First Defence Finance: How does the Bank of England Work?

How Does the Bank of England Work?

Author: First Defence Finance

You've probably heard the phrase "the Bank of England has changed interest rates" countless times.

But what does that actually mean?

Who decides whether interest rates go up or down? Why does the Bank of England change them? And how could a decision that gets made in London affect your savings, mortgage or loan?

With the Bank of England's next interest rate decision coming up on 17th September 2026, here's everything you need to know, without the financial jargon.

First, what is the Bank of England?

The Bank of England is the UK's central bank, but it's different from the banks you might use for your current account or credit card.

Its job is to help keep the UK's financial system stable and keep inflation under control.

One of its most important jobs is setting the Bank Rate, the interest rate that influences many other interest rates across the economy.

The Armed Forces Pension Schemes Quick Reference Guide

 To view the quick reference guide to the Armed Forces Pension scheme click on the link below.

Armed Forces Pension Schemes Quick Reference Guide

Defence Update: Local Overseas Allowance rate changes 2026

Local Overseas Allowance rate changes 2026

From 1 October 2026, some Local Overseas Allowance (LOA) rates will go up, and some will go down, depending on the cost of living in your location.

Check the new rates for where you're based before the change takes effect.

LOA explained

LOA is money paid to Service personnel who are working overseas.
It helps cover the extra cost of everyday living overseas, when prices abroad are higher than in the UK.

What's changing and why

Every year, experts check the cost of living in each country. They use information from the Employment Conditions Abroad (ECA) survey and the Office for National Statistics (ONS). This tells us if prices have gone up or down compared to the UK.

Two things to know about this year's changes:

1. Child rate is staying the same: The way LOA works out payments for children is being looked at again. Until this review finishes, child LOA rates will not change.

2. Second car payments are going down: New ONS data shows that running a car in the UK now costs less than before. As LOA compares costs to the UK, this means the second car payment is going down everywhere.

What you need to do

Look up the full details on the new rates for your location. These can be found in the Directed Letter 'Revised Local Overseas Allowance Rates effective from 1 October 2026' (on defnet and Defence Connect).

Your Offer, recognising your service

There are other allowances available to help with essential needs and family wellbeing while you're overseas.

Find out more in JSP 752 or visit Discover My Benefits to explore the range of savings, allowances and opportunities available.

Point of Contact

The Allowances Team: People-AFRem-AllcesGroup@mod.gov.uk

Serve & Protect Credit Union: Free financial education webinars this October

 
🌿 Green Living: Simple Eco-Friendly Tips to Lower Your Bills
When: Thursday 8th - 12:00-12:45
What to Expect: Discover how you can live a greener life to protect the planet and your wallet.

✍ Budgeting 101: Take Control of Your Money
When: Tuesday 13th - 12:00-12:45
What to Expect: Learn how to create a budget that meets your financial goals, with tips to cut spending.

🏡 Wills, Trusts and LPA Explained: Presented in Collaboration with Estates Planning Seminars
When: Wednesday 14th - 12:00-13:30
What to Expect: Discover the options available for protecting your assets and your family.

🌍 Financial Guidance for Global Majority Workers in the UK
When: Thursday 15th - 12:00-12:45
What to Expect: Explore the common challenges faced by Global Majority Workers and the support available.

🐖 Saving Made Simple: Practical Habits to Boost Your Savings
When: Wednesday 21st - 12:00-12:45
What to Expect: Discover 10 practical savings methods to build a healthy savings cushion.

☔ Financial Resilience: Ready When it Matters
When: Thursday 22nd - 12:00-13:00
What to Expect: Discover why financial resilience is so important, with simple tips to improve your resilience.

🚀 Credit Score 101: Tips to Boost Your Score
When: Friday 23rd - 12:00-12:45
What to Expect: Understand the importance of credit scores, with simple tips to improve your score.

💷 Borrow Smarter: Tips to Strengthen Your Loan Application
When: Thursday 29th - 12:00-12:45
What to Expect: Explore the journey of a loan application, the factors lenders evaluate, and what to do before applying.

🔗 Register for free here: sandpcu.co.uk/hs-webinars

Motorfinity Community Update (September 2026)

Motorfinity Community Update (September 2026)

Your role could unlock more than you think with Motorfinity

The new 76 plate is here

The new 76 plate has arrived — and if you work in the NHS, emergency services, armed forces, education, social care or another eligible sector, your role could unlock exclusive savings on a brand-new car.

