Memorandum from The Armed Forces' Pay
Review Body (September 2000)
1. The Armed Forces' Pay Review Body (AFPRB)
was established in 1971 to provide independent advice to the Prime
Minister and the Secretary of State for Defence on remuneration
and charges for members of the Naval, Military and Air Forces
of the Crown. Our remit covers Service personnel up to and including
the rank of Brigadier (one Star) and equivalent. Our full terms
of reference and current membership are at Annex A.
2. Our terms of reference require us, inter
alia, to have regard to the need to recruit, retain and motivate
the required Service personnel and the need for the pay of the
Armed Forces to be broadly comparable with pay levels in civilian
life. In delivering our terms of reference we have particular
regard also to wider contextual issues such as the demands placed
upon Service personnel and the resulting impact on their quality
3. The following information is provided
to the Defence Committee in support of its inquiry into Armed
Forces personnel issues. It reflects our deliberations and conclusions
as set out in recent annual reports.
4. Our recommendations are based on evidence
from a number of sources. We receive written and oral evidence
on a range of issues from the Ministry of Defence (MoD) and from
the individual Services. We undertake an extensive visits programme
in the UK and abroad to meet serving men and women and their spouses,
to hear at first hand their views on pay and related issues and
to see their living and working conditions. In the course of this
year's visits our discussion groups covered around 3,000 personnel
(in approximately 200 groups) at all ranks. Finally, we commission
independent research into a range of issues including pay comparability,
pensions and accommodation.
5. Data provided through MoD for our 2000
indicated that recruitment levels have improved in recent years
but that significant variations remain between Other Ranks and
Officers and between the three Services. We were told also that
there had been a net outflow of some 3,000 trained personnel in
the year to April 1999. This provided an indication of the retention
problem. As we stated in our 2000 report, the loss of trained,
experienced personnel in whom significant investment has been
made, had serious implications for the maintenance of operational
capability. We considered that the most important single issue
then affecting retention was overstretch. This concern significantly
influenced our recommendations to increase the Longer Separated
Service Allowance (LSSA) and Longer Service at Sea Bonus (LSSB).
We expressed the view that, while pay must play its part in the
recruitment and retention process, there were many non-pay issues,
particularly those affecting quality of life, which also had an
6. In our recent reports we have commented
on a number of these non-pay issues. Overstretch has led to more
frequent operational deployments which have impacted on the ability
to take leave and the time available for training and preparing
for promotion. Although operational commitments appear to have
peaked, we have learned on our visits that they continue at a
high level. In our discussions with personnel and spouses we are
often told that quality of life has been adversely affected by
time spent away from families and the impact of Service Life on
family members particularly spouses' careers and children's education.
Our visits programme this year highlighted single personnel's
perception that they were also affected by quality of life factors.
Personnel also highlighted quality of life issues such as: increased
workloads; excessive working hours; poor career and promotion
prospects; and below-standard accommodation. The above factors
impact on retention and raise expectations that increased pay
should compensate for reduced quality of life. Servicemen and
women need to be adequately and fairly remunerated but any remuneration
strategy will be undermined if they and their families are seriously
discontented with their quality of life.
7. The Strategic Defence Review (July 1998)
attached importance to improvements on "people issues"
many of which have yet to be delivered. Further delays in implementing
these and other major changes, such as Pay 2000, may have affected
retention of personnel. We consider that it is essential for MoD
to address these non-pay issues as a matter of urgency.
8. Under our terms of reference we seek
to make recommendations that maintain broad comparability with
pay levels in civilian life. Most Service posts do not have a
direct civilian equivalent. We therefore base our analysis of
comparability on job weight. This process involves judgement and
is neither simple nor mechanistic. Each year MoD provides us with
the results of job evaluation it has carried out using a propriety
job evaluation system developed by external consultants. These
results, covering representative jobs at each rank, enable us
to compare the remuneration of Service personnel with that of
civilians held on our comprehensive pay database. A more detailed
explanation of the process of pay comparison, including the steps
we have taken to quality assure the process, is at Annex B.
