Good news for soldiers, sailors and airmen in Afghanistan and Iraq: Christmas has come early. Gordon Brown has opened his coffers to pay them a bonus for operational service. He made the point that they are already well paid compared with other nations' soldiers, but that they deserved extra recognition for the dangerous and important work they are doing. Cynics might argue that the growing national call for tax free status when serving abroad was also a factor. But whatever the reason, this gesture will be widely welcomed.
Operations mean that troops are working long hours for week after week in hostile conditions. When the equivalent hourly rate of pay is calculated, it can be below the minimum wage. They envy the various perks that their allies enjoy (particularly tax free status), even if their overall pay and allowance package may be better. The real justification for extra payments is that British forces have been working beyond the defence planning assumptions for at least the last 8 years. They are expected to go on operational duty far more often than in the past. This affects how long they stay in the forces, and it is costly to recruit and train replacements when they leave. If a quick cash bonus improves morale, it may also prove a cost effective retention measure.
It was probably wise not to try to introduce tax free status. It would have been complex, and needed annual tax returns from junior soldiers. Arguments between tax inspectors and troops would not have improved morale. It would of course have meant that the higher paid officers were rewarded considerably more than their troops, and that might have been a source of further discontent.
There are however a few potential problems to be ironed out. The criteria for those entitled will be a source of argument. There will be questions about how Reservists are treated. Perhaps most importantly, there will be an issue for how Service pay is to be assessed in the future. Currently, the Armed Forces Pay Review Body looks at comparable civilian pay each year. It then adds an extra proportion to the civilian benchmark to cover the turbulence and differences of being in the armed forces. This "X-factor" is currently some 13%. It will be very unfortunate if when they next make a recommendation on military pay, they take into account the new operational cash payment, and reduce the X-factor to compensate. This would mean a pay cut for everyone not on operations.
Perhaps the biggest issue is where the money for these payments is to come from. The Defence Budget is in real difficulty. The money for future projects is being siphoned off to fund urgently needed operational equipment. There is a desperate need for new vehicles and helicopters in both Iraq and Afghanistan. Yet the MOD want to keep up with US technology. If they have to fund more in pay and allowances, something will have to give.
Let us all hope that Gordon has listened to the Service Chiefs as he cobbled together this welcome bonus scheme.
Tim Garden is the Lib Dem Defence spokesman in the Lords, and a former assistant chief of the defence staff.