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Mr. Portillo: I am surrounded by hon. Members who would like to intervene. I think that the hon. Member for Stockton, North (Mr. Cook) was first on his feet.
Mr. Frank Cook: The Secretary of State said that the money could be released for better purposes. Would he care to enlighten the House as to the specific purposes that he has in mind?
Mr. Portillo: I gave an example straight away, but I think that the hon. Gentleman was on his feet before I had finished the sentence. I referred to other demands for public sector capital investment. This money is not tied up productively at the moment; it can be put to better use. I now give way to my hon. Friend the Member for Davyhulme (Mr. Churchill).
Mr. Churchill: My right hon. Friend spoke about the costs of ownership of armed forces' houses, but how far have the Government truly considered the cost of the proposed lease-back scheme? My right hon. Friend will be aware that over the past five years, comparative rents in the private sector have been increasing three times as fast as the cost of living. What will be the impact on the public finances at the five-year intervals when the service rents are ratcheted up to market levels? What guarantee can he offer that any increased cost will not, at the end of the day, be sought by the Treasury from the defence vote rather than being borne by the Treasury, which properly should bear it, given that it will be receiving 15 times as much benefit from this deal as will the armed forces?
Mr. Portillo: My hon. Friend made many points. I do not want to detain the House too long. I do not recognise my hon. Friend's figures for the rise in rents of shorthold tenancies. My figures show that rents have risen by 14 per cent. between 1990 and 1996. My understanding with the Treasury is that the defence budget will not be left worse off through making rental payments. Indeed, we will be better off because the Treasury will meet the rental payments. The Ministry of Defence can give up the
hidden costs that I have mentioned and exchange the uncertainties of ownership for a more certain stream of rental payments. What is more, as I have just said, the Ministry will be compensated by the Treasury for the rents paid.
We have been bad owners in another way. We have a large number of empty houses, to which my right hon. Friend the Member for Horsham (Sir P. Hordern) referred. Today, there are 12,000 of them in England and Wales alone. We have to pay to secure and maintain those houses out of the defence budget, and we are rightly criticised for not releasing houses in which civilian families could live.
Mr. John Home Robertson (East Lothian):
Why not sell the empty houses?
Mr. Portillo:
It has not been for want of trying to sell them. Some of them are difficult to sell, so they remain on our hands, empty and expensive. Once there is a new owner, the Ministry can release surplus properties to him. Instead of having to search for a buyer ourselves, we will just need to give six months notice of leaving a site. From that moment, the property becomes the new owner's responsibility and the defence budget is relieved of the cost.
The MOD alone will determine what houses will be given up--not the new owner, not anyone else--and it will be our clear policy to release them in discrete groups that do not break up the integrity of the service patch. There is absolutely no right for the new owner to cherry-pick or infill. We will be able to improve in that respect on recent experience. I recognise that, in some instances, the pressure on service housing managers to sell surplus property may have led them to release the most sellable houses, even if it risked breaching the integrity of the patch. My hon. Friend the Member for Portsmouth, South (Mr. Martin) has made that point to me. In future, we will be free to release only the properties that we do not need and are not central to a service community. There will be no more mixing of civilian families among service homes. Communities will be kept intact to maintain the security and mutual support of the patch.
Mr. David Nicholson (Taunton):
On how many occasions in recent years have the Opposition decided to use one of their Supply days or half a Supply day to discuss bad management of MOD housing? On the medium and long-term siting of service and married quarters, will my right hon. Friend confirm that the arrangements will not prevent the moving of service quarters to parts of the country that are less under pressure from civil housing developments and that the geographical arrangements are not absolutely set in concrete?
Mr. Portillo:
We will require the houses where the Ministry of Defence needs to do its work. We will need houses where our people have to be. Those locations may well change--certainly over 25 years and even more so over 200 years. The arrangements give us the flexibility to acquire houses where we need them and to give up easily houses where we no longer need them. It seems much more sensible to achieve that by renting than by
Mr. Beith:
I assure the Minister that I have asked many questions about the management of RAF housing. He may be confident about the arrangements, but if a service man is on an unaccompanied tour in, for example, the Falklands islands, and receives a letter from home saying that the family home is in question because it is one of those that may be exchanged as part of the development deal, the kind of picture that the Minister wanted to portray earlier of giving service men confidence will not be that portrayed at all. Service men overseas will be extremely worried when the news comes to them.
Mr. Portillo:
As the right hon. Gentleman may be able to imagine, I shall come to that issue later, and I shall address his point then.
Mr. Portillo:
This is a short debate and I am therefore under pressure, but I realise that hon. Members want me to give way.
Sir Teddy Taylor (Southend, East):
As my right hon. Friend the Secretary of State appears to have said something very significant and reassuring, will he give us an assurance on the integrity of the site that there will be no question of purchasers being able to put their tenants in a military area? As he is well aware, many of us are very concerned about the integrity of service areas. Will he further give an indication about the security of houses in military establishments? Will they be treated differently? They are terribly important matters. The Secretary of State has raised a significant point. It would be reassuring for it to be included in the contract.
Mr. Portillo:
My hon. Friend can be entirely reassured. The new owner would have absolutely no right to put civilian tenants into military communities. As I said a moment ago, the properties that we give up are entirely a matter for the Ministry of Defence. They have nothing whatever to do with the new owner. The change affects the title to the properties. It does not affect their maintenance, security or any other aspect. I shall explain the special arrangements for the 11,000 properties that are behind the wire. Apart from that, we have no intention of giving up our responsibilities, nor do the civilian police have any intention of giving up their responsibility for security in married quarters simply because the title to the houses may have changed hands.
Mr. Portillo:
I shall give way to my hon. Friend, but the House will recognise that I am constrained by time.
Sir Michael Grylls (North-West Surrey):
Does my right hon. Friend agree that the freehold of those properties is better off in the hands of professional property managers whose sole business is looking after property and who understand it, rather than in the hands of the Ministry of Defence, and that the resulting standard should be very much higher? He mentioned the £100
Mr. Portillo:
Most of the improvements to our housing are carried out by private contractors. That has always been the case. No doubt it will continue in future. We have not done well in maintenance in the past. We now have a new organisation in charge of maintenance--the Defence Housing Executive. I shall explain the improvements that we have made in that respect.
Mr. Nick Ainger (Pembroke)
rose--
Mr. Portillo:
I shall give way to the hon. Gentleman, who has been attempting to intervene, but then I must make substantial progress.
Mr. Ainger:
The Secretary of State has told the House about the ease of disposal of MOD properties either to the single buyer or afterwards--if the purchaser wishes to dispose of them. Has every property that he has mentioned--all 58,000 plus--been cleared through the Crichel Down regulations? Many of them must be covered by those regulations. He is well aware of the problems at Trecwn, just outside my constituency, where properties that were declared surplus at the beginning of 1994 still have not been disposed of because of the Crichel Down regulations. Will he assure the House that each property that he says can be easily disposed of can be sold?
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