The Ministry of Defence (the Department) acknowledges the fundamental importance of good quality accommodation in retaining service personnel yet too many personnel find themselves in living quarters where the standard is simply not good enough.
Poor accommodation puts a strain on working and family life and is detrimental to morale. It also undermines efforts to recruit and retain armed forces personnel, many of whom have specialist skills which are in short supply. At a time of such financial strain, the Department cannot afford to lose experienced and skilled personnel simply because their homes are not up to standard.
A significant proportion of personnel, in some surveys almost half, remain dissatisfied with their accommodation, and the Department is not optimistic that this situation will improve much in the foreseeable future. Planned reforms of the system designed to improve the accommodation options available are unlikely to start to be implemented nationally until 2022 at the earliest, while the existing system has created a mismatch between the traditional model of military housing and the ways in which UK citizens now live.
Pilots for the Future Accommodation Model are much-delayed and two out of three will not begin until next year. Meanwhile, the Department is having to manage the renegotiation of rents for service family homes leased from Annington Property Limited – a huge task given the starting point of the diasastrous1996 deal which left the taxpayer between £2.2 billion and £4.2 billion worse off. It also needs to start afresh with its in-house management of the Defence Infrastructure Organisation, and re-tender its housing maintenance contracts.
“Too many military service personnel find themselves in living quarters where the standard is simply not good enough.
“Poor accommodation puts a strain on working and family life and hits morale and retention rates. The nation cannot afford to lose experienced and skilled personnel simply because their homes are not up to standard.
“Satisfaction amongst service families with accommodation is far too low - around half, according to some surveys. Unfortunately plans to improve choice in the accommodation system are unlikely to begin until 2022 or later. MoD must act to keep up with changes in social attitudes and the needs of personnel. Entitlement to accommodation remains limited to couples who are married or in civil partnerships.
“MoD hold far too many empty properties, some 10,000, while there are thousands of people across the country on housing waiting lists. MoD need to urgently reduce these levels.”
Conclusions and recommendations
Difficult negotiations with Annington about future rent levels on the estate lie ahead later in 2019, and will have a critical impact on the Department’s whole accommodation strategy. The Department and Annington both told us that their relationship has become more constructive in the last year, and they are investigating ways to secure additional value from the estate. For example, they have agreed to operate a streamlined approach to the determination of new rents for the 480 sites at the upcoming rent review. The Department tells us that it will ‘play its hand skilfully and aggressively’ when the process begins in earnest in October, but acknowledges that the sale of the estate in 1996 leaves it at a disadvantage, not least in seeking to maintain the 58% discount in market rent applied since the sale. The Permanent Secretary acknowledged that the previous deal was a poor one which could not have been much worse and so, it is difficult to see how the Department can redress the balance. It will be relying on its property experts and the senior staff recruited following the termination of Capita’s contract to manage the Defence Infrastructure Organisation.
Recommendation: We expect the Department to negotiate hard on behalf of the taxpayer who was badly let down by the terms of the original deal. It should provide us with regular updates on progress with the site review process, as well as agreement on other elements of the negotiations, initially in September 2019.
Levels of satisfaction with housing among service families remain far too low and are a continuing risk to retention rates among service personnel. This is unacceptable at a time when the Department’s budget is stretched to breaking point. The Department tells us that 95% of its housing now meets the nationally recognised Decent Homes Plus standard. In 2018-19, it spent £135 million refurbishing around 3,500 homes. Despite this, a department survey shows overall satisfaction with housing only rose slightly to 64% last year. The Department has not previously set itself specific targets for service family satisfaction levels. It suggests that roughly 80% is the highest level of satisfaction that is realistically achievable. Since our evidence session, the Department has informed us that it has set a target of 68% overall satisfaction in 2019-20. This is a start. It also told us that complaints about the quality of maintenance have fallen by one third, but satisfaction with this service is only 51%. The Department paid £109,000 in compensation for poor service in 2018-19. It is now preparing to retender its maintenance contracts and will be seeking innovative approaches from bidders to incentivise high performance.
Recommendation: The Department should continue to set itself stretching targets for continuous improvement in service families’ satisfaction with their accommodation, and incorporate demanding service quality targets into new contracts. These targets should be linked to contractor performance and incentives, and should take account of best practice elsewhere.
The Department has been slow to recognise that the traditional model of military housing, and who is entitled to it, has not kept up with changes in social attitudes and the needs of service personnel. Since 1 April 2019, all service personnel in what the Department defines as an established long-term relationship, have been ‘eligible’ for surplus service family accommodation. However, only those who are married or in a civil partnership (or with dependent children) are ‘entitled’ to accommodation. The Department says this is a temporary distinction while it finalises its plans to update its accommodation model, but it is a telling one. The payment of compensation in retail vouchers rather than cash also seems like a hold-over from an earlier era. The Department acknowledges that it still has more to learn about the nature and preferences of service families through improved communication that circumvents the limitations of the ‘chain of command’.
Recommendation: The Department must develop a clearer approach to the housing needs of armed forces personnel, based on need, as well as a deeper understanding of the diverse real-life circumstances of service personnel and their families.
The delivery of a modern and flexible accommodation model is still a distant prospect, over three years after its announcement. The Department announced its new accommodation model for service personnel in the 2015 Strategic Defence and Security Review. The first Future Accommodation Model pilot has been delayed from 2018 to September 2019, with two more to follow in 2020. The pilots will take three years, and MoD will make its main investment decision in 2022, after evaluating the responses of personnel to the choices on offer. Assuming it opts to proceed, full roll-out will then begin – at least seven years after the initial announcement.
Recommendation: The Department should provide us with updates on the Future Accommodation Model, initially in Summer 2020, to confirm that the pilots are under way, to explain how they will capture the varied circumstances in which service personnel and their families live.
The Department is still holding too many empty properties, while there are thousands of people across the country on housing waiting lists. The Department advised us in November 2018 that it expected to reduce the level of empty properties to 12% by 2022. This fell short of our July 2018 recommendation of 10% by 2021. The Department now tells us that it has a ‘stretch’ target to reduce the level of empty properties to 10% by Autumn 2021. Achieving this is dependent on several factors, including the rate of armed forces recruitment. It is incentivised by the terms of the agreement with Annington to speed up the rent review process. Annington has agreed to waive any dilapidations payments above £7,000 on the 500 most dilapidated properties surrendered by the Department each year (provided that at least that many are surrendered). Annington previously told us they were developing plans to rent out surplus stock as ‘affordable’ housing. In advance of our evidence session it provided us with a small example of renting surplus stock to a local authority.
Recommendation: The Department should provide us with an update on progress towards the 10% target for empty properties by 31 July 2020.
The whole issue of military housing needs to be given far greater priority within senior levels of the MOD. The Annington Renegotiation must not be allowed to be used as an excuse for making far greater progress on all the other issues listed above. We expect the target dates set out in this report to be met.
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