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The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)
It is a pleasure to serve under your chairmanship, Mr McCabe, and to respond to this debate. I declare an interest, which is in the Register of Members’ Financial Interests: I am ex-Army and a lieutenant colonel in the reserves. I pay tribute to the other coastal towns that have been represented in the debate by the hon. Members for Portsmouth South (Stephen Morgan) and for Plymouth, Sutton and Devonport (Luke Pollard). I represent Bournemouth. I think the only Members present who do not represent coastal towns are the spokesmen for the SNP and the Labour party, the hon. Members for Glasgow South (Stewart Malcolm McDonald) and for Caerphilly (Wayne David). Nevertheless, the debate has been helpful in understanding and sharing concerns about public sector pay specific to the armed forces.
A number of Members have made perhaps a little bit of a political point, asking where the Conservative Members are in this important debate. I could say to the SNP spokesman that there are no SNP Back Benchers here either; he is his party’s sole representative. Many Members who would have been here today are participating in the armed forces parliamentary scheme. That is why they are absent.
I pay tribute to the hon. Member for Portsmouth South for calling this debate. Like the hon. Member for Plymouth, Sutton and Devonport, he represents a historical city that has a connection with all services, but specifically the senior service. We need to place the debate in context and against the backdrop of the nation’s finances, which ultimately are the question mark hanging over the size of the coffers that the Treasury has to provide financial support not only to the Ministry of Defence, but to all armed forces. I will not go into the politics of the situation, but when we came into government in 2010 there was a significant deficit. That deficit has been reduced by three quarters and the economy is now growing. The low taxes we are seeing are creating growth in our economy. We have record lows in unemployment, which is a good thing.
However, let us be honest: the election result and the debates during the campaign showed a nation concerned about our public sector and the length of time that the pay freeze has affected them. That concern was shared not only by those individuals affected, but by those who support our teachers, nurses, doctors, fire service, police, ambulance service and armed forces. Our armed forces do not have the voice of the unions, as has been mentioned a number of times. Members will be aware that the Government have been continuing the difficult task of balancing the books, but we must recognise that that ultimately means a period of pay restraint that has affected all public sector workers, including the armed forces.
We are aware, as we bring fiscal discipline back to the public finances, that that restraint has had an impact on the salaries of our people, but looking forward, the Government’s recent announcement of greater flexibility where required in public sector pay means that the independent pay review bodies can now make their own judgments on future pay awards, which will mitigate the impact. As the Chief Secretary to the Treasury said on Tuesday, our public sector workers, including those in the armed forces, are among the most extraordinarily talented and hard-working people in our society. I would go further: our public services are one of the things that define Britain across the world, by which I mean not just our blue light services, but our armed forces in particular. I echo other contributors by saying that professionalism is what defines us and gives us our reputation across the globe. It is important that we look after the people using equipment in operations. They make their mark and step forward to make a contribution with allies as a force for good in this very difficult and challenging age. They, like everyone else, deserve to have fulfilling jobs that are fairly rewarded. We have to take a balanced approach to public spending, dealing with our debts to keep our economy strong while also ensuring that we invest in our public services.
Wayne David
The Minister is hinting at something important, but I would like clarification. He talks about greater flexibility for the Armed Forces Pay Review Body. Is he suggesting that were that greater flexibility to produce a recommendation for a significant increase for the armed forces, the Government would accept that immediately, without question?
Mr Ellwood
I will not do what the Leader of the Opposition suggested when we came back to office after the general election, which was a knee-jerk removal of the 1% pay freeze. That was suggested in proposed amendments to the Queen’s Speech. I will work extremely hard to ensure that that ambition is fulfilled. If the hon. Member for Caerphilly recognises and reads what is happening this week, there is greater clarity to provide independence, to ensure that Departments are free to reflect what is required in this day and age.
The Government will continue to ensure that the overall package for public sector workers is fair to them and that we can deliver world-class public services that are affordable within the public finances and fair to taxpayers. The last spending review budgeted for 1% average basic pay awards, as has been mentioned a number of times, but that is in addition to progression pay for specific workforces, such as the armed forces, and that must not be forgotten. There will still be a need for pay discipline over the coming years to ensure the affordability of the public services and the sustainability of public sector employment. The Government recognise that in some parts of the public sector, particularly in areas of skill shortages—such as with engineers, as has been mentioned—more flexibility may be required to deliver those world-class public services, including in return for improvements to public sector productivity.
The detail of the 2018-19 remit for the Armed Forces Pay Review Body and the Senior Salaries Review Body—I stress that they are both independent bodies that provide advice to the Prime Minister and Secretary of State on pay and remuneration for the armed forces—is still under consideration and will be agreed as part of the Budget process. Recommendations from the AFPRB and SSRB are expected in the new year.
The Government, as I have emphasised, fully recognise the invaluable work undertaken by our gallant members of the armed forces, often in dangerous and difficult circumstances. A good example is the response of our personnel to the recent events in the Caribbean and Hurricane Irma. That is a timely example of the professionalism of our armed forces in a crisis. More than 1,100 armed forces personnel have been deployed so far under Operation Ruman, to provide relief to the people of the devastated Caribbean islands. A further 600 are en route on board HMS Ocean, which was mentioned earlier. I am sure all hon. Members will join me in paying tribute to the valuable work of our armed forces personnel.