With selected vehicles available for quick delivery, you could be behind the wheel of a new 76 plate sooner than you think.

More than just a saving

Depending on your eligibility and the manufacturer, Motorfinity customers can access:

• Exclusive discounts on brand-new cars
• A wide choice of leading manufacturers
• Family discounts with participating brands
• Flexible finance options
• Part exchange
• UK-wide delivery
• Expert support from first browse to delivery

Blandford: Garrison forces mortgage clinic starts Wed 7th Oct

 

This will take place the first Wednesday of the month and is based in the Williams Building 0900 – 1200hrs.

This is free no obligation advice for serving personnel, veterans, and their families.

Information provided by Bovington HIVE

Department for Work & Pensions update: Do you know your state pension age?

With Pension Awareness Week 2026 ongoing, DWP are encouraging customers, service users, colleagues and stakeholders to take one simple first step: checking their State Pension age on GOV.UK.

As State Pension entitlement is linked to National Insurance contributions, the Service community are reminded that spouses or civil partners who accompanied their Serving partner on an overseas assignment can complete a Gov.uk online form to request that NI credits are applied to their record for time spent overseas. For further information, eligibility criteria and the online form, please go to: https://www.gov.uk/guidance/national-insurance-credits-for-partners-of-armed-forces-personnel-overseas

Department for Work & Pensions update: Do you know your state pension age?

With Pension Awareness Week 2026 ongoing, DWP are encouraging customers, service users, colleagues and stakeholders to take one simple first step: checking their State Pension age on GOV.UK.

As State Pension entitlement is linked to National Insurance contributions, the Service community are reminded that spouses or civil partners who accompanied their Serving partner on an overseas assignment can complete a Gov.uk online form to request that NI credits are applied to their record for time spent overseas. For further information, eligibility criteria and the online form, please go to: https://www.gov.uk/guidance/national-insurance-credits-for-partners-of-armed-forces-personnel-overseas

Department for Work & Pensions: Latest news updates

Loved ones of asbestos and dust-disease victims to receive fairer compensation

Families who have lost loved ones to asbestos and other dust-related diseases will get higher compensation payouts, as part of the Government’s effort to support bereaved families.

Workers who develop asbestos-related and dust-related diseases like mesothelioma and pneumoconiosis caused by their work can claim a one-off payment from the Government if they haven’t already secured compensation from their employer.

This is often the only option available to sufferers, since it can take years for these diseases to develop, meaning the employer responsible has usually gone out of business by the time someone is diagnosed.

However, under the current system the payment is passed to their grieving family at a reduced rate if it is paid after the sufferer dies. New legislation will ensure that dependants will receive the same rate as sufferers, in full.

Read the press release

*The MOD War Pension Scheme also provides for asbestos exposure claims attributable to Service, such as Diffuse Mesothelioma. See https://www.gov.uk/guidance/help-for-veterans-diagnosed-with-diffuse-mesothelioma

Major work experience drive for young people

Young people will be given vital work experience opportunities thanks to a major initiative between government and Britain’s leading retailers – with the ambition to create up to 100,000 jobs by the end of the Parliament.

Alongside the sector’s ambitions of creating 100,000 jobs, the British Retail Consortium and DWP are launching a new work experience programme, Opening Shift, which will see 18-24-year-olds looking for work offered two to four weeks of hands-on experience as part of more than 11,000 placements with Britain’s biggest retailers, including Tesco, John Lewis, Waitrose, Curry’s and Costa Coffee, complete with dedicated workplace support and interview experience.

The DWP will manage the pipeline of eligible young Universal Credit customers who will be referred to the voluntary programme through jobcentres, and the retailers will provide the placements and wider support, with 16 to 35 hours of work experience provided each week for two to four weeks.

They could be offered a permanent role if one is available, be put on the retailer’s talent bank, or directed towards apprenticeship and other opportunities.

Read the press release

Pension Awareness Week 2026

As part of Pension Awareness Week, Pension Geeks is offering free online events, including a session on how MoneyHelper can help you. Visit the Pension Awareness Week website for more information.

