Public Accounts Committee
Thursday 10th September 2026
Skip to latest contribution
This debate has concluded
(began 2 weeks, 3 days ago)
Watch LiveSkip to latest contribution
This debate has concluded
10:15
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
Welcome to the session on the Public Accounts Committee on Thursday, the 10th of September 2026. Today we are examining Armed Forces housing and the Ministry of Defence, repurchase of service family accommodation from Annington homes. In 1996, the Mod sold around 55,000 houses to Annington homes for 1.7 billion by 2024. The Nao estimated the deal had led the government 14.5 billion worse off. So the NOI has bought back more than 36,000 homes at a cost of 6 billion, ending an expensive arrangement but not undoing nearly three decades of poor value or weakened control over a vital part of the defence estate.
But the repurchase and the MoD's proposed 9 billion defence housing strategy offer a majority a major opportunity to repair and refurbish service family accommodation. However, success will critically depend on the Mod building capacity and expertise to achieve this. So this morning we will examine how the Mod plans to use this opportunity to improve military housing and what lessons government must learn before selling public assets for short term gain. So we've got a very senior cast this morning, and I'm very grateful to everybody for sparing time to come and see us this morning.
Jeremy, would you like to introduce yourself to begin with, please?
But the repurchase and the MoD's proposed 9 billion defence housing strategy offer a majority a major opportunity to repair and refurbish service family accommodation. However, success will critically depend on the Mod building capacity and expertise to achieve this. So this morning we will examine how the Mod plans to use this opportunity to improve military housing and what lessons government must learn before selling public assets for short term gain. So we've got a very senior cast this morning, and I'm very grateful to everybody for sparing time to come and see us this morning.
Jeremy, would you like to introduce yourself to begin with, please?
10:16
10:17
10:17
10:17
10:17
10:17
10:17
10:17
10:17
Tristan Osborne
-
-
Tristan Osborne
Thank you very much, Mr. Chairman. Defence of our country is the most critical of responsibilities of government and housing our troops who serve for our country, potentially putting their ultimate lives on the line is something which we have a deeply set within our mindset, within our country. And we we owe a deep sense of responsibility for these people. This deal, however, has let, in my view, has let those people down not only by the outcomes of it in terms of the financial liabilities, but also the state of the housing that they were put in.
So my line of questioning is just around how we ended up in this deal in the first place, and lessons that we need to learn from that. And my colleagues will follow up on that. So I've read the report in 2018. I've read, obviously, recent government announcements around poor value for money. The original contract was signed with this homes company, backed by Terra Firma Capital Partners and other financial institutions at the time.
How could we have ended up with such a poor contract that has left us with such a liability on the taxpayer and having let down our troops?
So my line of questioning is just around how we ended up in this deal in the first place, and lessons that we need to learn from that. And my colleagues will follow up on that. So I've read the report in 2018. I've read, obviously, recent government announcements around poor value for money. The original contract was signed with this homes company, backed by Terra Firma Capital Partners and other financial institutions at the time.
How could we have ended up with such a poor contract that has left us with such a liability on the taxpayer and having let down our troops?
10:19
Speaker 1
-
Speaker 1
Well, thank you. First thing to say is I want to draw a very important distinction between what you're talking about, which is the 1996 deal and the repurchase deal, which is actually the focus of this report, which I think is a good deal. And the department is praised in that report. And I would like to actually begin by thanking all the civil servants and public servants involved in the repurchase of this of the of these homes.
This is a very significant success. There is a lot to do to learn lessons from that for the future for the Defence Housing Service. The second thing is to strongly agree with you about the importance of housing. Housing matters, because every service family deserves a safe, secure and well-maintained home. Entirely agree. There are unique challenges that our armed forces face that is about frequent Redeployments colleagues. Mike and David can talk more.
We deal with in in government. So the shift to IFRS really does really. Changes, really unlock this in does unlock this. And just the other thing I would say we've already alluded to, the fact is we're in a relatively we're in a weaker negotiating position before 2019 as well would be my other question. I'm going to see if one of my colleagues wants to add to that, because it's it's a it's a good question, I don't know.
This is a very significant success. There is a lot to do to learn lessons from that for the future for the Defence Housing Service. The second thing is to strongly agree with you about the importance of housing. Housing matters, because every service family deserves a safe, secure and well-maintained home. Entirely agree. There are unique challenges that our armed forces face that is about frequent Redeployments colleagues. Mike and David can talk more.
We deal with in in government. So the shift to IFRS really does really. Changes, really unlock this in does unlock this. And just the other thing I would say we've already alluded to, the fact is we're in a relatively we're in a weaker negotiating position before 2019 as well would be my other question. I'm going to see if one of my colleagues wants to add to that, because it's it's a it's a good question, I don't know.
10:34
Speaker 3
-
Speaker 3
So I think I think it takes two people to negotiate. And the answer is, how do you bring Annington homes to the table? There were several key things in that. The first one was the enfranchisement. We went to court a couple of times and did well, which. The. Going forward, we could have been locked in legally for years over this. These are big sums of money and nobody want to lose.
So what what the court case, what the changes in IFRS 16 and what the renegotiation of the rent did over that period which you describe, was give us the opportunity to bring Annington homes to the table for a proper conversation about the way forward. So that's why we did what we did then.
So what what the court case, what the changes in IFRS 16 and what the renegotiation of the rent did over that period which you describe, was give us the opportunity to bring Annington homes to the table for a proper conversation about the way forward. So that's why we did what we did then.
10:35
10:35
Speaker 3
-
Speaker 3
So the two previous reports are clear. The first one more gentle, the second one much clearer that, you know, there is work to be done here. I wasn't around at the time, to be clear, but I don't see what the negotiation position would have been strong enough. So you see that the negotiation would have would have been strong enough to bring people to the table. You know, it was an alignment of three things that enabled to have a great conversation and sort this out.
10:36
10:36
Chris Kane
-
-
Chris Kane
Jeremy, one of the things that you said earlier to, to Tris was the the lesson, one of the lessons is that taking a long term view is important. But then you followed up and said, but it's very hard to look 30 years into the future. That inherent tension between the two statements, which I agree, I agree with, is very difficult to to deal with. You have the responsibility of dealing with it, but I think you can look towards one side of that, what you said or the other.
And if you look towards that, it's very hard to look 30 years into the future. If your predecessor 30 years ago was saying that, that might explain how we got into it. But if you say we should take a long term view with all of that involved.
And if you look towards that, it's very hard to look 30 years into the future. If your predecessor 30 years ago was saying that, that might explain how we got into it. But if you say we should take a long term view with all of that involved.
10:36
10:37
Speaker 1
-
Speaker 1
I think the objectives that were set essentially led to a more short term approach than, than than , than should have been taken. Now, that is partly driven by the objectives that were set. So another lesson here. And again, these things often come to the committee. Our job is often to maximise value for money, maximise the outcomes for the objectives that have been set. And that is that is, I think, another really important sort of lesson here around this.
And I think the importance of a long term objective that is focused on stewardship of a national asset is important.
And I think the importance of a long term objective that is focused on stewardship of a national asset is important.
10:37
Chris Kane
-
-
Chris Kane
And just to echo what the chair said, I think it's important that we say that we are we are about to start talking about a good contract, but looks like a good contract. I hope that doesn't come back to bite me in 30 years time when people are sitting here in this committee. But that lesson learning piece, I know you take it seriously and I know it can easy to be defensive when we're asking these questions, but it does seem particularly bad.
And that's what I think the committee is reflecting on. So that's just a comment from me.
And that's what I think the committee is reflecting on. So that's just a comment from me.
10:38
Tristan Osborne
-
-
Tristan Osborne
So I appreciate your answers in relation to the 2019 position. So obviously in .14, the assets that we acquired as part of this deal were as referred to in that were in quite a poor state. Now, part of that is because of essential maintenance was only conducted to a safe and legal standard. And I appreciate that we celebrate that. We've also the deal actually saw us purchasing the asset a significantly reduced valuation compared to what the seller was looking for.
