Select Committee on Defence Fifteenth Report


6  Estate rationalisation

86. The MoD defines a key part of Defence Estates Estate Strategy as being to ensure that the estate consists of "fewer larger sites appropriately located and making the best use of resources whilst remaining fully capable of meeting the military need". Achieving this has entailed the disposal of substantial assets: the value of the land and buildings sold since 1999 amounts to £1.69 billion.[78]

87. Vice Admiral Laurence explained to the Committee that estate rationalisation for Defence Estates was necessarily an ever-evolving process:

Normally, when one sets off on a rationalisation programme you want to know where you start and you want to have a clear end-state. I suspect there will be an element of continuous change about the Defence Estates I suspect that by the time we have reached what looks like the end-state, at the moment, we will find we want a different end-state.[79]

88. He identified as the major trend a move across all three Services towards fewer, larger sites, pointing towards the creation of so-called 'super garrisons' by the Army, the drive for a smaller number of large core airfield sites by the RAF and a need on the part of the Royal Navy to make a decision about the number of naval bases. "Overall," he concluded, "the number of sites will decrease, the size of sites, in general, will increase […] that is a general picture of how I see it moving over the next 10 to 20 years".[80]

89. The MoD estate in London has so far been reduced from seven to three office buildings, and future investment across the UK will be focused on those sites identified as "anchor locations" (defined by the MoD as large sites which have an indefinite operational future, have capacity or potential for development, and will be the main focus for future operational activity and investment).[81]

90. In 2005, the MoD outlined a series of rationalisation measures which would release substantial parts of the estate for re-use or disposal. So far, two measures have been completed:

  • The merger of FLEET and Second Sea Lord HQs at Portsmouth, and
  • The creation of Air Command, through the concentration of Strike Command and Personnel and Training Command HQs at High Wycombe.

A further three measures remain at the planning stage:

  • The collocation of the former Defence Logistics Organisation at Abbey Wood (Bristol) and Bath;
  • The concentration of HQ Land and Adjutant General's HQ at Andover in 2009 (Project HYPERION); and
  • The rationalisation of the Chief of Defence Intelligence's estate.

A rationalisation project awaiting approval is the Midlands Medical Accommodation project, which would involve the relocation of HQ Defence Medical Education and Training Agency (DMETA) from Gosport and Keogh Barracks, Aldershot, to Lichfield, with the provision of attendant SLA, SFA, messing and other facilities.[82]

91. We note the measures outlined by the MoD in 2005 which aim to release parts of the defence estate for either re-use or disposal. Such rationalisation can lead to much disruption for both Service personnel and civilian staff and the MoD must ensure that the process is managed as effectively as possible to limit such disruption.

Project MODEL

92. Project MODEL is a significant rationalisation of the MoD's estate in Greater London. It will entail the consolidation of the facilities currently used by UK Forces on modern and integrated facilities at Northolt. MODEL will be funded by the receipts from the sale of sites no longer required, and is expected to release 100 hectares of brownfield land for development. It also involves a new procurement strategy known as "Prime Plus Contracting", whereby industry is involved as an integrator of the four key project outputs: construction work, disposal of sites, finance, and re-location of personnel.[83]

93. During our visit to Hounslow, we saw money being spent on short-term repairs to a barracks which potentially has no long-term future. We were told that other London barracks were in a similar position. The strategic plan for London needs to be brought to a conclusion as soon as possible to ensure that proper investment decisions can be made.

94. Part of Project MODEL has been the sale of Chelsea Barracks. Vice Admiral Laurence told us that the Army had decided, when reviewing its presence in the capital, to retain and invest in the Royal Artillery Barracks, Woolwich, as a core site, and dispose of Chelsea Barracks. The disposal of Chelsea Barracks has now been agreed in principle, and the MoD has an understanding with a prime bidder, but the deal will not be completed until January 2008.[84] There have been reports that the property was sold for substantially more than was initially expected.[85]

Proceeds from the disposal of assets

95. The proceeds from the sale of assets such as Chelsea Barracks, which can be substantial, are not simply returned to Defence Estates, nor even necessarily in total to the MoD. We asked Vice Admiral Laurence to explain the rules governing the proceeds from the disposal of assets. He told us that:

Effectively the receipts from disposals come back to the defence budget. Now, it is not quite as simple as that because whenever a spending review is held a calculation is done, a prediction, with the Treasury as to how much we are likely to receive over the next three years, and that calculation is built into the calculations done as to the size of the defence budget. If we exceed those targets, in principle the arrangement is that the money is retained by the Ministry of Defence, but that is, of course, subject to discussion with the Treasury.[86]

96. The thrust of Vice Admiral Laurence's remarks seemed to be that the Treasury would factor in likely proceeds from the sale of any assets when agreeing the MoD's budget. Although he argued that the 'default setting' would be for the proceeds to remain with Defence Estates for reinvestment, he admitted that "this is a matter for the Defence Management Board to decide because they may decide that they have priorities to provide protective vehicles for our troops or something".[87]

97. While we understand that there is competition for scarce resources, we are concerned that the proceeds from the disposal of assets are not being properly reinvested within Defence Estates to improve the quality of the estate as a whole. Not only does this slow the vital process of estate improvement, it militates against innovative and creative rationalisation decisions: Defence Estates has no financial incentive to restructure the estate in a cost-effective manner if the proceeds from any sales are siphoned off to ease other parts of the MoD's budget.

