The Minister for the Armed Forces (Mark Lancaster)
I am grateful to the Opposition for giving me the opportunity to discuss armed forces pay. The motion reflects a shared sense on both sides of House of the value our armed forces bring to the nation. It reflects an appreciation of their unparalleled bravery and enormous efforts all around the globe—whether fighting Daesh in the middle east, providing vital reassurance to our Estonian allies against Russia aggression, or bringing essential humanitarian aid to those whose lives have been devastated by hurricanes in the Caribbean. Lastly, it reflects a desire that those who put their lives on the line should receive the reward that is their due. At the same time, the motion presents but a partial picture of a complex issue, so I welcome this opportunity to correct some the misconceptions and provide some of the missing context.
Nick Smith (Blaenau Gwent) (Lab)
Defence spend as a percentage of GDP in the final year of the previous Labour Government was 2.5%. Will the Minister tell me what it is now?
Mark Lancaster
Off the top of my head, I would say that it is just over 2%.
Mark Lancaster
I was going to say 2.14%, but it is 2.16%.
First, there is the broader fiscal context. We should not forget why pay restraint was imposed in the first place back in 2010. It was a consequence of a large inherited economic deficit. The whole public sector, not just our armed forces, was subject to the same conditions. Given that a huge chunk of the defence budget is spent on personnel—currently, just under £9 billion, which is more than we spend on equipment support—the MOD had an important part to play in supporting the Government’s efforts to restore the UK’s economic credibility. After all, a stronger economy means stronger defence. Having taken those tough decisions, we have since seen the deficit reduce by three quarters and the economy grow, while taxes are low and employment is high, which benefits us all.
Lady Hermon (North Down) (Ind)
Most of us in the Chamber sat through the proceedings on the ten-minute rule Bill, and no one spoke against it. Tribute was paid to the courage, the service and the sacrifice of our armed forces—not only in Northern Ireland, but in Iraq—and the Minister put his tribute on the record at the beginning of his response. There is a moral obligation, so I do not want to hear about fiscal reasons. I want this Government to recognise their moral obligation and duty to our armed forces and to lift the 1% pay cap in recognition of the armed forces’ courage and sacrifice for the country and the Queen.
Mark Lancaster
I will move on in a moment to that very question. I would add that many of us also sat through Prime Minister’s questions, and I would simply refer the hon. Lady to the very powerful argument that the Prime Minister made in response to the question from my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois) on the very subject she has raised.
The second point this motion ignores is the impact of pay progression. Officers and other ranks are tied to incremental pay scales, and they routinely and regularly move up the bands. The hon. Member for Llanelli (Nia Griffith) talked about privates. The average private soldier starts on a salary of £18,673. After one year, through incremental pay alone—not including the 1% pay increase—that rises to £20,029, which is an increase of 7.26% in one year. After three years, the salary rises to £21,614, which is an increase of 15.8%, not including the 3% increase that would have been given. That is an increase in pay of almost 20% over the three years.
Mr Kevan Jones
I think that the hon. Gentleman is being completely disingenuous—
Mr Jones
The Minister is wrong. The point is that, in any job, people get a pay increase because they are being trained and their ability to serve increases as that goes on. The fact is that the yearly increases my hon. Friend the Member for Llanelli (Nia Griffith) mentioned affect a private’s pay because they affect the levels of the bands and the percentages. He cannot argue that, just because somebody gets pay progression, not giving them an increase in their basic pay every year will not affect their ultimate pay. Of course it will.
Mark Lancaster
I am slightly worried about the hon. Gentleman’s approach. We have actually been great friends in this House for many years, so I am somewhat surprised that he called me disingenuous. I am sure that I will get my revenge at some point. As somebody who continues, after 29 years, to serve in the armed forces, I would like to think that accusing me of all people of being disingenuous when it comes to the armed forces is slightly unfair. I like to think that I have done my bit.
At the end of the day, I do not think that a private soldier receiving £18,673 in their pocket on day one—admittedly before tax—and then receiving £21,614 after three years will care too much whether that is due to pay progression or annual increases; it is money in their pockets.
Mark Lancaster
Here we go: the hon. Gentleman says—perhaps this is testimony to Labour mathematics—that £21,614 is less than £18,673. [Interruption.]
Mr Speaker
Order. The hon. Member for North Durham (Mr Jones) should not keep hollering from a sedentary position in evident disapproval of the stance taken by the Minister. Apart from anything else—he is chuckling about it—it is marginally discourteous to his hon. Friend the Member for St Helens North (Conor McGinn), who had requested an intervention and had it granted, before it was ripped away from him by the hon. Gentleman’s unseemly behaviour.
Conor McGinn
Talking about the figures, I was very concerned to read in the London Times this morning that the Government are considering scrapping the £29 deployment allowance that applies to soldiers on the frontline in Iraq. The Minister is an agreeable chap, and I would like to give him an opportunity to deny that categorically at the Dispatch Box.
Mark Lancaster
I am a very agreeable chap, but this is yet more speculation from The Times. No decision at all has been made to scrap the operational allowance. Every year since the operational allowance was introduced 12 years ago, there has been a review of where it should and should not apply. Soldiers have not been told that they will not receive it when they go to Iraq. I am deeply proud that this Government have doubled the operational allowance from £14 to £29. Finally—to get the last word, for the time being at least, with the hon. Member for North Durham (Mr Jones)—none of those figures takes into account the substantial rise in the personal tax allowance introduced while this Government have been in power.