The two parts to my question are we paid a significant amount of money on the original contract to this private provider? The asset now we've had to repurchase on behalf of the state is in a suboptimal condition, hence the reason why we're now having to improve it. Why has it taken till 2024 before the Mod exited the deal?
The two parts to my question are we paid a significant amount of money on the original contract to this private provider? The asset now we've had to repurchase on behalf of the state is in a suboptimal condition, hence the reason why we're now having to improve it. Why has it taken till 2024 before the Mod exited the deal?
10:39
10:39
10:39
10:39
Speaker 5
-
Speaker 5
So I guess a couple of points the way the deal was structured, and you are both right that the commercial consequences are a consequence of the detail of how it was drafted, how it worked, how the whole kind of various different clauses work together, the way it was structured, the level of losses were increasing exponentially. And you can see if you track through the various different Nao reports that the scale of loss is increasing really rapidly in a relatively short period of time.
So in real terms, it goes up from about 5.5 billion loss in 2018. Six years later, they're talking about the equivalent figure, about an 8.5 billion loss. So you can see that's really ratcheting up. And as we roll forward into the future, the losses as a consequence of the deal were continuing on a really, really steep upward trajectory. So there was a real imperative to act at the point of time when we did. And then, as colleagues have said, in order to secure a decent deal, when we were buying it back, we had to create commercial leverage.
That commercial leverage didn't exist earlier. It was a consequence of a series of really carefully calculated steps that created the conditions where a buyback was deliverable, and if we hadn't done that, we would have been buying these homes back at many billions pounds more with a with a much stronger counterparty. And we'd have been sat in front of this committee saying, well, why did you pay twice as much as you should have done to buy these homes back in 2018? Yeah.
So in real terms, it goes up from about 5.5 billion loss in 2018. Six years later, they're talking about the equivalent figure, about an 8.5 billion loss. So you can see that's really ratcheting up. And as we roll forward into the future, the losses as a consequence of the deal were continuing on a really, really steep upward trajectory. So there was a real imperative to act at the point of time when we did. And then, as colleagues have said, in order to secure a decent deal, when we were buying it back, we had to create commercial leverage.
That commercial leverage didn't exist earlier. It was a consequence of a series of really carefully calculated steps that created the conditions where a buyback was deliverable, and if we hadn't done that, we would have been buying these homes back at many billions pounds more with a with a much stronger counterparty. And we'd have been sat in front of this committee saying, well, why did you pay twice as much as you should have done to buy these homes back in 2018? Yeah.
10:41
10:41
10:41
10:41
Speaker 1
-
Speaker 1
Yes, it is a priority and that is why we are. That is one of the reasons why we are creating the Defence Housing Service in order to ensure that we provide the quality of homes that are . Service personnel rightly expect from the from the from the department. But the thing I would say is we're work is already underway. Last year we refurbished upgraded 1250 homes. The quality of our.
The service that we are offering has already improved. One thing that struck me preparing. Preparing for the committees. I looked at the number of active complaints that we have regarding the quality of homes on the 1st of July. It was, I think it was 60 or 66, 60 active complaints in the 60s. In November 2022, there were 4200 complaints. At that point in time. So the service has improved.
The other thing I would point to is survey data on the satisfaction with with military homes, that has increased by 12 percentage points over the past year to 75% of families are now saying they're satisfied. That's across the entire housing provided by the the the the department. That's actually higher than the national average for civilian landlords by four percentage points. Now, obviously, I would like it to be higher still, and I expect higher standards for our service personnel.
But we are we are we are getting after this. There is more. There is more that we need. We need to do. But it is a priority for the for the department because when it's not good enough, it's not good enough. And we've all seen examples of housing that isn't yet isn't yet at the standard we needed. And that's why we need this long term plan to get after it.
The service that we are offering has already improved. One thing that struck me preparing. Preparing for the committees. I looked at the number of active complaints that we have regarding the quality of homes on the 1st of July. It was, I think it was 60 or 66, 60 active complaints in the 60s. In November 2022, there were 4200 complaints. At that point in time. So the service has improved.
The other thing I would point to is survey data on the satisfaction with with military homes, that has increased by 12 percentage points over the past year to 75% of families are now saying they're satisfied. That's across the entire housing provided by the the the the department. That's actually higher than the national average for civilian landlords by four percentage points. Now, obviously, I would like it to be higher still, and I expect higher standards for our service personnel.
But we are we are we are getting after this. There is more. There is more that we need. We need to do. But it is a priority for the for the department because when it's not good enough, it's not good enough. And we've all seen examples of housing that isn't yet isn't yet at the standard we needed. And that's why we need this long term plan to get after it.
10:43
Speaker 3
-
Speaker 3
But I joined in 2022, and I was surprised at the condition of forces housing and what we were doing. And I think we've had a previous hearing on this at Defence Select Committee. I think it's fair to say we were not in control of the things we were taking care of. We had a non-compliance issue, had a mould issue. We were issuing houses with damp and mould. So we changed all that. We've turned all that around.
I think we've I think at worst we had 4000 cases just over of houses with severe damp and mould. All of that has gone. We've dealt with that. We've dealt with the compliance issue, the the few non-compliance issues we have now tend to be failure to get access into a house. And so we've worked really hard doing that. What we've got to is a position where the remaining houses are not resistant to modern life.
So we have single brick or single pane windows, so damp and mould is generated a lot. Our houses are generate probably between 6 and 8 calls per house per year into our help desk. Whereas for an equivalent housing association, you're probably three and I'm generalizing, but that's the scale of change that we're looking at. So so the only way now to fix it is our houses need a boost, which is the point of creating defence housing services to, to get rid of.
And of course, the other thing is if you think how people use these houses, the price of energy, nobody's opening the windows and people are drying the houses, drying their clothes in the houses, etc. so understanding the use of the house and, and just making sure we are making houses properly to resist the way that they will be used going forward is what we need to do now, which is the point of defence housing services.
I think we've I think at worst we had 4000 cases just over of houses with severe damp and mould. All of that has gone. We've dealt with that. We've dealt with the compliance issue, the the few non-compliance issues we have now tend to be failure to get access into a house. And so we've worked really hard doing that. What we've got to is a position where the remaining houses are not resistant to modern life.
So we have single brick or single pane windows, so damp and mould is generated a lot. Our houses are generate probably between 6 and 8 calls per house per year into our help desk. Whereas for an equivalent housing association, you're probably three and I'm generalizing, but that's the scale of change that we're looking at. So so the only way now to fix it is our houses need a boost, which is the point of creating defence housing services to, to get rid of.
And of course, the other thing is if you think how people use these houses, the price of energy, nobody's opening the windows and people are drying the houses, drying their clothes in the houses, etc. so understanding the use of the house and, and just making sure we are making houses properly to resist the way that they will be used going forward is what we need to do now, which is the point of defence housing services.
10:45
Speaker 2
-
Speaker 2
Thank you very quickly. One other point, which is a sort of philosophical one, is this is about moving from a reactive approach to a proactive long term mindset, which I think is a very different approach, allows us to engage in the sort of structured, thoughtful steps that Mike has just talked about. That's why the dip making this part of a ten year programme in the dip is so important. It stops. I think one of the problems we've had in the past is we didn't maintain something until it failed.
And that, by definition, is a reactive and somewhat , very often very costly approach to to life. So I think we can actually move forward in a more efficient and a more effective way by having this long term programme and putting specialist skills to work in that programme.
And that, by definition, is a reactive and somewhat , very often very costly approach to to life. So I think we can actually move forward in a more efficient and a more effective way by having this long term programme and putting specialist skills to work in that programme.
10:46
Matt Turmaine
-
-
Matt Turmaine
Thank you. So there are a number of points that that the three of you have communicated there, which are sort of touching on some other questions. I mean, that fix when fail point or however the report describes it. I mean, it's, you know, that's not a great approach. I do appreciate that progress is being made and that things have got better. I have a constituent in my constituency who's, you know, got an example of this, but there's a couple of points that I would like to come back to, if I may.
