Armed forces personnel will, for a second year running, receive a delayed pay award.
Satisfaction with pay among personnel is low, and the amount of pay is cited as one of the top factors influencing intentions to leave the forces.
The Ministry of Defence (MOD) has not confirmed when it will announce the award but pay will be backdated to April 2020.
Here we look at how pay for the armed forces is agreed, the role of the Armed Forces’ Pay Review Body and the impact on retention.
- The public sector pay restraint limited armed forces pay from 2011/12 to 2017/18.
- The armed forces received a 2.9% increase in 2019/20.
- Pay for 2020/21 will be backdated to April 2020.
- The pay model introduced in 2016 will be reviewed during the 2021/22 pay round.
- Pay levels are set by the Government based on recommendations by the independent Armed Forces' Pay Review Body (AFPRB).
- Only a third of personnel are satisfied with their pay.
About armed forces pay
The remuneration package for armed forces personnel consists of the following elements:
- Basic pay
- An additional payment called the X-factor
- Additional/specialist pay, taxable and non-taxable allowances
The pay that an individual receives will depend on their personal circumstances and eligibility for specialist pay and allowances. The starting salary for service personnel is £20,000. Salary levels can be found in AFPRB annual reports.
What does the Armed Forces Pay Review Body (AFPRB) do?
The AFPRB provides independent advice to the Government on pay and charges for the armed forces.
The level of pay is set by the Government based on recommendations by the Armed Forces’ Pay Review Body (AFPRB). This is independent of the MOD.
The basic principle is pay should be broadly comparable with pay levels in civilian life. However, the AFPRB is obliged to consider the funds available to the MOD, the Government’s inflation target, and the need to recruit and retain suitably qualified people. The MOD is not obliged to accept these recommendations.
The AFPRB is one of several Pay Review Bodies that recommends pay for public sector workforces.
What recent pay agreements have been made?
The Government imposed a two-year public sector pay freeze from 2011/12 to 2012/13, which meant only those earning less than £21,000 received an increase in base pay during that time.
Between 2013/14 and 2017/18 the Government imposed a public sector pay cap of 1%. The AFPRB recommended an increase of 1% in base pay across all ranks in line with this.
The Government lifted the public sector pay cap for the 2018/19 pay round, payable from 1 April 2018. The AFPRB recommended a 2.9% increase in base pay. The Government accepted “the spirit of this recommendation,” with a 2% increase in pay (to be paid in September salaries, backdated to 1 April 2018) and a 0.9% non-consolidated one-off payment.
The AFPRB later reported Service personnel did not feel that the [Government’s] response was in the spirit of our recommendations,” and that a non-consolidated award showed “disrespect for the unique role that they perform.”
In July 2019 the Government accepted the AFPRB’s recommended 2.9% increase in base pay for 2019/20 in full and backdated pay awards to 1 April 2019.
What about the 2020/21 pay award?
The MOD has not given a date for the 2020/21 pay award. In autumn 2019 Ben Wallace, the Secretary of State for Defence, wrote to the AFPRB asking it to formally begin the 2020/21 pay round and to submit its report in April 2020. This means personnel will not receive their pay increase in their April pay packets.
The Defence Secretary said the Government intends to bring the pay round process back on track for the pay award in April 2021.
In the past, the Ministry of Defence has announced the annual pay award and published the AFPRB’s report in March, effective from 1 April. This changed for the2018/19 in line with guidance from the Treasury to all Pay Review Bodies. The MOD announced the pay award in July 2018 for 2018/19 and in July 2019 for 2019/20.
Are personnel happy with their pay?
Pay is an important part of the package offered to personnel.
The views of personnel are captured in the annual Armed Forces’ Continuous Attitudes Survey (AFCAS). In 2018, only 31 percent of personnel said they were satisfied with the basic rate of pay, the lowest level recorded since 2007. Satisfaction increased slightly in 2019 to 35 percent. This remains below peak satisfaction reported in 2010 (52 percent).
47% do not think their pay and benefits are fair for the work they do.AFCAS 2019
The AFPRB has noted the link between satisfaction and pay in successive reports. In 2015, the body said personnel felt: “the overall offer was deteriorating and they were feeling the cumulative impact on living standards of a fifth year of pay restraint.”
In 2016 the body said it was concerned about the effect of continued pay restraint on the morale and motivation of personnel and their families. It highlighted competition from the private sector with regard to retention. As noted, in 2018 personnel were unhappy that the AFBRB’s 2.9% recommended increase was not accepted in full.
Nearly half of personnel do not think their pay and benefits are fair for the work they do. Just over half do not think the X-factor is enough compensation for lifestyle in the forces.
What does this mean for recruitment and retention?
The AFPRB has discussed the recruitment and retention difficulties facing the armed forces, including the role of pay, in successive reports.
It warns personnel feel the “value of the overall armed forces offer has further declined,” citing changes to pensions, dissatisfaction with accommodation, food and pay increases.
The AFPRB explicitly links motivation and morale with current recruitment and retention difficulties. National statistics show the armed forces are currently 8 per cent below the planned number of personnel. The amount of pay is cited as one of the top factors influencing intentions to leave.
The Defence Secretary directed the AFPRB to consider how to target pay to areas with skills shortages and to support wider recruitment and retention.
Reviewing the pay system in 2021/22
The Government introduced the current pay system in 2016 as part of the New Employment Model for service personnel. It is designed to be simpler and fairer than the previous system. The five-yearly review of the pay system (the Pay 16 model) will take place during the 2021/22 pay round.
About the author: Louisa Brooke-Holland is a researcher in the House of Commons Library, specialising in international affairs and defence.