The Defence Training Estate

98. The Defence Training Estate (DTE) comprises some 130 training areas and ranges in England, Scotland and Wales. In 2003, the MoD let a £600 million contract to Landmarc Support Services to assist in the management of the training estate. The services Landmarc provides include almost all support activities not directly relating to the training estate: Landmarc runs the built estate, camps and accommodation, the rural training areas and training ranges and a booking and management information system. It also provides support to Defence Estates on environmental and other issues. In addition to the initial 10 years of the contract, Landmarc will be eligible for a five-year extension if it delivers satisfactory results.[88]

99. A wide-ranging review of education and training for the Armed Forces and MoD civilian staff began in 1999, and the Defence Training Review (DTR) report, Modernising Defence Training, was published in 2001. Among the report's recommendations was that the delivery of some types of specialist training should be rationalised on a tri-Service or MoD-wide basis. The DTR Rationalisation Programme was created to introduce modern training methods and technology, and concentrate training on to a reduced number of sites, in order to give the MoD the flexibility it needs to match training demand to defence needs.[89]

100. As part of the DTR, the training disciplines were divided into two contractual packages; Package 1 covers Aeronautical Engineering, Mechanical Engineering, and Communications and Information Systems, while Package 2 covers Logistics and Personnel Administration and Security, Languages, Intelligence and Photography. On 17 January 2007, the Secretary of State announced that the Metrix consortium had been awarded Preferred Bidder status for both Packages. It is expected that the number of DTE sites will be reduced from around 30 to around 10. The main campus will be at St Athan in the Vale of Glamorgan.[90]

101. There are still a number of challenges facing the MoD with regard to the Defence Training Estate. Mr Olney acknowledged that the drawdown of troops from British Forces in Germany "undoubtedly will put pressure on training areas in the UK".[91] However, as Vice Admiral Laurence went on to point out, major formation exercises cannot be carried out on the mainland UK, and the MoD is therefore forced to rely on training facilities overseas, for example at BATUS in Canada.[92] He suggested that one solution might be to retain the use of training facilities in Germany, the drawdown of British Forces in Germany notwithstanding.[93]

102. The Council for National Parks was concerned that any rationalisation of the Defence Training Estate should not result in "new, renewed or intensified defence use of land in National Parks", and pointed to the MoD's statutory duty, under the 1949 National Parks and Access to the Countryside Act, to have regard to National Park purposes. Indeed, the Council suggested that estate rationalisation might provide an opportunity to reduce the impact of military training on the National Parks. [94]

103. The MoD is currently reviewing the use of its Air Test and Evaluation (T&E) ranges at Aberporth, the Hebrides, West Freugh and Larkhill and the Sea T&E ranges around Raasay and the Clyde. These are operated by QinetiQ under a Long Term Partnering Arrangement, as part of which QinetiQ and the MoD undertake regular reviews to ensure that capability is provided as efficiently as possible. Each of the Air T&E ranges is currently managed independently. The MoD and QinetiQ are examining whether it would be more efficient to control trials from a single site, and, further, whether the use of four ranges is the best way to deliver the required capacity.[95]

104. The MoD, through the Defence Training Review Rationalisation Programme, is seeking to rationalise the Defence Training Estate and to improve those sites and facilities that are retained. However, demand for training may well increase in the future, particularly given the relocation of UK Service personnel from Germany. The MoD should, in its response to our report, set out how it plans to match the future demand for training land, which is likely to increase, with a reducing Defence Training Estate. The MoD should also set out how it will address the concern of the Council for National Parks that rationalisation of the Defence Training Estate might intensify the use of training on the land in National Parks.


78   Ev 19, para 11 Back

79   Q 99 Back

80   ibidBack

81   Ev 19, para 11 Back

82   Ev 19, paras 12-13 Back

83   ibid., para 15 Back

84   Q 104 Back

85   For example, "Sold, sir! £900m record for Chelsea Barracks", www.timesonline.co.uk, 29 April 2007 Back

86   Q 104 Back

87   Q 105 Back

88   Ev 20, para 19 Back

89   About Defence: Defence Training Review Rationalisation Integrated Project Team DTRRIPT, www.mod.uk Back

90   ibid. Back

91   Q 93 Back

92   British Army Training Unit Suffield, located at Canadian Forces Base Suffield in Alberta. Back

93   Q 94 (Vice Admiral Laurence) Back

94   Ev 28-29 Back

95   Letter from Minister of State for Defence Equipment and Support, Lord Drayson, to Robert Key MP, 4 July 2007 (not printed) Back


 
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Prepared 14 September 2007