So the on the satisfaction levels, Mr. Pocklington, the the supporting material that's being provided by the NAO shows that we have satisfaction levels currently at 52% with regard to the SFA, which is, you know, obviously is not amazing. And equally, in terms of things like the response to requests for maintenance for the current accommodation satisfaction levels of just 39% versus 45 for dissatisfied, and for the quality of the repair work that's being done.
Dissatisfied rates of 49% and satisfaction of of just 33. So there's clearly some way still to go, isn't there, in terms of in terms of being able to, to, to be getting to an acceptable level knowledge?
So the on the satisfaction levels, Mr. Pocklington, the the supporting material that's being provided by the NAO shows that we have satisfaction levels currently at 52% with regard to the SFA, which is, you know, obviously is not amazing. And equally, in terms of things like the response to requests for maintenance for the current accommodation satisfaction levels of just 39% versus 45 for dissatisfied, and for the quality of the repair work that's being done.
Dissatisfied rates of 49% and satisfaction of of just 33. So there's clearly some way still to go, isn't there, in terms of in terms of being able to, to, to be getting to an acceptable level knowledge?
10:47
Speaker 3
-
Speaker 3
Yes. Is the is the, is the simple answer. We are on a journey. We've fixed the, the big things that are in front of us. We are working with lots of people to get better. I do come back to you with the core component of the houses that we own are not great, so we go out to them a lot and we fix them a lot, and it will be driving the things that you are talking about.
I mean, the defence housing services thing that we need to carry out over ten years is to put ourselves in a different position for the next 50 years or however long it is. So, so I'm a great believer in doing it efficiently, which is what we're planning to do. I'm a great believer in doing it properly. So when I looked at the housing stock and you find things like vents that don't lead anywhere, single brick walls, no cavity insulation, I am not surprised that our houses need a lot of love.
We have we have underinvested in them for the best part of 40 or 50 years, right? That needs to change. It comes back to the effect on the family because it does affect families. And and I'm sure we would agree, wonderful service personnel deserve better. That is the intention.
I mean, the defence housing services thing that we need to carry out over ten years is to put ourselves in a different position for the next 50 years or however long it is. So, so I'm a great believer in doing it efficiently, which is what we're planning to do. I'm a great believer in doing it properly. So when I looked at the housing stock and you find things like vents that don't lead anywhere, single brick walls, no cavity insulation, I am not surprised that our houses need a lot of love.
We have we have underinvested in them for the best part of 40 or 50 years, right? That needs to change. It comes back to the effect on the family because it does affect families. And and I'm sure we would agree, wonderful service personnel deserve better. That is the intention.
10:48
Matt Turmaine
-
-
Matt Turmaine
Thank you. And obviously, once again, acknowledging that progress is being made and that things are improving. What's your assessment of what the the sort of overall quality of the estate? Now, obviously, there are examples where things have been improved, but, you know, as as an estate as a whole, where are you on that, on that?
10:49
Speaker 3
-
Speaker 3
So, so we know nine out of ten houses need some serious attention. So, so they all meet a decent homes standard near enough, all 90 something percent. So so but that that standard is perhaps not as aspirational as you or I would like being frank. So, so the plan is to sort out, if you like, the building blocks of what we use to, to house our service personnel, hopefully, hopefully turn them from tolerable to aspirational.
10:49
Speaker 5
-
Speaker 5
Perhaps add a little color. So in terms of the estate overall, most of these houses were built either immediately post-war or through into the early 70s. So the inherent build quality of these standards, the inherent design, the inherent construction is of its age and, as we know, have not been particularly well maintained . Subsequently, well over half of the estate is below EPC d in terms of energy efficiency standards. So this is inherently an estate which, if you compared it to most, for example, regulated housing providers, our estate is inherently worse than than those in terms of where we're starting from.
We end up doing about 250 000 repair tasks, reactive tasks across that estate in a year. So because of that poor quality of housing, because of the condition, it drives a huge amount of reactive work. And every single example of a reactive repair is disruption to a service family, you know, interruption to, to them trying to get on and just enjoy their homes peacefully, which is where we get to. We need this sustained long term programme to address the fundamentals, the underlying quality of the properties.
And while we're getting on with that, we have also got to get much, much better at dealing with the reactive repairs and the kind of service for people who are in those homes, and we are tackling both of those things in parallel.
We end up doing about 250 000 repair tasks, reactive tasks across that estate in a year. So because of that poor quality of housing, because of the condition, it drives a huge amount of reactive work. And every single example of a reactive repair is disruption to a service family, you know, interruption to, to them trying to get on and just enjoy their homes peacefully, which is where we get to. We need this sustained long term programme to address the fundamentals, the underlying quality of the properties.
And while we're getting on with that, we have also got to get much, much better at dealing with the reactive repairs and the kind of service for people who are in those homes, and we are tackling both of those things in parallel.
10:51
Speaker 3
-
Speaker 3
There is there is a lessons learned thing here that we touched on earlier, that if you look back to the original deal and think about the human behaviour that followed, doing up someone else's house to their benefit is is inherently not what you would want to do. So we have neglected these houses. We have, as I say, we've put right the kind of things in front of us, but there is now a major thing to do to sort out the building blocks.
10:51
10:51
Speaker 3
-
Speaker 3
It's difficult to say. Right. So so I think a lot of it, but but I, I have no idea how the Mod has budgeted money for housing over the subsequent 30 years. It could be that we spent a lot of money on houses and did them up well. But there is a there is an inherent behaviour not to do that. And this runs through the whole military estate, not housing. Our infrastructure is in poor condition.
10:52
10:52
10:52
Speaker 5
-
Speaker 5
Well, so obviously it's a ten year programme to get the whole of the estate up to standard. We're actually doing two things with that programme. We are both trying to fix the condition of the homes, but also make sure we've got the right homes in the right locations, because one of the other consequences of the Annington deal is that we ended up not being able to move our homes around to kind of sell and buy homes where we needed them.
So there's a big mismatch between where we need houses of certain sizes and where we've got houses. So that's a really other important factor unlocked by the deal. We will see people moving into better quality homes progressively throughout the period of ten years. We Defence Housing Service will publish the plan to do that in its first year of operation. We're doing quite a lot of the planning and analysis that sits behind that now, but at the same time as we're doing those fundamental repairs much more quickly than that, everybody will be seeing an improvement in the standard of the repair service, the standard that we prepare homes to when families move in, because we have between 10 and 15,000 families moving home each year, and we're trying to kind of ratchet up the standards there so people will feel a benefit quickly.
But really tackling, tackling the underlying problems will take the whole of that ten year period.
So there's a big mismatch between where we need houses of certain sizes and where we've got houses. So that's a really other important factor unlocked by the deal. We will see people moving into better quality homes progressively throughout the period of ten years. We Defence Housing Service will publish the plan to do that in its first year of operation. We're doing quite a lot of the planning and analysis that sits behind that now, but at the same time as we're doing those fundamental repairs much more quickly than that, everybody will be seeing an improvement in the standard of the repair service, the standard that we prepare homes to when families move in, because we have between 10 and 15,000 families moving home each year, and we're trying to kind of ratchet up the standards there so people will feel a benefit quickly.
But really tackling, tackling the underlying problems will take the whole of that ten year period.
10:53
10:53
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
Mike. I don't want to be unkind, but you've been in place since 2022. This committee has been very critical of these housing housing survey figures for many years. And it isn't good enough because if we want to recruit and retain our service personnel, I would suggest to you, David, that we need to do something about this much quicker than ten years, because we found at Marham, for example, when we went to look at the F-35s, you know, people have been on operation Himars to Japan, were immediately came back, immediately sent off to the Gulf.
Their families, in some cases, as we saw, were living in substandard houses. Now, modern families won't put up with that length of tour and that service of housing. Just to give you an example, clearly matters quoted the worst figures. But if I look at the figures on how you regard the current service family accommodation, how satisfied are you with the following? The figures are worse today than they were in 2012.
Satisfied 52 as compared to 56 in 2012. Dissatisfied 29 compared to 33. If I ran a business where over half my customers were dissatisfied with my product, I wouldn't be in business very long. So I think permanent secretary, and I think, Mike, there is complacency about this. And why is it that the Mod can't produce a published minimum standard for single living accommodation? If they were social housing, you'd have to do that.
