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[A]
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local Overrons Allowance (1.04) is paid to British Service Personnel evtinent where they incur additional expenses in maintaining the standard of living with they would enjoy in the Ut. LOA is reviewed at, normally, true pear incerraj Sə
2. The Review procedure requires a detailed analysis of costs in the overseas station but as a first step it is necessary to establish the UK standard as tha basis for comparison. This standard takes the form of a comprcheraive budget shoving how 'average man' spends his income. Because patterns of expenditure vary at different income levels separate UK Pudgets are constructed for selected ringle and married service ranks and projected so as to cover all runko and family viren. The information used in drawing up expenditure patterns in the UK Budgets is kokou primarily from the Department of Employment Family Expenditure Burvey'. Additional information is obtained from interviews with Service personnel in the UK so that, where necessary, expenditure patterns can be modified to take account of essential variations imposed by the conditions of Service life as opposed to civilian life. The budgets are drawn up at the commencement of ench three year cycle of Reviews and are amended by reference to movements in the Retail Price Index at the time of each individual overseas.review so that up to date conta are reflected.
3. An IOA review is carried out by a small team of MOD personnel assisted by a representative of the Civil Service Department. In a series of interviews with Service personnel coupled with pricing exercises in shops etc direct comparisons are made between local costs and UK costs for the component elements of the UI budget. It is thus possible to establish the-additional cost of maintaining the UK standard of living in an overseas area.
4. In some overseas areas local conditions, particularly climate, may make it necessary to allow for additional expenditure on cssential items or services which have no parallel in the UK and thus do not appear in the UK Budget standard.
A typical example' would be the cost of heavyweight clothing to meet the extreme conditions of a Canadian winter. A UK resident would not normally possess such items but they would be essential purchases when on a tour of duty in Canada. When assessing additional costs incurred due to local conditions due weight is given to any compensating reductions in expenditure which might result where the application of the UK standard is inappropriate. For example, in say Singapore additional lightweight clothing would be required in the tropical conditions but the need for UK style clothing would be reduced.
5. Although it may be necessary to modify the UK standard because of local conditions it is not the purpose of LOA to equate the standard of living of Service personnel with that of the local population. Essentially LOA is concerned with the maintenance of the UK standard.
AMAVID IN
MARY NO. 51 26 NOV 1975
HKILIO
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CONFIDENTIAL
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