Department for Work & Pensions: Latest news updates

Loved ones of asbestos and dust-disease victims to receive fairer compensation

Families who have lost loved ones to asbestos and other dust-related diseases will get higher compensation payouts, as part of the Government’s effort to support bereaved families.

Workers who develop asbestos-related and dust-related diseases like mesothelioma and pneumoconiosis caused by their work can claim a one-off payment from the Government if they haven’t already secured compensation from their employer.

This is often the only option available to sufferers, since it can take years for these diseases to develop, meaning the employer responsible has usually gone out of business by the time someone is diagnosed.

However, under the current system the payment is passed to their grieving family at a reduced rate if it is paid after the sufferer dies. New legislation will ensure that dependants will receive the same rate as sufferers, in full.

Read the press release

*The MOD War Pension Scheme also provides for asbestos exposure claims attributable to Service, such as Diffuse Mesothelioma. See https://www.gov.uk/guidance/help-for-veterans-diagnosed-with-diffuse-mesothelioma

Major work experience drive for young people

Young people will be given vital work experience opportunities thanks to a major initiative between government and Britain’s leading retailers – with the ambition to create up to 100,000 jobs by the end of the Parliament.

Alongside the sector’s ambitions of creating 100,000 jobs, the British Retail Consortium and DWP are launching a new work experience programme, Opening Shift, which will see 18-24-year-olds looking for work offered two to four weeks of hands-on experience as part of more than 11,000 placements with Britain’s biggest retailers, including Tesco, John Lewis, Waitrose, Curry’s and Costa Coffee, complete with dedicated workplace support and interview experience.

The DWP will manage the pipeline of eligible young Universal Credit customers who will be referred to the voluntary programme through jobcentres, and the retailers will provide the placements and wider support, with 16 to 35 hours of work experience provided each week for two to four weeks.

They could be offered a permanent role if one is available, be put on the retailer’s talent bank, or directed towards apprenticeship and other opportunities.

Read the press release

Pension Awareness Week 2026

As part of Pension Awareness Week, Pension Geeks is offering free online events, including a session on how MoneyHelper can help you. Visit the Pension Awareness Week website for more information.

Hampshire: Operation Signature Hampshire Constabulary - help protect against fraud

Click image for more information. 

Information provided by South East HIVE Hub

Armed Forces Pension Awareness Week 2026: 14th-18th Sept

Army Pension Quick Reference Guide

Armed Forces Pension Awareness Week returns from 14–18 Sep, with a range of resources, presentations and opportunities designed to help serving personnel and veterans better understand their Armed Forces pension.

Armed Forces pensions can be complex, and understanding your pension and the benefits available to you is important at every stage of your career and beyond. Throughout Pension Awareness Week, we will be sharing practical information to help make pensions easier to understand and give you the knowledge you need to make informed decisions.

New pension resources

Throughout the week, the team will be releasing a series of factsheets covering some of the topics that can be difficult to navigate. These will provide clear and accessible information on subjects including:Taxation and your Armed Forces pension
Understanding your pension benefits
Pension forms and what they are used for
Tools and resources available to help you understand your pension
Other key aspects of the Armed Forces Pension Schemes

Access the Pension Awareness Week resources here: https://www.gov.uk/guidance/pensions-and-compensation-for-veterans

Join our online presentations and webinars

The team are pleased to be working with the Forces Pension Society and White Ensign Association to offer a series of online sessions throughout the week.

Tuesday 15 September | 11:00–12:00

AFPS 15 and advice for younger members
Hosted by the Forces Pension Society

This session will provide an overview of AFPS 15, with information and advice particularly relevant to younger members of the Armed Forces.

Join the presentation: https://teams.microsoft.com/meet/343659045212715?p=aU5jxp2Oyw6UFTmJJB

Meeting ID: 343 659 045 212 715

Passcode: hS6rx7M5

Wednesday 16 September | 11:00–12:00

Overview of AFPS 75, AFPS 05 and AFPS 15
Hosted by the White Ensign Association

This webinar will provide an overview of the different Armed Forces Pension Schemes, helping members understand the key features of AFPS 75, AFPS 05 and AFPS 15.

Join the webinar: https://events.teams.microsoft.com/event/317d7a71-f9e3-48e1-a572-119a56acfd70@9e902c46-439c-4b5d-b4…

Thursday 17 September | 11:00–12:00

Understanding pension taxation
Hosted by the Forces Pension Society

This session will focus on taxation and Armed Forces pensions, helping to explain an area that can often feel particularly complex.