So I do think there is a degree of complacency over the condition of this housing.
Their families, in some cases, as we saw, were living in substandard houses. Now, modern families won't put up with that length of tour and that service of housing. Just to give you an example, clearly matters quoted the worst figures. But if I look at the figures on how you regard the current service family accommodation, how satisfied are you with the following? The figures are worse today than they were in 2012.
Satisfied 52 as compared to 56 in 2012. Dissatisfied 29 compared to 33. If I ran a business where over half my customers were dissatisfied with my product, I wouldn't be in business very long. So I think permanent secretary, and I think, Mike, there is complacency about this. And why is it that the Mod can't produce a published minimum standard for single living accommodation? If they were social housing, you'd have to do that.
So I do think there is a degree of complacency over the condition of this housing.
10:55
Speaker 3
-
Speaker 3
So you're right. I've been in place since 2022. Since then we have. I walked into quite a storm, damp and mould around compliance and around all those things. We have fixed all of those things. We have bought back Annington homes. We have put together a plan to launch the Defence Housing Service and we've. And we've got it financed and got money to do it. I understand your point about the ten years we're effectively rebuilding 50,000 houses and at the same time hope to develop some others.
So. So I wish I could tell you there is a quick fix. And it's not that we've not been doing anything. So last year we tackled the worst thousand houses. We'll do something similar this year. We've fixed, I think largely the service and there is a hangover. I used to I used to work in retail construction and you know, I really like to view these people as our customers.
Now this was not the case before. So we are working really hard to change this. And I actually think it's changed significantly. The conditions now allow us to fix it, which has not been the case for 40 or 50 years. So I hear what you say and that's fine, but it's my intention to fix this over the next ten years for the following 50, which we have failed to do for the previous 50.
So. So I wish I could tell you there is a quick fix. And it's not that we've not been doing anything. So last year we tackled the worst thousand houses. We'll do something similar this year. We've fixed, I think largely the service and there is a hangover. I used to I used to work in retail construction and you know, I really like to view these people as our customers.
Now this was not the case before. So we are working really hard to change this. And I actually think it's changed significantly. The conditions now allow us to fix it, which has not been the case for 40 or 50 years. So I hear what you say and that's fine, but it's my intention to fix this over the next ten years for the following 50, which we have failed to do for the previous 50.
10:56
10:56
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
Well, I suppose some of this revolves around money, so perhaps we could sort out the money aspect of it. As I understand the the deal to repurchase these houses at 6 billion was granted to you by the Treasury on condition that £9 billion was spent on refurbishment and repair over ten years. If that's the case, how much is going to be spent in this Parliament?
10:56
Speaker 4
-
Speaker 4
So, chair, we we touched upon this when we were last in in in front of you. You're absolutely right to refer to our 9.2 billion commitment for service family accommodation over ten. And as we talked about through the dip process, that was absolutely protected. It is a core priority for us for all the reasons that we have been setting out to you today and the committee are familiar with, as part of the the audit process and the variety of priorities and critical capabilities that we were considering in ensuring we had a balanced plan, we did need to reprofile some of the spend from this Parliament into next Parliament.
That was around 800 million. What I can do, though, is assure the committee that that alongside that, we were really clear and we wanted to prioritise that we were having a real terms increase so that we were really getting after the immediate problems and supporting defence housing services. So our plans for this year, a real terms increase on last year, the plans for next year, another real terms increase. The plan for the year after that, another real terms increase.
So we are not we are not really not complacent. We know how important this is to our service personnel. We know how important it is actually more broadly, so that we can optimise our estate and derive even greater value for money for it. But we did need to balance it in in the wider plan.
That was around 800 million. What I can do, though, is assure the committee that that alongside that, we were really clear and we wanted to prioritise that we were having a real terms increase so that we were really getting after the immediate problems and supporting defence housing services. So our plans for this year, a real terms increase on last year, the plans for next year, another real terms increase. The plan for the year after that, another real terms increase.
So we are not we are not really not complacent. We know how important this is to our service personnel. We know how important it is actually more broadly, so that we can optimise our estate and derive even greater value for money for it. But we did need to balance it in in the wider plan.
10:58
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
Can you just clear up this for me, because there's a little bit of confusion over these figures. As I understand it, the original allocation was 1.5 million to be spent in this Parliament. You have deferred 0.8 billion. And if that is the 8.8 figure, I think is is is being in the public domain. I'm not sure about the 1.5 billion in this Parliament. That means you're only going to spend 0.7 billion in this Parliament.
It sounds as though you're a long way short of getting anywhere near the 9.2 billion in 10 years.
It sounds as though you're a long way short of getting anywhere near the 9.2 billion in 10 years.
10:58
Speaker 4
-
Speaker 4
I think there is a risk of confusion between the service, family accommodation and budget and the single living accommodation budget and the 1.5 relating to the additional increase that we were we were looking to spend. So what we set out in the dip. So service family accommodation the next four years is 2.7 billion that we are. We are planning to spend over the next over the next four years. That does include already some of the reprofiling that we did need to do to ensure that we balance the broader programme, given the pressures that we have in defence.
But as I said, we absolutely were protecting the 9.2 billion over the ten. We we need to do that. We will continue to do that. And we were absolutely ensuring that we were alongside that, continuing to drive real terms increases so that we continue to make the progress that we wanted to make. I'm
But as I said, we absolutely were protecting the 9.2 billion over the ten. We we need to do that. We will continue to do that. And we were absolutely ensuring that we were alongside that, continuing to drive real terms increases so that we continue to make the progress that we wanted to make. I'm
10:59
11:00
Speaker 4
-
Speaker 4
In housing, in totality? I think I would need to write to the committee because that gets into the single living accommodation figures that I don't have in front of me today. So I'd need to to write to confirm that on the service family accommodation, the the four years going forward is the 2.7 billion. Obviously, this Parliament includes a prior year on that on that as well.
11:00
11:00
11:00
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
It should be relatively simple. How much are we going to spend in this financial year on defence housing. Because if you're if you're deferring 0.8 billion, how much are you going to spend, actually spend in this financial year? I mean, it'll come out in the accounts eventually. So how much are you proposing to spend? You must have a budget.
11:01
11:01
11:01
Speaker 2
-
Speaker 2
accommodation and it would include some of our defense optimization budgets. Jeffrey, you wrote to me about two days ago asking for this information and asking for a reply. Later this we will write, we will reply. You've asked the question. It's a perfectly fair question. It is, it is. It is in different places in our budgets in the Department, because you're including single living accommodation as well as service . Families
11:01
11:01
11:02
11:02
Speaker 3
-
Speaker 3
As Jeremy said very eloquently earlier, the very unusual. nature of of service life, the peripatetic nature of it, the fact that families are separated sometimes for long periods of time. So I think where, where, you know. philosophically where standards will need to flex and differ is where it has to. reflect the operational necessities of life in the armed forces. But absent that, it is obviously our intention to to offer people the same standard as they could get in in commercial life,
11:02
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
In normal life. Otherwise, how are we going to attract people into the armed forces? Taking David's point that you've got a ten year programme, isn't that too long? You want to recruit people, you want to retain them? Yeah, we're we're we're in a desperate state at the moment, needing to recruit more people. Housing is integrally. Linked
11:02
11:03
11:03
11:03
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
an easy task, and we don't have a lot of time to get after it either. Okay. And forgive me. So if I gave the impression that we were waiting for ten years before this would be fixed. No, I didn't get that. I got you were having a ten year programme. And I'm just saying that you need to think about that because I think it's too long. And but but we a few bits that go with that.
We are prioritising improving condition over capacity so that we're bringing the condition improvements as early as possible in that programme. We are improving all of the houses as we go through, and improving the service throughout the whole of that period of time. As we've touched on before, we are targeting the worst properties first. So, you know, the scale of the problem that we are challenging will be eaten into progressively through that period, and we will see .
