Conclusions and recommendations
1. Defence
Estates met two-thirds of its performance targets in 2005-06.
Two targets relating to decreasing "customer dissatisfaction"
were assessed as being achieved, although the assessment was based
on the development of a new survey, not the results of a survey.
Some targets were greatly exceeded—one, relating to the
number of properties upgraded to Standard 1 condition, by over
180%. It may be that exceeding the targets relating to the upgrade
of properties simply reflected a staggeringly good performance
on the part of the MoD, but we find this difficult to judge. The
MoD should review the way it sets targets for Defence Estates
to ensure that targets are not set at a level which is too easy
to achieve. (Paragraph 19)
2. The targets set
for Defence Estates have increased in number from 11 in 2003-04
to 22 in 2005-06 and the percentage of targets achieved have ranged
from 91% in 2003-04 to 68% in 2005-06. Such variation makes it
difficult to assess how a defence agency is performing over time.
We recommend that the MoD should review whether Defence Estates
needs to be set such a large number of targets and whether there
is scope for focusing on a smaller number of key targets in the
future. (Paragraph 21)
3. Defence Estates
was one of the largest Defence Agencies, but from April 2007 lost
its agency status. As with other Defence Agencies which have lost
agency status, we are concerned that there will be a loss of transparency
and accountability if Defence Estates is not required to produce
its own annual report and accounts. We remain to be convinced
that additional information in the MoD's Annual Report and Accounts
on the activities of a former agency will be sufficient to allow
proper parliamentary scrutiny. (Paragraph 26)
4. It goes beyond
the scope of this inquiry to offer an evaluation of the merits
and risks of Private Finance Initiative and Public Private Partnership
projects … These are matters which we shall continue to monitor
closely. (Paragraph 36)
5. We welcome the
steps which are being taken to improve and modernise Single Living
Accommodation, and have seen some new accommodation which is first-rate.
However, it is not clear what the strategy is and some accommodation
remains appalling. This is unacceptable. Quite apart from this
being poor management of property, accommodation is an important
factor in retention, and the MoD must do more to address the condition
of accommodation if it is not to lose experienced personnel who
are very difficult to replace. The MoD must, as a priority, put
right the worst accommodation as well as that which can most easily
be improved. (Paragraph 42)
6. The Regional Prime
Contracts are intended to improve the maintenance of Single Living
Accommodation, but it is clear that there are significant problems
in the way the they are operating in practice. We recommend that
the MoD provide us, in the response to this report, with a progress
report showing how these contracts are performing against the
expected improvements. (Paragraph 48)
7. Views on the merits
of the Annington deal differ. Undoubtedly, the increase in property
prices makes the deal look, with the benefit of hindsight, less
attractive than it looked at the time. But the deal was intended
to deliver not just money into the public purse but also incentives
for the MoD to maintain acceptable standards of repair and fewer
empty properties. Our comments below on the disposal of properties
suggest that these incentives have not operated as intended. We
find this deeply disappointing. Given the constraints of the Annington
deal and the changing strategic requirements, there is a case
for a review of the whole of the married quarter estate to ensure
that property is being retained and disposed of optimally, with
maximum value for money for the taxpayer. (Paragraph 56)
8. In our view, the
proceeds from sales of surplus married quarters should be re-invested
in Service accommodation. (Paragraph 57)
9. While we welcome
the progress the MoD has made in upgrading Service Family Accommodation,
much more remains to be done. The MoD needs to recognise the scale
of the challenge it faces. (Paragraph 61)
10. It would be perverse
if Defence Estates were spending money improving properties which
it intends to dispose of when so much accommodation in which Service
personnel are living is in need of improvement. It was intended
that the Annington deal should incentivise the MoD to maintain
properties to an acceptable standard, so that it could dispose
of them without expense if they were no longer required. If the
MoD is allowing property to fall into disrepair prior to disposal,
this is simply bad management. We recommend that the MoD give
details, in its response to this report, on how much it has spent
on upgrading property before disposal. (Paragraph 63)
11. We recommend that,
in its response to our report, the MoD set out how it plans to
reduce the number of vacant Service family homes. We also expect
the MoD to set out when the key decisions will be made which will
provide clarity on the number and location of Service family homes
needed in the future (Paragraph 70)
12. We note that the
MoD offers individuals a loan of up to £8,500 towards the
purchase of a house. Given the rise in house prices throughout
the UK in the last decade, the MoD should consider increasing
the amount of loan offered to Service personnel. (Paragraph 71)
13. We recommend that,
in the response to this report, the MoD set out how it intends
to respond to the proposals set out in the Housing Green Paper,
and how these policies will impact on Service personnel in areas
covered by the devolved administrations. (Paragraph 72)
14. We welcome the
steps which Annington Homes has taken voluntarily to prioritise
Service families when it sells former Service Family Accommodation.
