The Minister for Defence Procurement (Jeremy Quin)
Over the last few weeks, I have had many discussions with my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) and other colleagues here today who are representing the 14 sites around England where this has taken place. I am acutely aware from those discussions, and the emails and communications that my hon. Friends have been receiving from their constituents, what a great distress these notices to quit have caused. I am very grateful that my right hon. Friend secured this debate this evening so that we could put more clarity on the situation.
It is perfectly understandable that there are so many difficulties faced by families at this time, as hon. Members have highlighted in this evening’s debate, and I am determined that we do all we can to get to a better solution. I reaffirm at the outset that while we have given notice on these 350 homes, the notice period is a full 12 months for all those homes and for every tenant, taking us through to the end of September 2021. I want to provide full clarity to tenants as soon as possible, but we are totally committed, over the next few weeks and months—if a way can possibly be found with Annington, as my hon. Friend the Member for North West Cambridgeshire (Mr Vara) and other Members suggested —to finding a way to enable tenants to have the offer of remaining in their homes when those properties transfer.
I should be clear from the outset that the MOD’s service family accommodation has one strategic purpose, which is to provide homes for our service personnel and their families wherever and whenever they are required to serve. When we no longer need housing to meet military requirements, they are disposed of. My right hon. Friend is absolutely right that over recent years, to reduce the voids, for reasons I will get on to, where properties have been temporarily vacant, we have made those available for sub-let to civilians.
Until 1996, the MOD owned the vast majority of service accommodation outright. However, that year, the MOD entered into an agreement with Annington Homes Ltd. Under the agreement, the MOD provided a 999-year lease to Annington over 57,428 homes. The MOD proceeded to sub-let the same properties under a 200-year underlease. Under the terms of the arrangement, the MOD retained all the costs of maintaining and managing the estate. This, among other reasons, meant that the MOD received a 58% discount on open market rents for the houses concerned for the first 25 years. Hon. Members will appreciate that those 25 years start to come up from next year. Annington has publicly stated that it believes that new rental arrangements should result in a significant increase in rent. The MOD disagrees and the matter is currently subject to arbitration.
Given that both parties recognised from the outset that the needs for MOD housing evolve over time, there was always an understanding that the MOD can return homes to Annington, and since 1996, over 19,000 homes have indeed been given back. Furthermore, last year, we agreed with Annington that we would hand back a minimum of 500 properties annually for the next seven years in return for a reduction on the dilapidation charge on each house of up to £7,000 per property, delivering up to a £24.5 million improvement to the taxpayer. However, homes can only be handed back as a group of contiguous properties, usually minimum packages of 20 homes. Where a group of properties is vacant, and it is absolutely clear that there is no future military use, the route to hand-back is very clear. However, in many cases , I am afraid, the situation has lacked that clarity, and rather than leave family homes vacant for potentially years, the MOD has sub-let those homes on a short-term basis to civilian tenants. First, this provides a home to the tenants; and secondly, it mitigates the cost to the MOD while longer-term decisions are made, or, indeed, while a vacancy exists before service personnel move in. Let me emphasise that we do not actually make money on these civilian lets. After all associated costs, the MOD estimates that they are, on average, loss making, but it is only a small loss compared with that which would otherwise be the case. About 1,500 Annington Homes properties have been sub-let in this way.
I am very sorry that decisions were taken—my right hon. Friend raised this—on the notice to quit and communications made without MPs or, indeed, the local authorities being informed sooner. Decisions that were made on the portfolio of properties that would be passed back to Annington as part of a wider programme were only made during the course of the summer, and I am afraid that covid did have a direct impact on this timing. During the lockdown, base moves were frozen. This has had an ongoing impact throughout the defence estate, with homes that might have been vacated remaining occupied for longer. In addition, during the same period, more than 1,200 service personnel and family members who would ordinarily have moved on from SFA housing either due to the end of service or, sadly, in some cases, due to family estrangement, have, as a result of the specific circumstances of covid, remained in their homes. This number continues to grow.