Mark Lancaster
I will not give way at the moment—I am taking my revenge—but I am sure he will get another chance.
Despite fiscal constraint, salaries in the armed forces throughout this period have not stagnated. Indeed, they have actually risen on average by 1.5%. What is more, the MOD has the option of introducing targeted payments where there are particular recruiting and retention issues. These payments can range from time-limited financial incentives through to longer-term recruitment and retention payments that recognise the particular challenges we face in retaining certain specialisms, such as military pilots or submariners.
That brings me to the third aspect of the pay story, which has been conveniently glossed over. Joining our forces comes with a range of often unacknowledged additional benefits: a non-contributory pension scheme, subsidised accommodation and food, access to free medical and dental care, and allowances packages—I have just mentioned one of them—towards additional costs. It is therefore unsurprising that pay is neither the primary reason why people enter the service, nor the primary reason why they leave.
Stephen Morgan (Portsmouth South) (Lab)
Does the Minister recognise the frustration felt by the armed forces when they see rising costs in accommodation, but no real pay rise?
Mark Lancaster
Let us be absolutely clear: the subsidised accommodation costs that our service personnel are charged are approximately two thirds—I repeat, two thirds—of what they would pay in the private sector. There has been a readjustment across the range, because some of the bands were completely out of date. For example, accommodation was graded according to how far it was from a public telephone box. What relevance does that have in 2017 compared with access to broadband? So there was a readjustment, but let us not forget that members of the armed forces pay considerably less than they would if they worked in the private sector.
Rishi Sunak (Richmond (Yorks)) (Con)
I am glad to hear my hon. Friend talk about non-pay benefits. My constituents at Catterick garrison and at RAF Leeming most often talk to me about the day-to-day hassle and unfairness they face as a result of their service. To that end, will he confirm the Government’s commitment to the armed forces covenant and perhaps develop further what they are doing to ensure that nobody is penalised by their service in our armed forces?
Mark Lancaster
I am delighted that perhaps we have a moment of consensus across the House when we talk about the military covenant. It is indeed one of the success stories of recent years. When I was in my previous role, which is now filled by the Under-Secretary of State for Defence, my right hon. Friend the Member for Bournemouth East (Mr Ellwood), we managed to convince the nation of the value of service, and to see so many companies signing up to the armed forces covenant—well over 1,400—is a testament to its success. Indeed, every local authority in England, Scotland and Wales—
Several hon. Members rose—
Mark Lancaster
I shall give way one more time and then I must make progress.
Vernon Coaker (Gedling) (Lab)
I thank the Minister for giving way. May I take him back to his comment about military salaries rising in real terms? Can he explain to the House why the Ministry of Defence publication of 1 September 2017 states:
“Fig. 11 highlights that growth in military salaries fell below inflation from financial year 2010/11 to 2014/15.”?
Will he source where his evidence is coming from, as opposed to the evidence that the rest of us are having to rely on, which is taken from the MOD’s own website?
Mark Lancaster
We are going back—are we not?—to the debate about the annual salary increase and incremental pay. I have always used the example of the private soldier, where we see almost a 20% salary increase over three years.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
Will the Minister give way?
Mark Lancaster
I have been generous, but I am going to make progress. I will give way again before I finish my speech.
In other words, when it comes to armed forces pay, context is all, and the decision to award a 1% pay increase in 2017 did not happen in isolation. It followed a recommendation by the Armed Forces Pay Review Body and the Senior Salaries Review Body. They were clear that their decision
“broadly maintained pay comparability with the civilian sector”.
Critically, the AFPRB and SSRB are independent organisations that make annual recommendations. Their reports are detailed, comprehensive and take time to compile. For 2016-17, they gathered written and oral evidence from everyone from the Defence Secretary down, including more than 2,300 service personnel and 154 spouses. They held 186 discussion groups before arriving at a decision. Such a thorough, evidence-based approach is precisely why it would be wholly wrong to start introducing ad-hoc in-year reviews, as some people have suggested.
Focusing solely on the pay award also excludes the other reforms we have made to pay—reforms supported by the AFPRB itself. For example, in 2016 we introduced a new pay scheme, more effectively to reward personnel for their skills and simplify an individual’s pay journey. Consequently, people are better able to predict their future career earnings and make better-informed decisions.
At the same time, we recognise that, in an increasingly competitive world, we need to do more to plug skills gaps in parts of the public sector, such as engineering, if we are to continue delivering world-class public services. That is why the Government’s recent announcement that greater flexibility will be available in public sector pay remains key. It means the independent pay review bodies can now make their own judgements on future pay awards to mitigate any potential future impact. So, for 2018-19, the AFPRB will no longer have an across-the-board requirement to keep its recommendations within a total 1% maximum award. But let us not jump the gun. The 2018-19 armed forces pay review is still to come. It will be agreed as part of the budget process and we expect its recommendations early next year.
