. However, there is obviously a balance to be struck between using the incentive of preparation for a second career as a productive means of attracting and retaining personnel and preventing it becoming a 'push out' factor where the pay and other benefits of civilian careers lure people out of the Services too quickly.

91. The first priority of Service training must be equipping personnel to perform their military functions. A Defence Training Review was set up by the previous Secretary of State and began its work in September 1999. It is described as 'a fundamental and searching review of education and training across the Department to consider how best it can meet the professional requirements and personal development needs of our Armed Forces and civilian staff into the 21st century.'[175] It is intended that it will report in the spring. The key areas are:

  • the policy framework set by the SDR, including the need for joint and multinational operations;

  • changing social trends and the effects this will have in producing a different type of young person for the Armed Forces to train;

  • the implications for defence training of the government's lifelong learning policy;

  • the challenges presented by developing technology and the need for the Armed Forces to operate using modern defence systems.[176]

The review will also look at the amount of training which personnel receive at different points in their careers and how this correlates with the competencies needed for their career progression; the way training is delivered, and whether more training can be provided through electronic or distance-learning to reduce time spent away from home on courses.[177]

92. In addition to the specific training which personnel require to perform and develop their military function, there is the question of training which encourages personal development and which prepares individuals for a civilian career when they leave the Services. The MoD told us that—

    The need to gain nationally recognised qualifications is often a cause for personnel to leave the Services earlier than might otherwise be the case. The Review will, therefore, seek to ensure that all in-house training can be validated and accredited to national standards to provide service personnel with recognised qualifications for when they return to civilian life.[178]

We have already commented that one of the cultural changes which make the Services less attractive as a career is that young people do not wish to be tied into a job for a long period. The retention strategies of the Services will have to face up to this reality—it provides a complex and sometimes conflicting set of challenges. This view was echoed by Mr David Fisher, the Director of the Defence Training Review—

    .. people do not necessarily expect to have a job for life, they want to move around more freely ... so that underlines the importance of having marketable skills ... we do see it as our responsibility to train and develop people so that when they go on to other jobs they have transferable skills.[179]

The opportunity to gain these marketable skills is a significant recruitment and retention lever for the Services. But it may also demand a more radical approach to career patterns. The Director of the Defence Training Review told us that, having recruited young people, the need then is—

    ... to persuade them that they have a career which has lots of options, lots of variety, lots of chances to make themselves better people and that is where the through-life training and education is so important.[180]

93. The Defence Training Review is therefore looking at ways to improve accreditation systems so that qualifications obtained in the Services are more readily transferable to the civilian sector to ensure that 'every single service person when they leave the service takes credit into the other workplace for what they have learned'.[181] The Head of the Review team was certain that the vast majority of service training was capable of being accredited in some way. This was more obviously the case for engineering and technical skills but more difficult for the traditional combat or 'teeth' arms which are much more essentially military in nature. The Adjutant General agreed that the infantry is an area with the least transferable skills, but even here National Vocational Qualifications (NVQs) have the capacity to recognise leadership and management skills which many infantry personnel develop and this is being pursued.[182]

94. The Review Team believed that the crucial elements in taking transferable qualifications forward in the Services were that it should be done on a defence-wide, rather than a single Service basis, and that the MoD should use its 'muscle' in this area to better effect: it is the biggest user of training and education in the country, with a budget of over £3 billion. This is an area where the 'overarching' approach to personnel is likely to be very beneficial. The MoD should therefore be able to negotiate arrangements with the private sector which better accommodate the needs of the Services and their personnel.[183] We hope to see evidence of the MoD using its market position in training to secure better services more economically in the future. But private sector training cannot be a direct substitute for that provided within the Services.

95. Linked to this whole area of personal development and obtaining marketable qualifications is the Learning Forces Initiative. The initiative was introduced as part of the Strategic Defence Review with the intention of introducing 'a range of measures for the provision of better opportunities for personal development linked to academic, vocational and professional qualifications'.[184] The main aims of the initiative are:

  • competence in key skills, related to national targets

  • opportunity to gain recognised and transferable qualifications

  • funding for learning activities during and after service

  • provision of Personal Development Records

  • access to information, advice and modern learning facilities

  • returning the individual to the civilian workplace with 'added value'.

