Examination of Witness (Questions 600
- 619)
WEDNESDAY 29 NOVEMBER 2000
MR JOHN
WILSON
600. It was a very fragile starting point then,
was it not: uncertainty over the housing stock and taking a big
risk. You ended up being more than 20% down on what the real cost
of refurbishment was.
(Mr Wilson) I think it is a fair statement that the
stock was in poor condition and it was not fully known how poor
a condition it was in.
601. The consequence of that is that service
families continue to live in substandard, unfit accommodation
for even longer periods of time.
(Mr Wilson) Yes. The consequence was a two year extension
to the upgrade programme.
Chairman
602. Who paid the price for not recognising
how bad the housing stock was?
(Mr Wilson) It is a cost which is paid by the Ministry
of Defence.
603. Did the Japanese know what they were buying?
I thought all of the competitors did a substantial survey to ensure
that they were bidding knowledgeable of the extent of the housing
stock. I find it pretty stupid on their part that they did not
realise and the Ministry of Defence did not know the value of
the property they were holding.
(Mr Wilson) The structure of the sale was such that
both sides, yes, looked at sample properties to identify the rough
quality of the stock, but the nature of the sale left the maintenance
and upgrade responsibilities with the Ministry of Defence. Under
the terms of the contract, properties which are released to Annington
Homes have to be released to them in good and tenantable repair.
If properties which are released to Annington Homes are not in
good and tenantable repair, the Ministry of Defence has either
to rectify the properties or to pay dilapidations to them, but
the definition of "good and tenantable repair" is very
substantially less than our standard one for condition.
Mr Hancock
604. We got taken to the cleaners then, did
we not? Taking out the 9,000 houses in Scotland that were not
part of the deal, they get 52,000 houses at a knock down price
with the MoD and the families paying the price of putting those
homes right. Once again, United Kingdom Limited got ripped off
in this deal.
(Mr Wilson) There are lots of financial issues associated
with the sale. This was examined closely by the National Audit
Office and the Public Accounts Committee following the sale.
Mr Hancock: It is a very good buy, is
it not, 52,000 houses at that price and having somebody else pick
up the tab of another half a billion to put them right?
Chairman: We do not intend to preoccupy
you with discussing whether the sale of the houses to Nomura was
right or wrong but I am pretty certain that in the next 12 months
we will be making an evaluation as to whether the sale was the
right choice, whether they should have gone to Annington or one
of the other buyers, and who has made the money out of it. The
Treasury, I presume. Our reluctance to spend too much time on
Annington should not delude anybody into thinking that we are
acquiescent. I think it was an appalling decision and we at some
stage, having had four our five years to examine the consequences,
will be recommending to the next Committee that we look at this
in far more detail. We are just looking at the personnel consequences
and it would not be fair to burden you with this. It does seem
to me that the figures are pretty appalling. The amount of money
that needs to be spent in order to bring the housing up to an
acceptable grade has not been released to you. People had the
impression that money was being ring fenced and apparently you
had to fight your corner regardless of the alleged ring fencing.
Put your people on standby for about six months from now, Mr Wilson,
and we will be in hostile mode. If you can suggest any people
to come along with you who made the decision, we would be elated
to have the opportunity to discuss this with them. I am sure John
Barton is making extensive notes about our intentions.
Laura Moffatt
605. How much has been spent on upgrading this
year?
(Mr Wilson) This year our forecast is to spend £68
million.
606. What do you expect to spend in the next
financial year?
(Mr Wilson) We expect to spend over £70 million.
607. Is that going to match the targets that
you have set for upgrading?
(Mr Wilson) Yes, I believe it will. The total number
of upgrades which we plan to have delivered through the upgrade
programme is a further 16,300. We plan to deliver a further 2,100
properties through further private finance initiative contracts
and a further 2,400 relatively minor upgrades which will be delivered
through property management processes.
608. You can see this Committee's dilemma because
in your statement you say that on the upgrade programme you have
had to take some financial cuts and this has led to a delay in
the start of some planned major upgrades.
(Mr Wilson) Yes.
609. Because you switched some money from other
projects back into the upgrades, you were able technically to
meet your demands?
(Mr Wilson) Yes.
610. That is robbing Peter to pay Paul, is it
not? What else suffered then?
(Mr Wilson) It was an in-year adjustment. That is
correct. One has a choice in year often between spending a lot
of money on major upgrades or demolishing and rebuilding but not
actually delivering very many houses and, on the other hand, doing
a lot of what we call quick hits which delivers a lot of upgrades
but it delivers them only from, say, standard two to standard
one. We have tried hitherto to concentrate on the major projects,
the demolitions and rebuilds, and we have achieved some very fine
housing through that process, new estates of brand new houses
at Perham Down near Tidworth where I understand you were yesterday,
a whole new estate at Salamanca Park, Aldershot, a new housing
estate at Catterick, the new housing which has been delivered
through the PFI, new houses which have been delivered this year
at Blandford. The houses have been coming through the system.
As we move through the programme, we are changing the emphasis
to undertaking a larger number of lower value upgrades, so the
numerical increase year on year will be higher as we go through
the programme.
611. Is there any compromise? You said that
you have been through a process of grading the homes. Of course,
our desire is that they would all be in first class condition,
but is there any sense that that has to be altered to meet your
targets of 1,600 to be upgraded?