Stephen Doughty
The Minister is extensively quoting the AFPRB, but it is also clear that it says that
“if inflation continues its upward trajectory, we could foresee recruitment becoming more challenging and morale being adversely impacted... we would need to consider very carefully whether a one per cent average limit on base pay was compatible with continued operational effectiveness”.
He knows my concerns about the recruitment figures and that I accept that pay is not the only issue affecting recruitment and retention, but will we see those recruitment figures going up, and will he listen to what the AFPRB is clearly saying?
Mark Lancaster
Over the past year, we have seen 8,000 applications to the Army, which is an increase of some 20% on the previous year, but I am interested in the hon. Gentleman’s view. I was deeply surprised to discover while reading a national newspaper that part of Labour’s plan is to use the money for marketing—some £10 million a year—as one source of income to give soldiers a pay increase. We have approximately 150,000 armed forces personnel, so that would be an increase of about £5.50 a month per member of the armed forces, but it would involve scrapping the one thing that delivers recruiting. So, no marketing budget for a bottom-fed organisation? Does he agree with that? Does he agree with the plan of his Front Benchers to scrap the marketing budget?
Stephen Doughty
Marketing is obviously a crucial part of the recruitment process, but the Minister needs to be clear. He has given me an answer that makes it clear that every single course—including those at Catterick in the constituency of the hon. Member for Richmond (Yorks) (Rishi Sunak), who has just left—is under-recruited. Every single course at Sandhurst since 2015 has been under-recruited. It is his Government who are leading us to this recruitment crisis. Pay is one part of that, and a crucial part, but he is the Minister and he is in charge.
Mark Lancaster
So we have a crucial marketing budget. Would that be scrapped? I am going to Catterick in two weeks to be the passing-off officer for the latest group of Gurkhas to pass off. That is a fully recruited course; not all courses are, but I am delighted to say that the last Sandhurst course was also fully recruited.
Mark Lancaster
I will give way to the hon. Lady, but then I must make progress.
Nia Griffith
As the Minister knows well, newspapers do not always report things the right way round. The point we are making about the marketing costs is that they have rocketed. The question is, what value for money are those costs providing? What value for money is the contract with Capita providing? What evaluation have the Government done of whether the money spent on Capita—spent on marketing—is providing value for money in view of the returns they are getting? That is what we want to see.
Mark Lancaster
I am not sure whether we have seen a U-turn in Labour party policy—[Interruption.] So we have not seen a U-turn. Would Labour still scrap the marketing budget? Can we have some clarity? Is Labour proposing to scrap the marketing budget or not?
Nia Griffith
The point that I was making is that there has been a massive increase in the marketing budget for zero returns in additional recruitment. That is the point—is it value for money? The Government are running the contract. They are employing Capita. They need to answer as to exactly what value they think they are getting out of Capita.
Mark Lancaster
I am going to do the House a favour and move on.
As alluded to earlier, for those joining our armed forces, pay is not the be all and end all. People sign up to challenge themselves, experience adventure and learn new skills. The most frequently cited reason for leaving, according to the 2017 armed forces continuous attitude survey, is the impact of service on family and personal life. That is why we are keen to do all we can to improve life for our personnel. Some 70% of our people told a recent MOD survey that they wanted more flexible working opportunities, so we are introducing a flexible working Bill. It will enable regular service personnel temporarily to change the nature of their service, enabling part-time working or protection from deployment to support an individual’s personal circumstances “where business need allows”.
Mark Lancaster
I will in a minute, but only once more because others want to speak in this short debate.
At present, a woman considering starting a family, or an individual with caring commitments, faces a difficult choice over leaving when their circumstances change. We do not want to lose good people with knowledge, skills and experience from a more diverse workforce, and we should not have to.
By providing a more modern and flexible employment framework for our people, we will help to improve morale, retain and recruit the very best, and increase the overall effectiveness of the armed forces. More than that, we will also help to attract recruits from a wider cross-section of society—those who might otherwise not have considered a military career.
Pay and flexible working, in and of themselves, do not offer a silver bullet to address the issues of recruitment and retention, as highlighted by my right hon. Friend the Member for Rayleigh and Wickford in his excellent report “Filling the Ranks”, but taken together with our broader people programme, we believe that it will have a significant impact.
Mark Lancaster
I will give way for the last time, to the hon. Member for Stoke-on-Trent North (Ruth Smeeth), who asked first.
Ruth Smeeth
I thank the Minister. Many colleagues have mentioned the overall package, but may we go back to service family accommodation? I shall be talking about pay later, but the reality is that SFA and the CarillionAmey contract are the No. 1 issue, in addition to pay, that is raised with us every day. As chair of the all-party parliamentary group on the armed forces covenant, I think that SFA is becoming a headache for everybody and needs to be resolved as a matter of urgency.
Mark Lancaster
The hon. Lady makes a very valid point. In my previous role, I spent a lot of time with CarillionAmey. I took the chief executive on a walk around Woolwich to see the standard of some of the accommodation. I think that there is acknowledgment across the House that the situation has improved, but there is still an awful lot more work to do. We recognise that and are determined, as were the previous Government, to address this issue. Of course the better defence estate strategy is part of the key to that. As we begin to consolidate our barracks, we will have less mobility of our armed forces; we will be able to dispose of some sites and all that money will be reinvested.