We are prioritising improving condition over capacity so that we're bringing the condition improvements as early as possible in that programme. We are improving all of the houses as we go through, and improving the service throughout the whole of that period of time. As we've touched on before, we are targeting the worst properties first. So, you know, the scale of the problem that we are challenging will be eaten into progressively through that period, and we will see .
11:04
11:04
11:04
Speaker 3
-
Speaker 3
Our ambition is gated by the. 24 hours in the day and the amount of money that we can put to work, particularly at the front end of this, of this process, to get ahead of events. That is part of a resource. allocation in terms of the overall pot and what we prioritize. Obviously, at one level, we want to have the best possible service family accommodation and single living accommodation for our brave men and women in our armed forces, and we need to get to good as quickly as we possibly can.
But we also have a series of other objectives, which you know well about, because we've talked about them in this room before, which are about re-equipping our armed forces to deter and to fight and win, about leading in NATO, about rebuilding our supply chain for war, fighting readiness and resilience. Indeed, the whole of society needs to get ready for the onset, possible onset of war, creating an innovation engine as well, which requires a lot of time and attention to make sure that we infuse our capabilities with.
innovation at the pace of relevance, indeed, to be leading in that all of these things cost money. We only have so much money and so much time. So we're trying to get ahead of this one as much as fast as we can. It isn't just about us and our resources. Of course, as you've seen from what we've said about defence housing service, we're looking to collaborate with with the private sector, we're looking to infuse our capabilities with more skills.
We're looking to bring money and resources in from, from, from potential partners as well. And we bring that all to bear through the Defence Housing Service and its plan. The front end of this should allow us to accelerate, but it's too early . To be
But we also have a series of other objectives, which you know well about, because we've talked about them in this room before, which are about re-equipping our armed forces to deter and to fight and win, about leading in NATO, about rebuilding our supply chain for war, fighting readiness and resilience. Indeed, the whole of society needs to get ready for the onset, possible onset of war, creating an innovation engine as well, which requires a lot of time and attention to make sure that we infuse our capabilities with.
innovation at the pace of relevance, indeed, to be leading in that all of these things cost money. We only have so much money and so much time. So we're trying to get ahead of this one as much as fast as we can. It isn't just about us and our resources. Of course, as you've seen from what we've said about defence housing service, we're looking to collaborate with with the private sector, we're looking to infuse our capabilities with more skills.
We're looking to bring money and resources in from, from, from potential partners as well. And we bring that all to bear through the Defence Housing Service and its plan. The front end of this should allow us to accelerate, but it's too early . To be
11:06
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
able to make promises on that at this stage. But speed is everything. I want to move on from this, but I just want to say one thing. Unlike almost anybody else, defence personnel have to be tied to this housing on the whole because of a variety of things. They need to be near to where they're going to be called, and they move about a lot. Therefore, we owe it to them to produce the highest possible standards.
And I accept what Mike standard says. Mike green says the standards of housing that everybody expects today are very different to where they were ten years ago. So you've got rid of mould. Fine. But they actually expect a better standard of insulation and heating and everything else. Nowadays, I .
And I accept what Mike standard says. Mike green says the standards of housing that everybody expects today are very different to where they were ten years ago. So you've got rid of mould. Fine. But they actually expect a better standard of insulation and heating and everything else. Nowadays, I .
11:06
Blake Stephenson
-
-
Blake Stephenson
Really, really want to move unless it's very important. Mike, I want to move on. I wanted to reassure you on your complacency point. So it took us two years to do the biggest property deal of its type in the UK with Annington homes and get it done. It's taken us a while to get all the money in the dip assigned in consultation with ministers. ET cetera. ET cetera. We have a plan.
We are in the process of setting up an arm's length body to deliver it, and we will deliver it. It does take time and money to fix 40 years of neglect. We . Are not
We are in the process of setting up an arm's length body to deliver it, and we will deliver it. It does take time and money to fix 40 years of neglect. We . Are not
11:07
Speaker 3
-
Speaker 3
complacent. I agree, I agree with you on our service personnel. There aren't many programs in the DEP larger than this one, and I think that demonstrates how important we take. We take this, you know, we are nothing without our people. We need our people to be comfortable and happy. We need their families to be well settled and looked after and to feel really appreciated. Because it. The one thing I'd add to what Jeremy said earlier was it's not just about the serving men and women.
Their families make huge. sacrifices as well to be part of the family that is Ministry of Defence, and we . Need to
Their families make huge. sacrifices as well to be part of the family that is Ministry of Defence, and we . Need to
11:07
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
really keep that close in our in everything we do. I indicated in my comments earlier on about long service, long tours of service of some of our servicemen. I am I in error? I should have declared my interests as a chartered surveyor. I don't think I'm going to make anything out of this whole business, but some of my fellow chartered surveyors might, so I need to declare that interest. It's registered on my members interests.
11:08
Matt Turmaine
-
-
Matt Turmaine
So we will now move on. Please to you, Matt. Thank you. Chair. So I just wanted to talk a little bit about something you obviously, your ambitions for improving the. accommodation within this Parliament. And obviously, you have great ambitions. You want to see as much of it done as possible. Can you talk a little bit about what they are? So, for example, have you set .
Specific
Specific
11:08
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
targets for how much of it you're going to get through and things like this. Thank you. So we had a profile that was sat behind the Dip submission, the Dip plan that was built on a look across the whole of the estate. We are currently going through a much more detailed bottom up view of what do we need to do in what locations. So we've divided the country up into 65 zones.
For each of those zones. We're doing a really rigorous analysis of how many homes have we got of what size, how many homes do we need of what size, what condition are those properties in, and what is the most economic mechanism to get to the end point that we need? And we've got a various different set of tools that we can use. We can spend money on refurbishment, we can sell properties and replace them. We can build properties on our own land.
So we've got a series of different interventions that we can make to actually tackle the problem. So the planning around SPC 27 that we're working through now is us pulling together that bottom up plan. I can't give you specifics of how many new homes will be provided, how many homes will be refurbished, but you can see the run rate at the moment is around about 1000 substantial improvements per annum. I expect that to double during the course of the period that we're working through.
And alongside that really substantial investment in actually improving the properties, all of our properties that are prepared for move in will be prepared to a higher standard. As we touched on earlier, that's between 10 and 15,000 properties a year. So there'll be these kind of twin things running, which is substantial refurbishments running at order of 2000 a year,
For each of those zones. We're doing a really rigorous analysis of how many homes have we got of what size, how many homes do we need of what size, what condition are those properties in, and what is the most economic mechanism to get to the end point that we need? And we've got a various different set of tools that we can use. We can spend money on refurbishment, we can sell properties and replace them. We can build properties on our own land.
So we've got a series of different interventions that we can make to actually tackle the problem. So the planning around SPC 27 that we're working through now is us pulling together that bottom up plan. I can't give you specifics of how many new homes will be provided, how many homes will be refurbished, but you can see the run rate at the moment is around about 1000 substantial improvements per annum. I expect that to double during the course of the period that we're working through.
And alongside that really substantial investment in actually improving the properties, all of our properties that are prepared for move in will be prepared to a higher standard. As we touched on earlier, that's between 10 and 15,000 properties a year. So there'll be these kind of twin things running, which is substantial refurbishments running at order of 2000 a year,
11:10
Matt Turmaine
-
-
Matt Turmaine
And then across the whole of the estate, a general lifting of standards. That's good. Thank you for that. And you sort of pre-empted the next part of my question in a way, which was that modelling around making sure that you've got the right. accommodation for the needs of the service personnel that you've got as well. But you said that that is part of the plan that you're pulling together at . The
11:10
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
And the big challenge is to replan, as David said, I think also, as well as building a really good plan, we know that things will change over that period of time. One of the challenges we've identified with the Annington deal is it was rigid, it didn't flex because we have set the estate up differently. We are now in a position as well as working to a plan. When things change, we own the properties. We can sell them.