(Mr Wilson) Absolutely not. We have not compromised
on the standard one for condition at all. Indeed, the scales for
accommodation which are set out in a joint service publication
have been updated to reflect the aspirations of today's and tomorrow's
service families. What we found when we took the housing over
from the services was that an awful lot of it was designed in
the 1940s, 1950s and 1960s and had, for example, sculleries, outhouses
and so on. At Shorncliffe near Folkestone, as part of the upgrade
process, we have converted that area of the house into modern
kitchens and utility rooms because we know that is what the families
want. Also, the new houses which we have been delivering through
the PFI and some of the new houses we have been delivering from
our own capital have come with en-suite bathrooms or en-suite
shower rooms. What we found is that, when completely refurbishing
a house or delivering a new house, the added cost of an en-suite
or shower is minimal in relation to the cost of the house as a
whole. We hear that is what Service families want. With regard
to the whole process of working out the specification and the
design of the houses we have discussions with the Service families;
we have discussions with the families' federations. Indeed, we
had a meeting with them only last week at Blandford and Bovington.
The new houses at Tidworth which we are building you will not
have seen on your visit to Tidworth.
Chairman
612. We will. The Clerk and I are going next
week.
(Mr Wilson) There are new houses at Perham Down.
613. How far away is that?
(Mr Wilson) About one or two miles from Tidworth.
614. I am sure we can walk that far.
(Mr Wilson) I would be delighted also if you would
visit the main Tidworth housing estate, the Matthew and Avon Estate,
where we are currently demolishing over 500 houses and building
484 brand new houses. The design of those houses has been pursued
after very extensive consultation with the families concerned,
even to the extent of computer modelling the layout of the houses
inside, the layout of the streets and so on. I would be delighted
to show those to you.
615. If the Army Wives' Federation ambush me
on my tour, I would be delighted to listen to their views as well.
There is a spy here.
(Mr Wilson) I am sure Mrs Dooding will confirm the
extent of consultation that there has been.
Laura Moffatt
616. Many of us in this House have had a background
in local government, including housing. It has always been my
view that, unless you are completely au fait with the housing
business, you should not be in it. I think perhaps this whole
sorry episode up to now is proving that to be true. Most people
who know anything about housing know that the only way to deal
with it is to have a programme of planned maintenance. Can we
rely on your plan that you will have proper housing for people
to live decently?
(Mr Wilson) Yes, you may. I accept what you say about
the need to have professional housing expertise. That is one of
the main reasons for setting the DHE up in the first place.
Chairman
617. I cannot hide my enmity for those who were
responsible for Nomura. This Committee has produced two reports.
The Committee was led by the late Michael Colvin MP. The sale
was justified to us and to Parliament because the housing would
be brought up to grade one standard and £100 million would
be ring fenced to make that happen. You have said that but it
seems to me from the information we have had about the state of
the stock being far worse than realised that £100 million
is not adequate. The Treasury would not ring fence the money anyway
and they need to release more money in order to meet the requirements,
to meet the pledge given by those people trying to give us the
impression that the service families would benefit from the sale
of Ministry of Defence housing to Nomura. This government was
not responsible for the decision. I am not in any way saying the
building programme is proceeding at a leisurely pace but, bearing
in mind the commitments given and bearing in mind that the servicemen
are leaving partially because of the failure of a government to
provide them with proper housing, which Treasury door do you bang
on to say, "You pulled the wool over our eyes; you pulled
the wool over Parliament's eyes; you pulled the wool over the
Defence Committee's eyes"? What is needed is more than £100
million. This is what your predecessor said was required. It is
not being delivered. I would not want you to commit political
suicide by criticising the Treasury, but I do have the overwhelming
impression that the money is not being properly and adequately
allocated. Therefore, the pace at which you are proceeding is
far too slow. Frankly, I put no blame at all on you, Mr Wilson,
but I really do feel that it was the Treasury who was responsible
for this and the Treasury is not prepared to put its money where
its mouth was. The consequence is people are being thwarted in
their aspirations to have proper accommodation. Fine, you are
building more houses, but we know the vast amount of appalling
housing that is out there. These guys and their wives are going
to be out of the services a decade before the pledge to give them
decent housing is going to be realised. Am I being unfair in what
I have said or am I being unrealistic in expressing that this
£1.5 billion given to the Treasury has gone somewhere else?
I do not know where it has gone but it certainly has not gone
into improving the housing stock.
(Mr Wilson) The £100 million has been ring fenced.
It was spread some £6 million in 1996-97, £20 million
per year thereafter and then £14 million in the final year.
The balance of £34 million is in my budget.
618. If the Treasury suddenly said, "We
will double the budget", would you have the capacity to define
the contractors and would you have the bureaucratic capability?
Why are not more houses being rebuilt or modernised? Is it because
of the trickle feeding by the Treasury or because your organisation
does not have the absorptive capacity to spend more money than
you have been allocated?
(Mr Wilson) I am spending each year as much money
as I am allocated. This year, I plan to spend £68 million
and next year over £70 million. If I were given more money,
I could spend more.
Mr Hancock
619. Could I ask whether the availability of
that money matches the targets that your Executive was set by
the MoD?
(Mr Wilson) There have been some cuts taken along
the way, as you pointed out earlier—a £17.5 million
cut last year, for example. I believe that an additional £40
million or so on top of what I am currently planning to spend
will need to be spent. That is known.
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