Mark Lancaster
I will give way one more time, to my hon. Friend, and then I will conclude.
Johnny Mercer
I really welcome the contribution by the hon. Member for Stoke-on-Trent North (Ruth Smeeth), my colleague on the Defence Committee, because this whole debate comes down to credibility. Yes, we would always want more money; people will always want to be paid, but that is not the No. 1 issue. Generally, we have a good offer for our servicemen and women. We have deep challenges with accommodation, veterans’ care and mental health, but this has to be a credible debate, and it is simply not the case that our men and women have a raw deal on pay and experience.
Mark Lancaster
My hon. Friend makes a very powerful point.
It is worth being clear about what this programme entails. It will see us offering greater help to personnel, so that they can live in private accommodation and meet their aspirations for home ownership. It will see us develop a new employment offer for new joiners to the service from 2020, better meeting the expectations of future recruits and targeting resources on the people we need most.
Mark Lancaster
No: I have been very generous.
The programme will also make it easier for people to move between the public and private sectors during their careers—retaining and making the most of their skills in areas where they are most needed.
Of course, as my right hon. Friend the Member for Rayleigh and Wickford outlined, there is still more to do, whether recruiting more people from ethnic minority communities, improving accommodation or making sure that all our people are fit mentally as well as physically; but we are now hard at work developing an action plan to take forward his recommendations, including a planned medical symposium.
Our people will always be our greatest asset. As a Minister and a reservist, I have nothing but respect and admiration for achievements of our armed forces personnel. Of course I appreciate the impact that pay restraint has had, but I also believe we are taking a balanced approach. On the one hand, we are ensuring pay discipline, which is critical to the future affordability of public services and the sustainability of public sector employment. On the other hand, we are doing our utmost to make sure that our overall package not only reflects the value that our people bring to our country but retains the flexibility that is so vital in attracting the best and the brightest.
Armed forces pay structures and levels are regularly reviewed, and I look forward to hearing the AFPRB’s latest recommendations. In the meantime, I am personally committed to doing everything I can to make sure that our exceptionally talented and hard-working men and women continue to receive the recognition that is their due.
Stewart Malcolm McDonald
The right hon. Gentleman makes an interesting point, and I look forward, as always, to hearing his contribution. To be fair to Members on the Opposition Benches, I do not think that anyone has said that this is just about pay. In fact, we had a very thorough debate earlier this week on flexible working, when many other issues were also addressed. I see that his colleague, the hon. Member for Burton, is nodding in agreement. [Interruption.] I understand what the motion is about. He is shouting from a sedentary position, but if he allows me to make a little more progress, perhaps he will hear what else I have to say on what might be stopping Scottish people joining the armed forces.
Colonel Kemp, who took command of UK forces in Afghanistan in 2003, has criticised the Government’s reliance on outsourcing with Capita, which in 2012 took over regular and reservist Army recruitment in a contract valued at around £44 million over 10 years. That seemed to cause a bit of a bun fight across the two Front Benches. I ask Government Members, and the Government Whip, the hon. Member for Burton, who seems determined to shout me down at every turn, why will they not heed the advice of a report part-authored by one of their own colleagues, the right hon. Member for Rayleigh and Wickford, which recommended in July this year that the Government should accelerate work on an alternative to the Capita contract? That thoughtful recommendation, which we support, was set out in a report part-authored by a Government Member.
I want briefly to mention pensions, because that is another area. I note that the right hon. Member for Hemel Hempstead (Sir Mike Penning) has now left the Chamber, having asked me to talk about other areas, which is a shame. It is well known that the Ministry of Defence is working on a new joiners offer, which I would like to hear more about. On pensions, I would be grateful if the Minister confirmed that the Ministry is working on new joiners’ offer arrangements. If so, how does that square with the promise, given a few years ago, that pension arrangements were safe for 25 years? Will any new scheme apply only to those joining after a particular date, or will the cut be retrospectively applied to those currently serving?
Mark Lancaster
The clue is in the title. It is called a new joiners’ offer.
Stewart Malcolm McDonald
I am glad that the Minister has cleared that up for me.
Mr Francois
The hon. Gentleman’s researcher has clearly been on the ball. I know that in the United States service credit unions are far more advanced than here; there is a big movement in America. I for one would ask Ministers to look munificently on the hon. Gentleman’s point.
Mark Lancaster
I am now feeling guilty for not giving way to the hon. Member for Harrow West (Gareth Thomas). He makes a very reasonable point. I am very pleased with the progress we have made with the credit unions, but there is always more we can do. I will look into this point, and write to the hon. Gentleman.
Mr Francois
We appear to have got some consensus there.
In July 2013 the Government published a White Paper entitled “The Reserves in the Future Force 2020: valuable and valued”, which envisaged an ambitious revival and expansion of Britain’s reserve forces, under the heading of Future Reserves 2020, or FR2020. The roll-out of that programme was initially complicated by a combination of excessive bureaucracy, delays to medicals for recruits and IT problems.
In response, the three services—in particular the Army, where the greatest problem lay—committed additional resources to reinforce the recruiting effort, and now, several years on, that has borne fruit. As of May 2017, the trained strength of the Army reserve is 26,730 as against a target of 26,700; the maritime reserves, including the Royal Marine Reserve, stood at 2,590 against a target of 2,320; and the figures for the RAF reserves, including the Royal Auxiliary Air Force, were 2,140 against a target of 1,860.