The consequences of these constraints forced us to identify other properties surplus to MOD requirements that we could hand back. But whatever the strategic position for the MOD and the nature of the short-term tenancies entered into, I want action to be taken for the future, to pick up on the point raised by my right hon. Friend. While it is absolutely right that temporarily vacant homes are made available for rent rather than being left vacant, I want greater clarity at the outset given to residents if the property is expected to be required for military use or disposal, and, if so, in what timeframe.
Stephen Crabb
Has my hon. Friend looked at the way these houses are being marketed through Orchard & Shipman? Is it being straight with these families about the terms on which they are taking on these properties? Many of the residents in my constituency tell me that they were under the impression that this would be secure and that they could look forward to many years of living in these properties.
Jeremy Quin
No such impression should have been given. These are short-term lets with, after the first four months, two months’ notice periods. They are temporarily vacant and they are being occupied on that basis. I was very concerned to hear from my right hon. Friend and from others that that might have taken place. I have received absolute assurances that that was not part of the marketing strategy from the managing agents.
Jeremy Quin
I have been aware of that from my hon. Friend. I am particularly sorry to hear that that was the case, and it should not have been the case. I have had written assurances that no such undertakings were received, but if he would like to write to me further, I will of course pick up on that. I had a written assurance that that was not the case and not part of the marketing, and it certainly should never have been part of the marketing of these properties. We would of course look into that and take it enormously seriously if it was the case.
That makes it even more clear that what we need to ensure for the future is that there is more clarity given to sub-letting tenants. It would be a crying shame not to make homes available that are vacant, but we need to make certain that we are clear regarding tenancies. That work is also being undertaken so that where there are existing tenancies in place, the same process should take place so that tenants can have that peace of mind for the future. I also want to ensure that in circumstances where disposals are due to take place, as in the case that my hon. Friend the Member for North West Cambridgeshire raised, wherever possible those are staggered over time to reduce the impact on local communities. It clearly has a significant impact on local housing demand where disposals happen in too great a number, and I am sure that we can make certain that we stagger them in the future.
My right hon. Friend the Member for Preseli Pembrokeshire asked why we could not simply rescind. I understand the passion behind the question and I understand what drives it. I cannot pretend to these civilian tenants that there is a long-term future in the MOD estate—that simply is not the case—but I am determined that we will do all we can to make the transfer and the transition as smooth as possible.
My right hon. Friend is also absolutely right that the properties at Cormorant Close are not linked to base utilities. In fairness to Annington, a lot of the data on this goes right back to 1996. I have had a full review of the circumstances for each of these, and we will obviously share that with Annington as, I hope, we move towards a better solution—I sincerely hope that we do—but it turns out that only four of the 14 sites have that linkage to MOD utilities. I hope that is helpful in ongoing discussions.
I do really want us to secure a good and improved circumstance for our tenants. If we can work with social housing providers, as my hon. Friend the Member for Devizes (Danny Kruger) mentioned, we would clearly wish to do so. We cannot sell to social housing providers; if we can facilitate a process with Annington Homes—that may well be in its interests—we would be very keen to do exactly that.
My right hon. Friend the Member for Preseli Pembrokeshire asked about the overall shape of things. Yes, we must work with Annington. I really do hope that we can get somewhere. Many Ministers before me have looked at this agreement in detail to find out what levers they have. I am again reviewing where we are with the circumstances, but I really hope that we can come to an agreement. In fairness to Annington, it has not said that it has an in-principle opposition to finding an arrangement, but I am aware that come September next year, it will have the absolute right to demand vacant possession of the homes being transferred. However, we are determined to work with it.
I sincerely hope that we can come to a satisfactory conclusion that works for Annington and works for these sub-let tenants. We will do all we can to try to get to a situation that will work for Annington and has benefits for the tenants concerned.
Question put and agreed to.