If they're in the wrong location. We can buy properties in other locations. So we've got a much more flexible system. So both a good plan and the ability to veer and haul as needed. One of the other things is probably worth just touching on that. We agreed as part of the implementation of the housing strategy was there's been a new planning designation for military affordable housing that's been published in the nppf. One of the things that that allows us to do is to both build and buy section 106 affordable housing, which means that, again, we've got another tool in our armoury to be able to, to .
Go and
If they're in the wrong location. We can buy properties in other locations. So we've got a much more flexible system. So both a good plan and the ability to veer and haul as needed. One of the other things is probably worth just touching on that. We agreed as part of the implementation of the housing strategy was there's been a new planning designation for military affordable housing that's been published in the nppf. One of the things that that allows us to do is to both build and buy section 106 affordable housing, which means that, again, we've got another tool in our armoury to be able to, to .
Go and
11:11
11:12
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
to share some of the details around that plan once you've finished pulling it together? We will. And part of the requirement of the strategy is that we will publish that regularly . As the Defence Housing Service gets into full operation, it will publish its plans and it will publish an annual report on its performance, both the delivery of the improvements and the kind of day to day service standards. So we're intending to get much, much more transparent .
As we
As we
11:12
11:12
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
Yeah. Thank you. Thanks. Thank you. Chair. Are you able to clarify at all, David, how many houses you're thinking about buying on the open market from 106 arrangements. Not at the moment, Jeffrey. We as we've worked through the replanning process, we are finding that probably more of the homes will be refurbished than bought. As we kind of look at the economics of the various different interventions, the details of that obviously are dependent on the housing market and the cost of refurbishment.
So it's a thing we're keeping under constant review. But at the moment I couldn't give you the new houses. Is the strategy to buy up those new houses and then sell off some of the older houses that need a lot of money spending on them, and where that makes sense. And that's part of the economic appraisal that we were doing. Absolutely, yes. So we talk about replacing homes as one of the interventions, and that's one of the tools in our armoury.
Thank you very much.
So it's a thing we're keeping under constant review. But at the moment I couldn't give you the new houses. Is the strategy to buy up those new houses and then sell off some of the older houses that need a lot of money spending on them, and where that makes sense. And that's part of the economic appraisal that we were doing. Absolutely, yes. So we talk about replacing homes as one of the interventions, and that's one of the tools in our armoury.
Thank you very much.
11:13
Rupert Lowe
-
-
Rupert Lowe
Right, Rupert. Next, please. One question on immigration only, please. Thank you very much, Jeffrey. Yes. So I think my question I've got one a bit later, which may be for Jeremy. Jeremy, maybe Jeremy will come into this one is probably for Rupert and Mike, actually. I mean, I'm keen to drill down on, you know, what actions you're taking to effectively support the government's commitment to build more homes on surplus land and.
11:14
11:14
11:14
Speaker 3
-
Speaker 3
intend to actually release for that development. Okay, well, I'll start at. 20,000 foot level and hand over to Mike for more detail. But it is part of part of the dip. settlement was treasury condition. It was exactly on this point, which was for us to have a commitment and a condition to deliver. 100,000 homes into the . For the general. population and part of the.
The DHS plan will be to. Over the period of the next ten years, to start to work assiduously to free up those homes and the land for those homes. So it's very much part of the programme. It's the other side of the programme. On the one hand, obviously the. The highest priority is to get our service personnel into appropriate family accommodation. But as part of that exercise, it's also to free up, up to.
100,000 homes to to . Make our
The DHS plan will be to. Over the period of the next ten years, to start to work assiduously to free up those homes and the land for those homes. So it's very much part of the programme. It's the other side of the programme. On the one hand, obviously the. The highest priority is to get our service personnel into appropriate family accommodation. But as part of that exercise, it's also to free up, up to.
100,000 homes to to . Make our
11:14
11:15
11:15
11:15
11:15
11:15
11:15
11:15
11:16
Speaker 2
-
Speaker 2
doing and this crisis that we have with regard to, I think, what my colleagues have set out, the policy objective is to build. 100,000 homes, either for military use or for the private or for the private, the private market. That's the policy objective that we've that we've set out. The details of the. strategy are ultimately matters for the plan. The Defence Housing Service will be. obliged under law to publish.
I think it's in the first year of its of its operation. There's a separate. question of use of.
I think it's in the first year of its of its operation. There's a separate. question of use of.
11:16
11:16
Rupert Lowe
-
-
Rupert Lowe
11:16
11:16
11:17
11:17
11:17
11:17
11:17
11:17
Speaker 2
-
Speaker 2
But off the top of my head, I don't. It's often the voids are being repaired. They're awaiting the arrival of people. And I think the the voids are about 20% at the moment. I think we would consider 10% to be the absolute optimal number of. There are always going to be voids in the in the in the system, because this is a system with 15,000 . People,
11:17
11:18
11:18
11:18
11:18
11:18
11:18
Rupert Lowe
-
-
Rupert Lowe
I mean, I'm aware you do. You do stuff with mirrors and Serco as a government, but clear springs, I've done a bit of research, seems to be a private company. It seems to be a company that effectively and given your history of the 96 issue, I think you should be looking at this. I mean, it appears to be a . Company
11:18
11:18
11:18
11:19
11:19
11:19
11:19
11:19
Speaker 3
-
Speaker 3
got time important. Jeffrey. No, I know we've got to stick to the subject. And just to confirm the position on Afghan as well, it's it's virtually zero. I understand the data I have is in December, we formally closed the final transitional site on the defence estate for the resettlement programme. So I don't think we will . See
11:19
11:19
11:19
11:19
11:19
11:19
Blake Stephenson
-
-
Blake Stephenson
11:20
11:20
11:20
11:20
11:20
Speaker 2
-
Speaker 2
Whether that is about operating, whether it's about ensuring that our customers, the service families themselves, the service personnel get a high quality, high quality service. How I would characterize it is we are we are building that. process at the moment. So we have a chair, Natalie Elphicke, we're just about to go out to recruit for. Non-execs for the Defence Housing Service, and we want to make sure we have a strong board with the right expertise.
But we're also. recruiting people now for the Defence Housing Service, whether that is the commercial experts that we that that that we need people with operational housing.
But we're also. recruiting people now for the Defence Housing Service, whether that is the commercial experts that we that that that we need people with operational housing.
11:21
11:21
11:21
11:21
Blake Stephenson
-
-
Blake Stephenson
now. But I think we're building we're building. We've recruited more since the report. But the vehicle. The vehicle is the Defence housing service. So so there were two parts to your skills thing. One was development, which we wholly admit they are skills we need to acquire. The other one was housing Services, which we do do. We're the third biggest housing provider in the UK. So in housing services we fix things.
We do things. Yes, we do have the skills. You have a lot of experience and expertise in housing support service. Yes. So on that point you are at odds, I think, with the.
We do things. Yes, we do have the skills. You have a lot of experience and expertise in housing support service. Yes. So on that point you are at odds, I think, with the.
11:21
11:21
Blake Stephenson
-
-
Blake Stephenson
So the Nao. report highlighted paragraph 3.12. If you want to take a look, highlighted that you have currently little experience or. expertise in housing support services. So let's focus on that one for the time being. Perhaps, perhaps, Mr. Green, you want to know. We are the third biggest housing provider in the UK now. We don't always do it. Well. Historically we have had. under-investment as we go since 2022.
We are getting better and better. We have a lot of work to do, but. But without wishing to say we're perfect, we're not. But but we we have struggled for funding to fix things. We are we are in the process of doing that. So in housing services and I defined housing services as maintenance, as all of those kind of things, as cutting trees, as whatever it may be.
We have a lot of.
We are getting better and better. We have a lot of work to do, but. But without wishing to say we're perfect, we're not. But but we we have struggled for funding to fix things. We are we are in the process of doing that. So in housing services and I defined housing services as maintenance, as all of those kind of things, as cutting trees, as whatever it may be.
We have a lot of.