Reserve recruiting now enjoys support from across British industry, including the Business Services Association, the CBI, the Federation of Small Businesses and the Institute of Directors, and is an important part of the armed forces covenant. In addition, considerable success has been achieved by offering “recruitment bonuses” to ex-regulars who have left the services but have then joined their reserve counterparts.
There is no room for complacency. That has only been achieved with considerable investment, of both money and effort, by the regular as well as the reserve forces. If the targets in FR2020 are to be met, it is vital that this earmarked funding is continued and not sacrificed to in-year savings, which would run the risk of seriously compromising the momentum achieved to date. Overall, however, the reserves story is now becoming a successful one, and is far healthier than it was only a few years ago.
An important aspect of the overall quality of life in the services is represented by service accommodation, and this is where the Ministry of Defence must do better if it wishes to retain the support of service personnel and, particularly, of their families. Remember the saying: “Recruit the serviceman, retain the family.” The UK tri-service families continuous attitudes survey, published in July 2017, shows that the level of satisfaction with the maintenance of service families’ accommodation remains low following a large decrease in 2016. In particular—this follows on from the point made by the hon. Member for Stoke-on-Trent North (Ruth Smeeth)—there are issues surrounding the delays in the MOD’s housing contractor, CarillionAmey, responding to requests for maintenance and also with the quality of the maintenance and repair work subsequently undertaken. Only 34% of those surveyed said that they were satisfied with the responsiveness of the contractor and only 29% were satisfied with the quality of maintenance or repair work that it undertook.
Conor McGinn
The hon. Lady makes an important and interesting point. We have certainly tried hard in my constituency and the Metropolitan Borough of St Helens more widely to implement the armed forces covenant, but there have been issues with its implementation in Northern Ireland. I am sure we would all wish to see those issues resolved and its full implementation in Northern Ireland, as in the rest of the UK.
Despite the Government’s target in the strategic defence and security review to have 82,000 full-time fully trained troops, as of April this year there were just 78,000 soldiers in the Army. By any measure, that is an abject failure on the Government’s watch, and it was rightly identified as a key problem by the former commander of Joint Forces Command, General Sir Richard Barrons. The recent report by the right hon. Member for Rayleigh and Wickford (Mr Francois) confirmed that the Regular Army needs to recruit 10,000 people a year to maintain its strength, but managed to attract only 7,000 entrants last year.
Worryingly, alongside all that, the figures show that the numbers leaving the part-time Army Reserve, which we were told would be increased to meet the decline in numbers in the Regular Army, increased by 20% between 1 June 2016 and 1 June 2017. At about the same time, in the most recent financial year the reserve intake fell by 18%. The Government do not seem to have a strategy to turn these falling numbers around. In fact, their only solution so far has been to sack another 120 members of the armed forces personnel who serve as recruiters and replace them with civilians from Capita. I say gently to the Minister—as I said earlier, he is an agreeable chap—that he has a bit of a cheek on him to criticise our plans for recruitment and what we would do with the budget when he is taking money out of the pockets of armed forces personnel and giving it to a private company.
Mark Lancaster
Of course people join the armed forces and people leave—that is the nature of any job and the nature of the armed forces—but to be absolutely clear, over the past three years the numbers in the reserves has increased, not decreased.
Conor McGinn
I do not wish to contravene the rules of the House by getting into a debate with the Minister, but I am not sure that he can express particular confidence that the target of 30,000 reserve recruits will be met. The Government started to publish the figures only after pressure from the Opposition several years ago. We will continue to monitor progress on that in particular, because although, like the hon. Member for Aldershot (Leo Docherty) said earlier, I am not a mathematician, I know that if we need to recruit 10,000 and we are attracting only 7,000 to the Regular Army, and we have not met the quota that we defined to meet national security needs through recruitment to the reserves, it is not going to add up. It is not going to add up for the armed forces, and it is not going to add for the British public.
Mr Sweeney
Yes, I absolutely agree. Engineering and air crews in particular have urgent issues of undermanning in the service.
It is alarming that the entire Regular Army can be comfortably seated in Wembley stadium now that its numbers have fallen below 82,000 and it is 6% undermanned. In contrast, the Regular Army numbered 103,000 when I joined in 2006 and it could not fit into Wembley stadium.
The defence budget has fallen from 2.5% of GDP to under 2% over the term of this Tory Government. There is a chaotic equipment programme. Whether it is Nimrod or the cats and traps on the carriers, fiasco after fiasco has bled resources out of the armed forces through a lack of efficient management of equipment programmes. It is shocking that armed forces pay should suffer as a result.
The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)
I just want to give the hon. Gentleman the opportunity to correct what he just said. It was the Labour Government who chose to abandon cats and traps, and who slowed down the building of the aircraft carrier, which cost over £1 billion on top of the original bill. That is what happened to the aircraft carrier under a Labour Government.[Official Report, 20 November 2017, Vol. 631, c. 3-4MC.]
Mr Sweeney
I have to correct the Minister. That is factually incorrect. I worked at BAE Systems at the time. The project was commissioned as a result of the 2010 strategic defence and security review, and £1 billion was utterly wasted before the project was cancelled.
