The Ministry of Defence (MoD) is unable to pay full-time soldiers and military personnel their promised bonus, offered as a more cost-effective pay rise, because the MoD's payroll system can't currently handle it.
The MoD said that to reduce the cost of a blanket pay rise to the taxpayer, it would offer a third of all military personnel a pay increase through a bonus scheme. However, the governmental organisation's online payroll system doesn't allow for one-off payments.
As a response to the massive failure, the MoD is now implementing an IT upgrade to its system, costing a whopping 500,000 - cutting into the savings it had managed to secure by paying the extra money that way.
Full-time members of the army have been eagerly awaiting their extra pay after the independent Armed Forces' Pay Review Body recommended all should be paid an additional 2.9% to boost morale and prevent people from leaving.
The MoD agreed to the pay rise, although said 2% would be submitted as a pay increase, while the remaining 0.9% would be paid in a one-off bonus. The total has been backdated to April, making for a chunk of money to leave the government's coffers.
"We are currently working to deliver the one-off payment, which is planned to be made to service personnel by the end of the financial year," an MoD spokesperson commented. They added the hiccup it wouldn't delay the payment, although as a precise time frame hasn't been put in place, it leaves the deadline pretty open.
Although the split between bonus and backpay will save money for the MoD in the long run, it won't save much this financial year, analysts warned.
"Paying 0.9 per cent as a non-consolidated bonus will save the MoD 90m from next year's budget," said Malcolm Chalmers, deputy director-general at the Royal United Services Institute told the FT. "But only if the bonus is not included in the baseline for computing the 2019 increase."