The pay comparability data led us to recommend differential, and
higher, pay awards for Privates, Lance Corporals, Lieutenants
and Captains (and their equivalents) in our 2000 report.
9. As part of the process of applying broad
pay comparability, we take account of deferred pay represented
by pension provision although we do not recommend on the scheme
itself. The Armed Forces Pension Scheme (AFPS) provides for early
and fast accrual of benefits compared with those in the civilian
sector. We therefore apply abatement to comparator salaries (currently
set at 7%). We review comparative pension benefits every five
years and will next report on them in 2001. Service personnel
have commented to us during our visits that pensions considerations
are increasingly becoming an issue.
10. We adjust the military salary to recognise,
in our judgement, the relative disadvantage of conditions of service
experienced by the Armed Forces compared to those in the civilian
sectorknown as the X-factor. In our last report we considered
that there had been a change in the relative disadvantage and
recommended an increase of 1% bringing the level of the X-factor
11. Where market forces significantly outstrip
pay in the Armed Forces for specific groups, such as in the telecommunications
industry, we have agreed to proposals from MoD for targeted payments
(either through additional pay or financial retention incentives)
to aid retention. We have reservations, however, about the use
of various forms of bonus payments over the longer term because
of their arbitrary nature.
12. Our approach to accommodation and other
charges also aims to ensure that the charges levied are broadly
similar to those paid by comparable civilian households. We apply
an abatement to accommodation charges to reflect lack of choice
and restrictions on the Armed Forces. Whilst we have acknowledged
the rising cost of civilian accommodation we have been reluctant
to match these increases until the promised improvements to Service
accommodation are implemented. Our concerns about accommodation
standards have been reflected in our recommendations on charges.
For example, we have not recommended an increase to the charges
for the lowest grade of single living accommodation in our last
three reports. We have commented that improvements to accommodation
standards clearly aid morale and retention and directly affect
the quality of life of Service personnel. During discussion groups
this year continued dissatisfaction with accommodation standards
remained a significant issue for Service personnel and was directly
linked with retention. We are reviewing the basis for accommodation
charges as part of the forthcoming pay round.
13. We report separately each year on recommendations
for the Defence Medical Services (DMS). In recent years we have
made recommendations which have sought to reflect NHS pay developments
and to address manpower and morale problems in the DMS. Evidence
submitted for our 2000 report indicated that these had had limited
impact, particularly on retention. We commented that morale was
low and that there was uncertainty about the future of the DMS.
We expressed doubt in our report that current and future demands
placed on the DMS could be met without the introduction of further
measures related to Service organisation and to the improvement
of retention rates.
14. Since 1995, MoD has kept us up to date
with developments on a new pay structure for the Armed Forces
arising from the Independent Review conducted by Sir Michael Bett.
We are informed that the new structure (now scheduled for introduction
in April 2001) will introduce incremental pay for Other Ranks
(and Brigadiers) and align pay more closely with measured job
weight. The delay in introducing the new pay arrangements has
allowed further improvements in the job evaluation process, a
review of the relationship between rank and job weight, and a
review of additional pay, bonuses and incentives. We will be assessing
further evidence from MoD on developments under Pay 2000 in the
coming months and making recommendations on pay levels for the
new structure in our 2001 report.
15. We completed our 2000 visit programme
at the end of July and will shortly begin considering written
and oral evidence for the forthcoming pay round. We will submit
or report to the Prime Minister and to the Secretary of State
for Defence before the end of January 2001.
1 p 235. Back
Armed Forces' Pay Review Body, Twenty-Ninth Report 2000, Cm 4565,
The Stationery Office, February 2000. Back
p 235. Back
Independent Review of the Armed Forces' Manpower, Career and
Remuneration Structures-Managing People in Tomorrow's Armed Forces.
HMSO 1995. Back