I will quickly draw my comments to a conclusion. The Armed Forces Pay Review Body has highlighted that the 2016-17 pay review was not an increase in real terms at all because of the impact of national insurance increases and the changes to housing cost allowances. From 2010 to present, it actually represents a 5.3% cut in real-terms pay for our armed forces. The reality is borne out by the evidence presented today, and it is comprehensive. We have seen a litany of failure, falling expenditure and stagnating incomes. That leads to a fall in morale. As a result, outflow has exceeded recruitment since 2011. Let us come together in this House today to recognise that there is a vicious cycle of downsizing. We must move towards a virtuous cycle of investment that will stop the continued degradation of our armed forces and ensure that the operational effectiveness of our armed forces is secure for the future in a very dangerous world.
Wayne David (Caerphilly) (Lab)
We have had a very good debate today. Members of the House have made excellent contributions, but I do not have time to refer to them—I apologise.
It is true to say that our armed forces face enormous problems. They have a huge problem with recruitment and retention and face the scandalous inadequacy of the levels of remuneration for the men and women who are prepared to put their lives on the line to defend this country. Those problems are linked. In a report commissioned by the Prime Minister and published in July this year, the right hon. Member for Rayleigh and Wickford (Mr Francois) talked about a perfect storm against which military recruiters have had to battle. As he said, the regular strength of the UK’s armed forces is some 5% below what was planned. There is also the problem of retention, with more personnel leaving the services than joining them.
Although there are several reasons why the armed forces are in such a predicament, a large part of the blame must rest with how the Army recruits its personnel, for which Capita bears a large measure of responsibility. The “hollowing out” in the ranks, which the right hon. Gentleman referred to in his report, is caused by several factors. Without doubt, the privatisation of Army recruitment and the outsourcing of aspects of recruitment for the other services has played a major role. The poor quality of living accommodation for servicemen and women and their families is another important factor.
Wayne David
I am sorry, but time is short. Another huge problem is the levels of pay in the armed forces. As the most recent pay review body report indicates, members of the armed forces
“feel their pay is being unfairly constrained in a period when costs are rising, private sector earnings are starting to recover, and the high tempo demands on the Armed Forces have not diminished.”
Wayne David
Time is limited, as the Minister knows. I respectfully ask him to sit down.
The Government say that they are introducing flexibility in the future pay regime, but let us be clear. The Armed Forces Pay Review Body stated in its 2017 report that the former Chief Secretary to the Treasury sent it a letter to say that the Government’s policy of pay restraint remained in place. The letter states:
“We will fund public sector workforces for pay awards of an average of 1 per cent a year, up to 2019/20.”
The pay review body report makes it clear that that is the context in which the body was obliged to work, and that point has been well made by my hon. Friend the Member for North Durham (Mr Jones).
Wayne David
If there is to be greater flexibility, as the Secretary of State has hinted, where will the extra money come from? The MOD is already undertaking a mini defence review and significant cuts are already being considered, with 1,000 Marines, HMS Bulwark and HMS Albion ready for the chop. It would be totally unacceptable for any pay increase to be funded by further cuts to the defence budget. Will the Minister indicate when he responds that the Department has the courage to stand up to the Treasury and demand that extra money be forthcoming for our brave men and women in the armed forces?
Wayne David
Where will the money come from? We will call for extra contributions of up to 5% from large corporations and we will demand that the super-rich pay a little bit more, instead of enjoying the largesse that the Government have given them. I am not hopeful that that will happen, however, not least because I understand that rather than fighting for more resources, the Secretary of State and his friends—[Interruption.]
Wayne David
Thank you, Mr Deputy Speaker. I think that the chuntering and the interruptions are indicative of the crass behaviour of the Ministry of Defence, which we are debating this afternoon.
I am not hopeful that Ministers will stand up for the armed forces, which they claim to support, not least because I understand that rather than fighting for more resources, the Secretary of State for Defence is considering scrapping the special allowance given to soldiers serving in Iraq and Afghanistan. Will the Minister, in his response—I will give him time to respond—make a commitment not to cut the special service allowance?
As we approach Remembrance Sunday—several Members mentioned it, including my hon. Friend the Member for Clwyd South (Susan Elan Jones)—it is surely imperative that the House unites in support of our armed forces. This afternoon, many contributions have strongly supported lifting the pay cap. I very much hope that all of us will support the motion, and call for a fair pay rise for our armed forces. Especially at this time of the year, our armed forces deserve nothing less. [Interruption.]
Mr Deputy Speaker
Order. The Minister should sit down for a second.
Mr Lancaster, I do not know whether you are deliberately trying to frustrate the Chair—I am sure that is not your intention—but you are going a good way towards doing so. Let me help you. It is up to the Opposition spokesman when he sits down. The Minister has asked for extra time to respond, so you should be thanking Mr David for sitting down to give him that extra time. Let us have less chuntering, and let us hear from Minister Ellwood.
The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)
It is a pleasure to respond to what has been a passionate and mostly constructive debate. It is a real pleasure to add my support, as expressed on both sides of the House, for our noble, gallant and brave armed forces.