Join the presentation: https://teams.microsoft.com/meet/361419005131144?p=gTyFIRCtFITMbM2GTR

Meeting ID: 361 419 005 131 144

Passcode: Rm6ra3Lb

Ask an Expert

Our popular Ask an Expert desks will also return, giving Service Personnel an opportunity to speak directly with members of the Armed Forces Pensions team, ask questions and find out more about your pension.

You can visit us at:

MOD Main Building, London
15, 16 and 17 September | 11:00–14:00
Location within Main Building: Exhibition display area located in 001NHLL

Get involved

Whether you are at the beginning of your Armed Forces career, approaching retirement or have already left Service, Pension Awareness Week is an opportunity to learn more about your pension and the benefits you may be entitled to.

We hope you will join us throughout the week, make use of the new resources and take part in one of our presentations, webinars or Ask an Expert sessions.

Find out more about Armed Forces pensions: https://www.gov.uk/guidance/pensions-and-compensation-for-veterans

How much could you save? see Motorfinity’s Sept offers

See Motorfinity’s latest models and top discounts: https://www.motorfinity.uk/

Colchester: Personal Debt Worries? Colchester Community Debt Support

 

Information Provided by East HIVE Hub

Vale of Glamorgan: Free School Meals Scheme for Pupils in Years 7 & 8 - Vale of Glamorgan

Vale of Glamorgan Council:

From September, pupils in Years 7 and 8 living in households receiving Universal Credit will be able to apply for the Welsh Government’s expanded Free School Meals scheme, following the removal of the income threshold.

This is the first phase of a wider rollout to other secondary school year groups

Check the eligibility criteria and apply for Free School Meals

Remember, the eligibility criteria for Free School Meals and the School Essentials Grant are different. If you need help with the cost of school uniforms, equipment or other essentials, you can also check whether you're eligible for a School Essentials Grant

Information provided by Wales HIVE Hub

Serve & Protect Credit Union: Free financial webinars this September

Dates are detailed below; to find out more or to register for a webinar, please go to: https://sandpcu.co.uk/hs-webinars

Car Finance: More than a Monthly Payment
Date: Tuesday 1st September
Time: 12:00-12:45

Green Living: Simple Eco-Friendly Tips to Lower Your Bills
Date: Thursday 3rd September
Time: 12:00-12:45
What to Expect: Tips for living a greener life to save money and protect the planet!

Budgeting 101: Take Control of Your Money
Date: Thursday 10th September
Time: 12:00-12:45
What to Expect: Create a budget that meets your short and long-term financial goals, plus tips to cut your spending.

Credit Score 101: Tips to Boost Your Score
Date: Thursday 17th September
Time: 12:00-12:45
What to Expect: Understand the importance of looking after your credit score, plus actionable tips to improve yours.

Harmful Effects of Gambling w/ GamCare
Date: Tuesday 22nd September
Time: 12:00-13:00
What to Expect: Discover the financial impacts of harmful gambling with representatives from GamCare.

Saving Made Simple: Practical Tips to Boost Your Savings
Date: Wednesday 23rd, Friday 25th September
Time: 12:00-12:45
What to Expect: Explore 10 practical savings methods that anyone can apply to build a healthy savings cushion.

Borrow Smarter: Tips to Strengthen Your Loan Application
Date: Tuesday 29th September
Time: 12:00-12:45
What to Expect: Understand what happens throughout the journey of a loan application, some of the key factors lenders evaluate, and what to do before you apply.

Department for Work & Pensions: Latest roundup of news – 21 Aug 26

Department for Work and Pensions (including Jobcentre Plus) arrangements for Monday 31 August bank holiday

Department for Work and Pensions (including Jobcentre Plus) arrangements are different for 31 August bank holiday:

England, Scotland and Wales 

• On Monday 31 August offices and phone lines are closed

To make sure people get their payment on a day when our offices are open, arrangements have been made to make some payments early.

If the expected payment date is Monday 31 August, then benefits will be on Friday 28 August.

If the expected payment date is not shown, customers will get their money on their usual payment date.

Free bus travel 24/7 for disabled people

From 1 April 2027, people who hold a disabled bus pass can travel on buses for free, no matter the time of day. This extra support will help to open up access to workplaces, education, training, and other opportunities as well as giving people breathing space on the cost of living and putting money back in people’s pockets.

