This is yet another cost-cutting exercise by a bankrupt government department that simply cannot afford to pay its people what it once promised them (no different to BA and its cabin crew).
The MOD is hoping that most people will be either a) too dumb, or b) too lazy to work out what this means for them. I have calculated that my disposal income will be reduced by just under £1000 per year as a result of this rate change ... but then I commute just over 50 miles each way. Most people will lose less than this, and most of them won't notice or care enough to make a fuss.
It is extremely sad that an organisation that once prided itself on looking after its people now unashamedly resorts to cheating some of those people as a means to save money. I know the MOD is broke, and that body armour for the troops on the front line has to be paid for somehow, but it is still a depressing example of flawed reasoning and moral weakness by our leaders that an utterly arbitrary metric - in this case the distance between a serviceperson's family home-base and their (current) place of work - has become a means to discriminate between the rewards package offered to some over that offered to others.
Another nail in the coffin ....