Before I respond to the debate, may I join the Prime Minister and I am sure the whole House in sending our best wishes, thoughts and prayers to those affected by yet another terrorist attack in Manhattan in New York? That place is close to my heart: I was born there, and I have worked there as well. The attack reflects the type of security challenges we continue to face not just in this country, but across the world.
As the Minister for the Armed Forces said, we need to see this debate in the wider context of fiscal responsibility, and that must be the backdrop to any discussion on pay. It is only with a growing economy that we can responsibly make any changes to funding for Departments. Let us not forget that we inherited a deficit of almost £150 billion. That is now down by three quarters, but the annual interest on the nation’s debt continues to be more than £50 billion every year, and we cannot simply take money if it does not exist. Under this Government, the economy is growing, employment is up and it is now possible to lift the 1% pay freeze imposed by the Treasury, which is good news.
This debate has focused primarily on armed forces pay, but that cannot be directly compared with other types of public sector pay, such as in the NHS and so forth—we must look at the other aspects that make wearing the uniform very different. We have to recognise the subsidised accommodation and food; the X factor pay, which many hon. Members mentioned; the pensions package; the free medical and dental care; the allowances, including operational pay; and of course the automatic pay progression, which has also been mentioned. The Armed Forces Pay Review Body considers all those factors before any changes are made.
Stewart Malcolm McDonald
Specifically on pensions, the MOD’s continuous attitude survey shows that dissatisfaction with the package was at 38% in 2013, but is now at 52%. Why?
Mr Ellwood
I take from the continuous attitude survey that, yes, we have to recognise the concerns about pay and indeed about pensions—such concerns are felt on both sides of the House—but the biggest concerns are the long periods of separation and the pressures on family life. That is exactly why we are introducing the armed forces people programme, which will alleviate the pressure on families caused by separation. We are providing a new joiners’ offer and a new accommodation offer, and we are also looking at a new enterprise approach, which will allow highly capable people in the private sector to slide across into the armed forces. There is also the flexible engagement model that we debated in the Chamber on Monday.
As the Minister for the Armed Forces said, and this has been reiterated by Members on both sides of the House, we must recognise how different it is to wear the uniform in today’s context. It is becoming tougher to recruit because we have full employment, and it is becoming difficult to retain because of the challenges and competition we have in public life. Unlike the Opposition spokesman, the hon. Member for Caerphilly (Wayne David)—who perhaps teased my hon. Friend the Minister for the Armed Forces in denying him the ability to intervene—we recognise those different circumstances, and we are trying to get people to step forward.
The conduct of war itself has changed. What we expect to ask of our brave service personnel is also different. That is the context of the debate, and that is reflected perhaps in the recruitment and retention challenges that have been echoed across the House.
Stephen Doughty
I thank the Minister for giving way, particularly as I did not get a chance to ask this question when the debate finished half an hour early the other day. Earlier, the Minister for the Armed Forces said that the current commissioning course at Sandhurst was at full capacity, but I looked at the figures for the most recent course: only 210 places were taken up when the capacity was 270. Can the Minister clarify what is going on? Is the course at capacity or not?
Mr Ellwood
If I may, I will ask my hon. Friend the Minister for the Armed Forces to write to the hon. Gentleman with the details, but I do not shy away from the challenges that we face. I have just made that clear. It is difficult to recruit and retain in the manner that we would wish because of a number of circumstances, which have been highlighted by the report produced by my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois). I shall come to that shortly.
Conor McGinn
The Minister for the Armed Forces was quick to his feet earlier to dispute figures that I gave that show that numbers leaving the Army Reserve increased by 20% between June last year and this year. Furthermore, the intake decreased by 18%. Those are not my figures; they are the Government’s figures. Would the Minister care to acknowledge that?
Mr Ellwood
I think that, overall, reserve numbers are up, but, again, I will ask my hon. Friend the Minister for the Armed Forces to write to the hon. Gentleman with more detail.
To move on—
Mr Ellwood
I will not give way to the hon. Gentleman. He tests the patience of the House in rising to his feet after denying my hon. Friend the Minister for the Armed Forces I do not know how many times the opportunity to intervene.
The Opposition spokesperson, the hon. Member for Llanelli (Nia Griffith), talked about the importance of Remembrance Day, which was also highlighted by other hon. Members, and about the importance of pay itself. She also talked about the role of the Armed Forces Pay Review Body, whose recommendations will, I understand, come through in March.
The hon. Member for Glasgow South (Stewart Malcolm McDonald) used the debate as an opportunity mostly to promote his views on Trident, which are not shared across the House. Indeed, this nation would become a lot weaker if we were to get rid of Trident. That would not be in anybody’s interest.
My right hon. Friend the Member for Rayleigh and Wickford produced a report highlighting some of the challenges we face, and I fully agree with him that we need to work on improving diversity. It is important that we attract the brightest and the best, and that includes recruitment moving up to 15% by 2020 for women, and up to 10% for BAME—black, Asian and minority ethnic. I am grateful to him for the work he did on that important report.
The hon. Member for North Durham (Mr Jones) talked about the black hole in defence finances. We came into government recognising that £38 billion was seemingly missing, because it had been stolen from future budgets, but let us take a step back.