Currently, disabled bus passes are only valid for travel between 9.30am and 11pm during weekdays, unless local authorities choose to fund an extension.

Read the press release

Government invests in young people with more opportunities close to home

Thousands more young people will be able to gain the skills, qualifications and experience they need for future careers, as part of a major package to break down barriers stopping access to technical education, training, and apprenticeships.

The package includes: A new bursary, worth up to £4,500 per year per household, that will remove a barrier that can otherwise discourage young people from taking up an apprenticeship, helping them build the skills and independence that lead to long-term, well-paid work. Thousands more college places to expand access to skills and training close to home. Free apprenticeship training for all eligible under-25s from August, up to £8,000 in support for SMEs hiring young apprentices, and National Insurance Contributions relief for apprentices under 25 will help deliver 50,000 new youth apprenticeships.

Find out more

SW MoneyHelper Financial Wellbeing Network latest information sheet: Your options for borrowing money (plus a super top tip energy update)

Introduction

According to historical data from the Bank of England's Money and Credit reports, consumer credit net borrowing spikes significantly in late autumn, known as the November Spike. Net consumer borrowing through credit cards, car finance, and personal loans consistently experiences a sharp acceleration in November. This is primarily fuelled by aggressive retail promotions and early festive spending. However, we start to think about borrowing in the summer.

Most of us need to borrow money at some point in our lives. Using the right type of credit in the best way can help you deal with unexpected expenses, such as buying a new fridge, or planned expenses such as festive holidays. Find out what to consider first, to make sure you make the right decision.

Deciding whether to borrow money

There are some important questions you need to ask yourself before you borrow money. For example, can you wait until you have enough money without borrowing? And could you afford to pay it back if you did borrow the money?

If you’re struggling financially, first make sure you’re claiming all the benefits you’re entitled to and if there are grants or rebates you might qualify for. Also, see if there are other ways to cut back on your costs, for example by switching energy, phone, or internet provider.

If you tend to be impulsive when buying things, try giving yourself a cooling off period of at least two days. When you’ve had a chance to think about it, you might change your mind. If you’re facing higher living costs, find out about extra sources of income and support in our section Help with the cost of living. If you’re thinking about borrowing money to help pay your bills, you should consider getting free debt advice first. Find out more about Dealing with debt.

To view the information sheet in full, please CLICK HERE

Defence Update - BBC special: Our Offer – your money, your future

BBC special: Our Offer – your money, your future

Radio 4's Money Box has spoken with Service personnel, a panel of experts, and the Minister for Veterans and People about how the Armed Forces offer more than just your pay packet.

The Armed Forces Offer gives you a range of benefits. These can help your money go further now and in the future. This includes help with housing, discounts and support to save.

In the special episode aired on 29 July, Money Box explored what this means for our people and the challenges they can face. It also looked at what Defence is doing to keep improving the offer.

Real stories, real support
Presenter Felicity Hannah spoke with Service personnel at Weeton Barracks in Preston to learn how they manage their finances. She was also joined in the studio by an expert panel, to discuss what’s on offer, from joining to leaving the military.

The panel included Ann Griffiths, Head of Policy and Research at the Royal British Legion, Kate Gannon, Vice President of the Personal Finance Society, and Sergeant Cameron Eden, a serving member of the Army and creator of ‘The Savvy Squaddie’ – a YouTube channel that offers guidance and insights to help Service personnel and veterans with their personal finances.

Felicity spoke with personnel who have received the retention bonus and used the Forces Help to Buy Scheme, and to a member of the Staff and Personnel Support Branch, who helps Service people with their finances.

Serve & Protect Credit Union: Financial wellbeing information

Serve and Protect Credit Union is available to Service community employees as part of their financial wellbeing offering.

The not-for-profit organisation offers the option to save regularly through payroll and access responsible borrowing if needed.

Prepare for every stage of life

From managing everyday costs to preparing for major life moments, having the right support can make a real difference.

That’s why Serve and Protect want to remind you of one of the staff benefits you can access – Serve and Protect Credit Union. Whether you’re saving, planning ahead or managing life changes, support is available.

Visit the Serve and Protect website for more info: sandpcu.co.uk/plan-ahead