11:22
11:22
Blake Stephenson
-
-
Blake Stephenson
Maybe not always the money in development. I completely agree with you. These are skills we have to acquire. So looking forward to the Defence Housing Service and what funding will be required and how large that organisation will be, and how you're going to create and develop the skills. Could you just walk us through your thoughts there and how you're going to ensure that it's properly funded and it's going to be sufficiently . Independent,
11:23
Speaker 2
-
Speaker 2
have the skills to deliver what the strategy requires? Well, we this is this is work in progress. We are establishing the Defence Housing Service. At the moment. It's operating in shadow form. Establishing it formally depends on royal assent of the Armed Forces Bill. So I don't want to prejudge, ultimately a decision for for.
11:23
11:23
Speaker 2
-
Speaker 2
But if possible, we are aiming to establish it on. the 1st of April next year. We will only do that if we can do so safely and we can protect public money. And it's also in the interests of service personnel. As well. We will then set out the. arrangements through a framework. document and the governance that you would expect to see of a. non-departmental public body.
The committee will be will be. familiar . , familiar with. These will ultimately. These are ultimately policy questions for ministers, though. And, well, you know, obviously we have a relatively new government. So these are I need to reserve their position to take policy advice and policy. decisions on on that. On the issue of funding, the often the key issue is what happens to receipts from sales.
That's often the issue that that. And as part of the overall agreement, the Ministry of Defence has access to those receipts from from from from from sales. But obviously the precise details and arrangements that are policy decisions for ministers. Then the next question that often comes is that of borrowing. Those familiar with the legislation will know that the Defence Housing Service will legally be able to borrow, but there are no.
plans for it to be able to borrow to fund.
The committee will be will be. familiar . , familiar with. These will ultimately. These are ultimately policy questions for ministers, though. And, well, you know, obviously we have a relatively new government. So these are I need to reserve their position to take policy advice and policy. decisions on on that. On the issue of funding, the often the key issue is what happens to receipts from sales.
That's often the issue that that. And as part of the overall agreement, the Ministry of Defence has access to those receipts from from from from from sales. But obviously the precise details and arrangements that are policy decisions for ministers. Then the next question that often comes is that of borrowing. Those familiar with the legislation will know that the Defence Housing Service will legally be able to borrow, but there are no.
plans for it to be able to borrow to fund.
11:25
11:25
Speaker 2
-
Speaker 2
What is in our mind is external finance, including borrowing, may perhaps be used for support commercial activities. These are things like joint venture arrangements. This will require agreement with the Treasury though, so that's not agreed. But the the concept that there may be occasions when that is. appropriate is what is behind .
11:25
11:25
Blake Stephenson
-
-
Blake Stephenson
In the in the legislation. Thank you for that. Can I ask Rupert a question? Actually, I visited the site in Abbey Wood in Bristol some time ago, and it's a great facility and you've got a really great team down there. So I just wanted to congratulate you on that. You outlined earlier the. challenges that you're facing with the National Armaments Directive, and I wrote down two things.
You said there's only so much money, which is always true, and speed is everything. And we're in the midst of a political argument at the moment about when we're going to get to 3% of GDP. 3.5% GDP funding for the armed forces. I don't want you to stray into policy.
You said there's only so much money, which is always true, and speed is everything. And we're in the midst of a political argument at the moment about when we're going to get to 3% of GDP. 3.5% GDP funding for the armed forces. I don't want you to stray into policy.
11:26
11:26
11:26
11:26
11:26
11:26
11:26
Speaker 3
-
Speaker 3
Bill and all of the other dependencies. Yes, I am. You are. Yes. I'm very confident that the the Dip has the full support of our government. It's been agreed. We're now moving into the delivery phase, taking the money and the programmes and turning them into a plan for action and to get out of the door quickly with our new programmes and new.
11:26
11:26
Speaker 3
-
Speaker 3
which defence housing services are very, very important component. So yeah, I, I mean, David and I would agree that the the money there allows us to fully fund our ambitions. Now, we are obviously working through those ambitions in the context of the Defence Housing Service plan, which will be liberated by the Armed Forces Bill going through.
11:27
11:27
11:27
11:27
11:27
11:27
11:27
11:28
11:28
11:28
Blake Stephenson
-
-
Blake Stephenson
But I think it's important we look to the future as well and make sure that we fix things. And I think we're going to get on to some lessons learned very quickly. Before I finish chair, I just want to move on to the support that the Mod drew on from the UK Government. Investments UK GI, and I think this was a positive story in the Nao report, which is which is good. The purchase price of 6 billion was a good outcome in in the Nao report.
I'm not going to comment on whether it's a good outcome. We now say that that's a good outcome to the. negotiations and was arrived at using a process in which you did draw on support quite heavily from UK. GI what advice? And I'm sort of loath to have one department provide advice to another department within government. But theoretically, hypothetically speaking, if you were to give some advice to other.
I'm not going to comment on whether it's a good outcome. We now say that that's a good outcome to the. negotiations and was arrived at using a process in which you did draw on support quite heavily from UK. GI what advice? And I'm sort of loath to have one department provide advice to another department within government. But theoretically, hypothetically speaking, if you were to give some advice to other.
11:29
11:29
11:29
Speaker 2
-
Speaker 2
And I think that's probably for Jeremy and then Mike, perhaps. Yeah, I, I first of all, I think UK GI provided very well provided invaluable support on this process. So I think it's Robert Russell and the team there were. incredibly played a really important role on this as part of the team. So my advice , I say to someone that has been on the board of UK GI in the in the past is involve them early in the in thinking about the policy, you've got to create it as a sense of team is the key thing so that they are part of the discussions and can help shape the discussions.
They bring a lot of expertise. I think the thing that also helped here is it was a good. cross-government team as well. It also involved, I think, the Treasury working very. collaboratively as well with clear political direction. But UK GI bring very specific skills and expertise.
They bring a lot of expertise. I think the thing that also helped here is it was a good. cross-government team as well. It also involved, I think, the Treasury working very. collaboratively as well with clear political direction. But UK GI bring very specific skills and expertise.
11:30
Blake Stephenson
-
-
Blake Stephenson
And I've seen actually in many jobs the value that they can play. Mike I have a life mantra which is trust your expert. Right? So UK GI were brilliant. And again I would call out Robert Russell as being fabulous in this conversation, in a conversation where decimal points matter a lot. You know, we're dealing with such big numbers. What it gives us is as negotiators is the confidence that we're doing the right thing, you know, so so Robert and the team were brilliant at saying you are doing the right thing.
They were brilliant at having the. conversations with us. And indeed, on behalf of us with Treasury to say this is a good deal, it is the right thing to do. Here is the. negotiating band that you, you, you have go and do the deal. And so I can't praise them highly enough because, you know, it . Makes us
They were brilliant at having the. conversations with us. And indeed, on behalf of us with Treasury to say this is a good deal, it is the right thing to do. Here is the. negotiating band that you, you, you have go and do the deal. And so I can't praise them highly enough because, you know, it . Makes us
11:31
11:31
Blake Stephenson
-
-
Blake Stephenson
nervous when we deal with such big numbers. We need to know we're getting it right. And to what extent did you rely on external expertise? Aside from UK GI? Not much. So so we had we had a lot of legal expertise. Clearly in the infringement court cases we had, if you like the. transactional legal people actually writing out the deal, writing out the here are the deeds for all the houses because I'm sure you can imagine the depth of.
documentation for. The best part of 40,000 houses was a lot. But in terms of .
documentation for. The best part of 40,000 houses was a lot. But in terms of .
11:31
Speaker 3
-
Speaker 3
Advice, it was mainly UK, GI and Treasury and rest assured that we. I was just going to say, rest assured, we're looking to. institutionalize that kind of support as we move forward. You'll appreciate. The National Armaments Group has a big commercial role to play in many areas. UK relationship UK GI continues to be very strong indeed, with the. Defence in. Investments unit being set up as part of National. Armaments Defence.
11:32
11:32
Speaker 3
-
Speaker 3
Essentially creating a little corporate finance boutique to help crowd in private. capital into our. programmes and into our supply chain, and to. manage the dozens of fees that we we are rolling out of and into new arrangements with. And we are embedding UK GI inside that as. secondees and as a bridge into the rest of UK GI. So the relationship with them is very good. But as.
As Jeremy and Mike said, getting them in early is the key. As with all.
