Future Accommodation Model

Charles Walker Excerpts

Tuesday 18th April 2017 Westminster Hall

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Walker. I thank my hon. Friend the Member for Manchester, Withington (Jeff Smith) for securing this debate, for making a very powerful case and for his questions to the Minister, which I hope will be answered today. It is also a pleasure to follow the hon. Member for Argyll and Bute (Brendan O’Hara).

I am sure we all agree across the Chamber that our armed forces need to evolve constantly to meet the security situation of the day, whether that is in their make-up, their equipment or their basing. Labour welcomes the chance to re-examine how we provide accommodation to our service personnel and consider how to make the offer as attractive as possible in order to keep encouraging our best and brightest into a career in the forces. It is vital that the wellbeing of our servicemen and women is a top priority in the changes made, but I am concerned that the future accommodation model focuses more on savings than on what is best for our personnel.

The hon. Member for Canterbury (Sir Julian Brazier) raised concerns that mirror those of my hon. Friend the Member for Manchester, Withington. The hon. Member for Dunfermline and West Fife (Douglas Chapman) reminded us of the Public Accounts Committee’s findings on service family accommodation. The hon. Member for Berwick-upon-Tweed (Mrs Trevelyan) asked whether the survey was good enough and stated her opinion that it was a very leading survey with limited choice—I shall refer to that point later. The hon. Member for Strangford (Jim Shannon) highlighted the importance of this issue to us all and related his experience with the armed forces parliamentary scheme and his involvement with serving personnel.

To put the debate in context, voluntary outflow rates for our armed forces are at an historically high level, particularly for jobs with transferable skills such as engineering. In the 12 months to 31 January 2017, more than 7,000 personnel left the armed forces earlier than planned through voluntary outflow. It appears that the overall offer of life in the armed forces is becoming less attractive: this is the sixth consecutive year of pay restraint, national insurance contributions are going up and rents are rising under the combined accommodation assessment system. It is therefore more important than ever that service personnel feel valued and that they should want to join the forces and stay in them. I will return to that point shortly.

One of the most significant changes made to service family accommodation was the selling off of married quarters to Annington Homes by the Major Government. I was not a Member of the House in 1996, but I am sure that those who were will remember the debate about the sale. Under the deal, the Department retained the freehold, but Annington Homes holds a 999-year lease, with the Department renting the properties back from Annington Homes on a 200-year under-lease. The deal was met with opposition from the Labour Benches; the then shadow Defence Secretary, the former Member for South Shields, said:

“The deal is breathtaking in its short-termism.”

He also said:

“The Government have never seriously attempted to deny the fact that the sale was not concerned with the long-term interests of our service men and women: the scheme was concocted solely to raise finances for the Treasury coffers”.—[Official Report, 16 July 1996; Vol. 281, c. 952-953.]

I understand that a rent review is due in 2021, 25 years after the initial sale, and every 15 years thereafter. As a consequence of that review, as is usually the case, the rent paid by the MOD is likely to increase.

I am concerned that if the future accommodation model is not done properly, we may see history repeating itself and the Government further tying the MOD’s hands. We are now hearing reports that because of poor management of the defence budget to the tune of £1 billion per year over the next decade, the Secretary of State is having to consider cuts to the Royal Marines. The Department has said that the future accommodation model will save it £500 million over 10 years, but we need to see more detail before we can take it at its word.

What we know about the future accommodation model so far is that the Government are fairly clear that they want to get personnel into the private rented sector, as well as promoting more home ownership, but are unclear on the detail of how to deliver that. The proposals laid out in the survey suggest that four potential options will be available to service personnel, loosely structured around the idea of stability or mobility. My hon. Friend the Member for Manchester, Withington has already pointed out the need for transparency and much more consultation with service personnel; I completely agree, and I look forward to the Minister’s answers to my hon. Friend’s questions.

Our main concerns with the future accommodation model as proposed are the impact on service families and standards in the private rented sector, costs, and the knock-on effect on retention rates. In the future accommodation model survey, the most important factor in accommodation for service personnel was good quality: 97% ranked it as a top priority. All of us here are all too familiar with the question of standards in the private rented sector. While many landlords are good, there are also those who are not good, and we are concerned that there will be nothing to check standards, and that in some cases families may be forced to live in less than appealing conditions. There will not be the same access to maintenance and repairs that personnel have now, and while service family accommodation can be adapted for families with disabled members, in the private rented sector such families will have to find housing that has already been adapted or convince a landlord to adapt a house for them.

There is also the need for security of tenure in the private rented sector. Some 86% of respondents to the AFF survey stated that the lack of guarantee of tenure during a posting was either a negative or a very negative aspect to renting privately. I simply do not see how it can be workable to encourage families or individuals who need to be mobile to move into the private rented sector. In the event of a posting, the onus will be on personnel to find new rented accommodation. That may be in a place they have never been before, and there will likely be cost implications for ending tenancies early, which will have to be covered. The complications are seemingly endless.

As for cost, my hon. Friend the Member for Manchester, Withington pointed out that there are no details when it comes to costing, except for the saving of £500 million over 10 years that the Department told the Armed Forces Pay Review Body it expects FAM to deliver, primarily through reduced running costs, capital receipts and savings, while maintaining the total subsidy that service personnel receive. However, if nothing has been settled in terms of the model, how can the Department make such a projection? I would be extremely interested to hear from the Minster what type of model that figure was based on and how the Department came to it.

Finally, there is the risk that FAM poses to retention rates. As I have mentioned, voluntary outflow remains high and we need to continue to attract people into the armed forces. Subsidised housing is a significant part of the overall offer, particularly when we consider that housing is becoming less and less affordable across the UK. The AFF survey made it clear that if service family accommodation was reduced in favour of a rental allowance, 76% of those surveyed would either consider leaving or would definitely leave the forces. That should be of great concern to the Government. The combination of a number of factors has created “the perfect storm” for retention issues and if the Government do not get the accommodation model right, they risk exacerbating the situation to a point of serious concern.

In conclusion, we know that in the past the Conservatives have made some rash decisions when it comes to service accommodation and we are concerned that this could be yet another costly example of that, hitting both the public purse and retention rates. The primary focus for a new accommodation model should be a balance between what is good for the service personnel and what works within the Department’s budget. Service accommodation should not be the first thing that gets cut to try to balance the books. The Government need to show that they value personnel just as much as they value equipment, and show that that view is much more than just words and translates into policies that have the wellbeing of our servicemen and women at their heart. I look forward to hearing the Minister’s response and I hope that it will clarify some of the points that have been raised this afternoon about this very important issue.

[Mr Charles Walker (in the Chair)]

I call the Minister. Minister, would you allow the hon. Member for Manchester, Withington (Jeff Smith) two minutes at the end to wind up?