The armed forces pay and wider remuneration package is designed to reward their unique service to our country and to support the recruitment and retention of personnel. The Government are of the view that the armed forces receive an attractive package of terms and conditions of service, which have not been mentioned so far and include a competitive salary with incremental pay scales. I stress that there are pay bands for privates, lieutenants and other ranks, such as captain. Each year they move up the band and their salary does not stay still. In fact, across the armed forces, the average individual pay rise has been about 1.5%.
Wayne David
As someone with a distinguished service record, does the Minister personally think that remuneration in the armed forces is adequate? What is his personal view?
Mr Ellwood
I am going to do everything I can to make sure that we do our best to have the remuneration package that our armed forces deserve, but we have to bear in mind the context and the backdrop, which I have spelled out. There has to be fiscal recognition of the place we are in, but I agree with the hon. Gentleman that we should all work as hard as possible to make the case and ensure that personnel get the salary they deserve and need.
There is also a non-contributory pension scheme, subsidised accommodation and food, and access to free medical and dental care. Service personnel also have access to an allowance package that provides financial assistance towards additional costs incurred as a result of their service. Throughout the pay restraint period, many personnel in the armed forces have received an annual increase in pay of well above 1%.
During the period of pay restraint, armed forces pay has not stood still. In 2016 we introduced a major revision to armed forces pay in the form of the Pay 16 pay model, which was designed to simplify an individual’s pay journey, enabling them more accurately to predict their future career earnings. That has also rebalanced pay to reward armed forces personnel more effectively in line with their skills, while addressing many of the concerns raised by the AFPRB regarding the previous Pay 2000 structure.
We also employ remunerative measures to address issues of recruitment and retention, which have been mentioned, to ensure that our armed forces are manned to the required levels and with the requisite skills. Where there are particular issues in recruiting or retaining personnel, for which career management action by the services has had limited impact, we have the option of introducing targeted payments. Those payments can range from time-limited financial incentives, to longer-term recruitment and retention payments that recognise the particular challenges we face in retaining certain defence specialisms, such as military pilots or submariners.
Armed forces pay is subject to annual review by the Armed Forces Pay Review Body and the Senior Salaries Review Body, which are independent bodies tasked with providing the Government with recommendations on armed forces pay and charges for all military personnel, including the reserves. Their terms of reference require them to give consideration to the need of the services to recruit, retain and motivate suitably able and qualified people, taking account of the particular circumstances of service life.
As part of its review, the AFPRB undertakes a detailed and comprehensive programme of work each year, which consists of a package of both written and oral evidence from the Secretary of State for Defence, senior officials and service families federations, representatives of which I had the pleasure of meeting only yesterday. The AFPRB also undertakes a series of visits to military units to hear directly from service personnel about their views on pay. In 2017, the AFPRB met more than 2,300 service personnel and 154 spouses and partners during 186 discussion groups. It visited establishments both in the UK and overseas, including operational theatres and ships.
In addition to the evidence it receives from Government, the AFPRB also commissions its own independent analysis and research, including on the pay comparability of the armed forces within the wider UK economy. A programme of visits has just concluded and the Government look forward to receiving the AFPRB recommendations next year.
Turning to the 2017 report, which the hon. Member for Caerphilly mentioned, in January this year the AFPRB and SSRB recommended a 1% pay increase for service personnel, taking into account the evidence received and independent pay comparability data. Those recommendations took into account the need to recruit, retain and motivate high-calibre people; the Government’s policies on the public services; inflation targets and the public funds available for Defence. The AFPRB reported that it believed that a 1% increase in base pay would
“broadly maintain pay comparability with the civilian sector.”
We need to bear that in mind, because that is the competing area.
The Government accepted in full the recommendations of the AFPRB and SSRB. I take this opportunity to thank the members of both pay review bodies for their work; it is greatly respected.
Turning to future pay, on which we want to focus, as I stated previously the detail of the 2018-19 pay remit for the pay review bodies is still under consideration and will be agreed as part of the budget process. As the Secretary of State said this week at the Defence and Security Equipment International conference,
“we will have greater flexibility to respond to the recommendations of the Armed Forces Pay Review Body.”
I hope that answers directly the question posed by the hon. Member for Caerphilly. It is for the AFPRB to make its recommendations for 2018-19, and as I mentioned earlier its remit allows it to consider any specific recruitment and retention issues that may apply to the armed forces. I am sure it will consider some of the issues raised in this debate. Over the coming months, the Chief Secretary will write to all the pay review bodies setting out the Government’s pay policy. The Defence Secretary will submit formal evidence to the AFPRB, setting out any specific recruitment and retention issues.
The armed forces are among the most extraordinarily talented and hard-working people in our society. The Government are committed to ensuring that the overall package that they and other public sector workers receive reflects the value we place on their work. The last spending review budgeted for 1% average basic pay awards, but the Government recognise that in some parts of the public sector, particularly in areas of skills shortage, more flexibility may be required, as reflected in this week’s announcement. There does, however, need to be pay discipline over the coming years, to ensure the affordability of the public services and the sustainability of public sector employment.
I make a personal statement that I will do all I can, as Minister for Defence People and Veterans, to make sure that the remuneration package that our gallant armed forces personnel get is what they deserve.