As Jeremy and Mike said, getting them in early is the key. As with all.
11:32
11:32
11:32
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
And you know that that is that is a critical importance. Could I just add one specific point in terms of the learning from the buyback transaction? It's not just who you involve, it's how you involve them. And rather than farming out bits of work to expert consultants, letting them write a report, taking it back in-house, and kind of having a bit of ping pong. The thing we did here is we built a single integrated team.
We had strong commercial capability in our organisation, and we were leading that team, but we were pulling in advisers. We had people at the heart of the process who knew when they needed to ask for help and when they didn't, because they had that commercial knowledge. And that's exactly mirrored in the way that Rupert's just described, how we're setting up that relationship with UK GI going forward. But it's a really specific piece . Of learning.
We had strong commercial capability in our organisation, and we were leading that team, but we were pulling in advisers. We had people at the heart of the process who knew when they needed to ask for help and when they didn't, because they had that commercial knowledge. And that's exactly mirrored in the way that Rupert's just described, how we're setting up that relationship with UK GI going forward. But it's a really specific piece . Of learning.
11:33
11:33
11:33
11:34
11:34
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
Very much, very much so, yeah. Okay. Thank you. Rupert. There's one bit of the defence housing strategy which really concerns me. You have excellent private sector expertise. You will know that the development sector are the sharpest knives in the book. The idea of having a state housing development service . fills me with absolute horror. I stand by joint ventures, partnership stakes.
It's a different thing, but to actually go into the field and compete against the private developers, you know, from that private sector expertise, once you depart from your core activities, the Mod has a core activity. I think this will be a huge distraction and potentially an enormous .
It's a different thing, but to actually go into the field and compete against the private developers, you know, from that private sector expertise, once you depart from your core activities, the Mod has a core activity. I think this will be a huge distraction and potentially an enormous .
11:34
Speaker 3
-
Speaker 3
Loss of public money. Well, I don't want to project forward as to what the outcome will be, because obviously we're hoping to manage public money very wisely and be very successful in what we're doing. But I do agree with you in principle. I want to see the Defence Housing Service. partner with. developers and in a way that allows us to leverage that those sharp elbows and and for common good, as opposed to try and go toe to toe with them and think we can, we can, we can bring in that, that.
expertise and on our own. So I think it's, it's much more of a partnership . Model as we
expertise and on our own. So I think it's, it's much more of a partnership . Model as we
11:35
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
look to, to spin out. But David, what's your view? Well, so exactly that. So we have no intention of going out and competing with other developers to, to run these things ourselves. We have a few examples which we have already successfully moved forward in partnership with private developers. So the Waterbeach development has with urban and civic, really significant and really financially successful development. But that's been done absolutely in partnership.
We know what we bring to the party and we know when we need to bring others in. And one of the things we've been talking, obviously to the market, we've been talking to all the major housebuilders, all the major developers. One of the other things that's really clear is there's an incredible synergy between the work on military housing and the opportunity to develop surplus military land, because those two can work together. A lot of the major housebuilders have said to us, look, if we can get really involved with you in partnership on your commercial development activities, we can help you access our buying power for the doors, windows, kitchens, bathrooms that you need to refurbish your military home.
So those two things are really supporting each other and working in tandem.
We know what we bring to the party and we know when we need to bring others in. And one of the things we've been talking, obviously to the market, we've been talking to all the major housebuilders, all the major developers. One of the other things that's really clear is there's an incredible synergy between the work on military housing and the opportunity to develop surplus military land, because those two can work together. A lot of the major housebuilders have said to us, look, if we can get really involved with you in partnership on your commercial development activities, we can help you access our buying power for the doors, windows, kitchens, bathrooms that you need to refurbish your military home.
So those two things are really supporting each other and working in tandem.
11:36
11:37
11:37
11:37
11:37
Rupert Lowe
-
-
Rupert Lowe
SFA estate in 1996. That's the key issue because again, it's poor taxpayer. So I guess my question really is, and I can see what happened in 96. I think we've elegantly discussed and quite rightly, Jeremy, that's not something you're responsible for and well done with trying to tidy up the mess. But actually tidying up the mess begs the question of how do we avoid a future mess which we have to tidy up.
So my question for you, I think, is, and looking at the the logic of this in 96 seemed to be to. deceive people about how much it was costing them to run the estate by paying a reduced rent, getting a deficient contract, and as a result, ending up with the mess we've got. So my question is, do you think on balance, it is a bad idea to try and round trip the. taxpayer and.
So my question for you, I think, is, and looking at the the logic of this in 96 seemed to be to. deceive people about how much it was costing them to run the estate by paying a reduced rent, getting a deficient contract, and as a result, ending up with the mess we've got. So my question is, do you think on balance, it is a bad idea to try and round trip the. taxpayer and.
11:38
11:38
Rupert Lowe
-
-
Rupert Lowe
Current cost with trying to sort of cut your cost short term and end up with a bullet payment in the long term? So I think again, in many ways, I like transparency, I like clarity, and this again, muddies the waters. And it was a case of the government doing a deal with the private sector. So the question is, is it a bad idea to do deals like this. And is . The
11:38
11:38
11:38
11:38
11:38
11:38
Speaker 2
-
Speaker 2
That we've talked about today, we think saves. Our latest estimate is this will save the Ministry of Defence. £7.7 billion over ten years. This is a success story. We've we've said well done. We are talking about we're talking about today. I think that one of the challenges of the. 1996 deal is too much focus was put on short term. financial returns.
So I'm, I think. agreeing with the essence of your of your of your point that was driven by the.
So I'm, I think. agreeing with the essence of your of your of your point that was driven by the.
11:39
11:39
11:39
11:39
Speaker 2
-
Speaker 2
But with the what we know now, that was a very bad that was a very bad deal in terms of being wary about the private sector and the speed of the private sector. Well, I don't want to make any comment about the partner involved in this in this deal. And I think you're answering a generic question just for the .
11:39
11:39
Speaker 2
-
Speaker 2
I've been informed by colleagues is they behave professionally in that process from. 2019 and the. negotiations that followed. But did they want to maximise their return? Of course, of course, of course they did. But your broader point is, is, is right that government needs to be very. careful about. incentives that it. creates and the behaviours that result from. transactions such as this.
That's why there's often such a prize in actually.
That's why there's often such a prize in actually.
11:40
11:40
Rupert Lowe
-
-
Rupert Lowe
Rather than having divergent incentives is another question. Another question I've got for you because again, I run multiple contracting businesses, and if I see a contract that looks so bad, I question whether or not there's been some form of fraud or misfeasance. Because often you find if a contract looks too good to be true, there's usually a reason why it looks too good to be true. So do you have a process whereby you actually do lift the drains? If you end up finding you've had your .
Face
Face
11:40
11:40
11:41
11:41
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
issues that you raised in relation to this deal. Thank you. Thank you chairman. Of course, the answer to some part of your question, Rupert, is that this committee has done an entire inquiry on fraud and error in the Mod, and we know very well what your systems are to try and check that contractors are actually invoicing for what they've carried out.
11:41
11:41
11:41
11:41
Geoffrey Clifton-Brown
-
-
Geoffrey Clifton-Brown
No questions. Right. Well, can I thank our witnesses very much indeed. You know, I think where I came from at the beginning is you're all to be congratulated of one way or another, sorting out this problem that you had. Let's hope that you can go forward now and produce as quick a results for the standard of defence housing as possible, because it is a priority if we want to recruit and retain our servicemen and we owe it to their families.
As I say, if we are asking them to undertake long tours of duties, we're asking them to move constantly. We owe it to them to produce decent housing. So thank you all very much. The uncorrected version of our transcript will be available in the next few days. I am absolutely certain that we will be producing a report with recommendations, which we hope you will study carefully. So . Thank
As I say, if we are asking them to undertake long tours of duties, we're asking them to move constantly. We owe it to them to produce decent housing. So thank you all very much. The uncorrected version of our transcript will be available in the next few days. I am absolutely certain that we will be producing a report with recommendations, which we hope you will study carefully. So . Thank
11:42