Mr Ellwood
In a second. When we came into government, we found a black hole in the nation’s finances, with £150 billion missing. Although the Labour Government managed to balance the books back in 2000, in every single year thereafter they spent more and more money that they did not have, but which belonged to the taxpayer. That is why we ended up with the deficit and the recession—they were taking money that did not exist.
Mr Jones
Look at the National Audit Office report of 2010. What it said on the equipment budget, not the overall budget, was that on its current basis the figure would be £6 billion. If there was no increase in line with inflation over a 10-year period, the figure would be £36 billion, not £38 billion—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. First, if the Minister takes the intervention both Members cannot be on their feet and he cannot suddenly say, “I don’t want to hear any more of it.” In fairness, if he gives way he needs to let the intervention get to the end. If I think the intervention is too long, let me take that decision. Let us not have both Members on their feet.
Mr Ellwood
Thank you, Mr Deputy Speaker. I make it clear that the facts are very clear. Look at any—
Mr Deputy Speaker
Okay. I will accept “accuracy” but not “truth”. Minister.
Mr Deputy Speaker
No, I tell you what: you’ll sit down. If we are going to play the game, we will start playing it. Now then, Minister: on your feet.
Mr Ellwood
Thank you, Mr Deputy Speaker. I have a huge amount of respect for the work that the hon. Gentleman did, and continues to do, in supporting our armed forces, but the numbers are clear. The growth of the deficit since 2000, moving forward, increased, increased and increased; and that is the black hole that I was actually referring to.
I think we have milked this subject enough for the moment, so I will move on. The hon. Member for Stoke-on-Trent North (Ruth Smeeth) spoke about the importance of the covenant. She is in her place. I thank her for the work that she does on this important matter and I would like to meet the Committee at the earliest opportunity.
My right hon. Friend the Member for Hemel Hempstead (Sir Mike Penning) spoke of the package of financial support, which is very important. I have touched on that. The hon. Member for St Helens North (Conor McGinn) said that the reserve numbers are increasing. My hon. Friend the Member for Aldershot (Leo Docherty) spoke with passion about his constituency. It was a pleasure to visit the event to commemorate the 35th anniversary of the Falklands campaign. The hon. Member for Clwyd South (Susan Elan Jones) spoke about the importance of the Royal British Legion. I am really pleased that the Office for National Statistics has agreed to include a tick—a requirement—for veterans and I am pleased that everyone has worked towards that.
My hon. Friend the Member for Cheltenham (Alex Chalk) spoke about the importance of the equipment that we have—£178 billion is being spent on that. He also said that the total cost of the promises that Labour has made so far under this Government is £500 billion. I do not know where that money will come from.
The hon. Member for Glasgow North East (Mr Sweeney) spoke about cats and traps. I want to make it clear that the electromagnetic aircraft launch system—EMALS—was being promoted. That simply had not matured in time. There was no way that we were going to buy F-35Cs for the aircraft carrier; they could not have been launched off it because there is no steam.
Mr Ellwood
I will not give way. There is no steam on board the aircraft carriers. They are diesel; they are not powered by atomic energy.
My hon. Friend the Member for Plymouth, Moor View (Johnny Mercer) denied being a Government lackey. I can confirm he is certainly not—
Mr Deputy Speaker
I think people will deliver figures in different ways, and the interpretation of those will always be in dispute. Minister.
Mr Ellwood
I was just going to mention the animation—the passion—of my hon. Friend the Member for Plymouth, Moor View, who has done a service to the House with his work to promote the needs and requirements of veterans. I hope that continues.
The hon. Member for Gedling (Vernon Coaker) made an interesting and measured contribution. He was the first to point out that what we need to do is to ask the question, “What do we want our armed forces to do?” Only by asking that question will we determine the size and the equipment we need, and that is why we are undertaking our capability review.
The hon. Members for Easington (Grahame Morris) and for Leeds North West (Alex Sobel) spoke with passion about Remembrance Sunday and the poppy appeal. It was a real honour to visit the Poppy Factory a few months ago to see the work that it is doing with veterans, and the work for Remembrance Sunday itself.
In conclusion, like all Members of the House, the Government want to ensure that our brave armed forces, those exemplary men and women who give their all for our country, continue to get what they deserve. Our forces are currently serving in 25[Official Report, 20 November 2017, Vol. 631, c. 4MC.] operations around the world. They are keeping us safe and enhancing our reputation around the world. They are the best of British, and they have the right to expect the best in return. Therefore, although the need for pay discipline will remain a constant in the coming years, we remain committed to ensuring that their overall package of pay, progression and benefits continues to reflect the enormous value that we place on their work. We await the next review’s findings with interest. Members can rest assured that, as a Defence Minister, a former officer and a reservist, I am determined to do everything in my power to ensure that our people get what they deserve.
Question put and agreed to.
Resolved,
That this House notes that the pay of Armed Forces personnel has been capped at 1 per cent in 2017-18 and that this represents another below inflation pay settlement; further notes that the size of the Army, Royal Air Force and Royal Navy and Royal Marines is below stated targets; notes that dissatisfaction with pay has been identified by service personnel as a reason for leaving their respective force; and calls on the Government to end the public sector pay cap for the Armed Forces and give Armed Forces personnel a fair pay rise.