However, the fact that Service families may not in practice have
the opportunity to buy their own homes sits uneasily with the
MoD's efforts to encourage home ownership among Service personnel.
(Paragraph 75)
15. The MoD must learn
from the problems it experienced in implementing the Housing Prime
Contract. While new contractual arrangements inevitably suffer
from teething problems, it is extraordinary that the MoD had to
pay an additional £20 million—a fifth of the contract
value—to achieve a reasonable level of service. We expect
an explanation, and a progress report, in the response to this
report. (Paragraph 80)
16. We welcome the
increased focus on customer satisfaction in the new Housing Customer
Attitude Survey and its extension to the occupants of Service
accommodation overseas. We are disappointed that the MoD has still
to make the results of the CAS available to us. We look for an
analysis of the findings, and of the MoD's plans to respond, in
the response to this report. (Paragraph 82)
17. It is essential
that there be robust inspection of property to ensure that it
is habitable before new tenants move in, and wherever possible
families should have the opportunity to view property before moving.
(Paragraph 84)
18. During our visits
we encountered an attitude of resignation to poor maintenance
of married quarters. The contractorisation of responsibility for
maintenance seems to have left widespread confusion about how
to get things done. The power to resolve maintenance issues had—in
the name of efficiency—been removed from the chain of command
and even from Defence Estates. There was no longer any local estates
manager responsible for sorting out problems and with whom the
unit command could engage directly. Both unit commanders and Defence
Estates officials were helpless to resolve the situation; worse,
they did not seem to know where responsibility lay nor what, if
anything, they could do. At present, there is no sense that anyone
has ownership of the problem: someone in the chain of command
needs to be clearly identified and authorised to ensure that the
contractor gets work done. If the problems we encountered are
representative of the situation across the MoD's built estate,
then it is a serious failure of policy. It is exacerbated by an
alarming lack of recognition at senior levels that these problems
are more than minor difficulties. (Paragraph 85)
19. 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. (Paragraph 91)
20. 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.
(Paragraph 93)
21. 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. (Paragraph 97)
22. 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. (Paragraph 104)
23. We welcome the
recognition by the MoD that it, like any other department of state,
must reduce energy consumption and its effect on the environment.
The experiment at RAF Kinloss has clearly been a success and we
congratulate the MoD for this innovative approach to energy management,
which has delivered substantial savings over a relatively short
period of time. However, we are concerned at the slow pace at
which the MoD has built on this success. Defence Estates should
extend the Kinloss experiment to other facilities as soon as possible.
(Paragraph 113)
24. We find it completely
unacceptable that, in 2006, the MoD did not know the condition
of 77% of the historic buildings for which it was responsible.
We acknowledge the improvements which Defence Estates has made
since that time, and look forward to hearing in March 2008 that
Defence Estates is aware of the condition of all of the historic
buildings for which it is responsible. However, it is not enough
for the MoD to be aware of the condition of its historic buildings,
it must maintain them. In its response to our Report, the MoD
should set out how it plans to maintain the historic buildings
and Sites of Special Scientific Interest in its care. (Paragraph
118)
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