faarn - i would think the responsibility for the LOA cuts lies in MoD rather than Govt. Up to MoD how they slice the diminishing pie, guess they see LOA as an easy target. I'm sure they must have some evidence to back-up the cuts....(or maybe they are just working on the premise "overseas, sound like a jolly to me, why would they need extra cash?"
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As the AFPRB don't cover allowances (unless their remit has changed?), I suspect the only factor that would affect LOA amounts would be repeated bending of the 3-stars' ears by the manning staff about gapped posts? Very hard to quantify the returns on the increased costs of a service person on overseas tour, especially when we no longer have the 'spare' capacity. (not my view - just guessing at the all-powerful bean-counters assessment).