The annual report of the Armed Forces' Pay Review Body contains recommendations for the pay levels for members of the naval, military and air forces. Recommendations include: a three per cent increase in military salaries from 1 April 2005; a five per cent increase in daily rates of Separation Allowance and a £50 increase in associated bonuses; a three per cent increase in all rates of Specialist Pay and Compensatory Allowances; and increases in accommodation and food charges.

This is the 38th Report by the Armed Forces' Pay Review Body (Cm. 7516, ISBN 9780101751926), and provides independent advice to the Prime Minister and the Secretary of State for Defence on remuneration and charges for members of the naval, military and air forces of the Crown. The key recommendations in this Review are as follows: a 2.8% increase in military salaries; a 2.8% increase in specialist pay, compensatory allowances and reserves' bonuses; 3.7% increase in Grade 1 SFA/SLA rental charges and lower graduated increases below Grade 1, a further phased increase to garage rent and daily food charge of £4.07. Also there are specific targeted pay measures, including: a 5% minimum pay increase on promotion to OR6; new commitment bonuses and associated transitional arrangements; a reduction in the qualifying periods for longer separation allowance; new pay spines and specialist pay for service nurses; a new RN Clearance Divers' pay spine and two new supplementary rates of diving pay for EOD qualified divers and targeted increases to hydrographic pay. The Review Body estimates that the above recommendations will add 3.4% to the Armed Forces' pay bill. The Review Body also see the weakening labour market as giving the Services an advantage in recruitment and retention, but new policies will be needed to compete in the labour market, when the country emerges from recession. A more strategic approach is also required to review elements of the remuneration package. The Review Body stresses the need to deliver on the Government's commitments under the Service Personnel Command Paper (Cm.7472, ISBN 9780101742429) and specifically to push forward on support for home ownership.