The associated Learning Credits scheme allows personnel to reclaim up to £175 a year for expenses on educational self-development. This has resulted in a 34 per cent increase in take-up of educational opportunities in the Royal Navy and now involves 2,650 people. In the Army, which started from a very low base point, take-up has increased by 368 per cent with 2,098 people now pursuing courses. The RAF has always had a high take-up rate of educational opportunities and 14 per cent of RAF personnel, 7,619 people, are engaged in this scheme.[185]

We believe the Learning Credits scheme should be more generously funded. We recommend a phased increase in the sums available up to a target of £500 per person per year. A significant addition to the Learning Credits scheme is the enhanced scheme, which makes up to £2,000 a year available to personnel for three years and continues to be available for ten years after they have left the Services.[186] This seems an excellent idea, although the precise details of how it will work are not yet clear and we look forward to receiving further information in response to this Report.

96. But the figures about take-up of this scheme also point once again to the risks of going too far in the direction of single solutions for all three Services. In general, the RAF has always provided its people with skills which are highly applicable to civilian work opportunities. Yet the RAF is attracting some two-thirds of the funding of this scheme. Here again, the overarching aims of the strategy need to be weighed against single-Service specific needs. It is parts of the Army, above all, who need to be developing this aspect of their training—and it must be adequately funded in doing so.

97. During our informal visits, we asked some of the personnel we met what they thought about the new training opportunities available to them. Some felt that the range of opportunities and the money to support these was not sufficiently publicised. Officers we spoke to welcomed them in principle but felt this was an area where heavy commitments meant that people are not encouraged to take up additional educational opportunities if pursuing them would result in them needing time away from their posts. The opportunity to work towards further qualifications would be an incentive to stay in the Services, but a sympathetic attitude from commanding officers is necessary: there was a strong feeling that continuous professional development should be part of the working day and that personnel should not be expected to do it all in their free time. Other ranks had similar views: that the opportunity to gain qualifications such as NVQs was one of the good things about Service life, but that manning shortages and operational deployments impacted on opportunities to do this.

98. Today's employment market is one with increasing emphasis on qualifications, and young people and their parents are well aware of the need to follow a path which will provide the best opportunity for career development. This is evidenced by the much greater numbers of young people opting for tertiary education: 68 per cent in 1999 compared with 45 per cent in 1980.[187] The Armed Forces have to move with this trend and offer personal development and the opportunity to obtain marketable skills both to attract the right calibre of young people into the Services and to retain them for a reasonable period of time. We hope that the findings of the Defence Training Review will fully recognise the value of transferable qualifications and that it will recommend appropriate changes in Armed Forces training and career patterns to reflect this. The funds available should be focused on those personnel whose military jobs do not automatically provide valuable civilian qualifications. Commanding officers must accept such training as part of a Service man or woman's career and not simply an add-on which they can undertake in their free time.

99. Good training is a recruitment incentive—but it will be by convincing people that the longer they stay in the Services the better trained they will be that retention can be improved. The Services all have some way to go yet before they approach to the best available in the private (and public) sectors in terms of creating a genuine lifelong learning environment, in which self-development is an integral part of manpower resource planning.


158  AFPRB Report 2000, paras 1, 69, 83; Ev p 42, para 22.3 Back

159  Ev p 42, paras 22.1 and 22.4 Back

160  AFPRB Report 2000, para 4 Back

161  AFPRB Report 2000, para 19; Ev p 42, para 22.5 Back

162  Armed Forces' Pay Review Body Report 2001, Cm 4993, February 2001 Back

163  HC Deb, 9 February 2001, c 707w Back

164  Independent Review of the Armed Forces Manpower, Career and Remuneration Systems : Managing People in Tomorrow's Armed Forces, chaired by Mr Michael Bett CBE, March 1995 Back

165  Ev p 42, para 23.1 Back

166  Ev p 43, paras 24.1-24.2; see also Q 361 Back

167  Ev p 42, para 23.1 Back

168  QQ 764-766 Back

169  HC Deb, 12 February 2001, c 16 Back

170  Q 766 Back

171  AFPRB Report 2000, paras 86-88 Back

172  Ev p 43, para 24.2-24.3 Back

173  First Report, Session 1997-98, Peace Support Operations in Bosnia and Herzegovina, HC 403, para 26 Back

174  AFPRB Report 2000, paras 118-119 Back

175  MoD Press Notice 301/99, 22 July 1999 Back

176  Ev p 44, para 28.1 Back

177  Ev p 44, para 28.3-28.4 Back

178  Ev p 44, para 28.4 Back

179  QQ 381, 403 Back

180  Q 389 Back

181  Q 372 Back

182  QQ 298, 376, 379 Back

183  Q 399 Back

184  SDR Supporting Essay 9, para 22 Back

185  Q 400 Back

186  QQ 400, 409 Back

187  Q 691 Back


 
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Prepared 23 February 2001