Examination of Wintesses (Questions 20-39)
VICE ADMIRAL
TIMOTHY LAURENCE
MVO, ADC, MR DAVID
OLNEY, MR
BILL CLARK
OBE AND MR
MIKE MARTINDALE
15 MAY 2007
Q20 Robert Key: Of course, contrary
to that is the Future Capabilities White Paper prediction that
there will continue to be a reduction in the numbers across all
three Services. Does that mean future sale of accommodation; or
will that accommodation just be snapped up because of the drawdown
from Germany?
Vice Admiral Laurence: Again David
Olney may want to add to this. The principle is that we keep property
that we know we need, and that we have a use for in the future,
but any sites that we do not believe will have relevance in the
future we dispose of. Say, for example, we have an individual
barracks in an area isolated, without any services around it,
a small barracks perhaps which is expensive to maintain but would
be valuable to the local community or local developers—that
would clearly be a high candidate for disposal. If we had a barracks
with some family accommodation in an area where we anyway wanted
to bring people in, we would probably try to hold on to that and
wait for the right moment to bring people back into it.
Q21 Willie Rennie: Robert was listing
out a long list of deferrals earlier and you seemed rather relaxed
about it. We hear from defence ministers constantly there is a
step change in the refurbishment of accommodation but that does
not seem to tie up with your response to Robert's list of deferrals?
Vice Admiral Laurence: The aim
of the deferrals exercise last year was to target it away from
accommodation as far as possible. As far as I am aware we managed
to achieve that. Most of the deferrals were to technical accommodation,
workshops, hangars and so forth. I am not relaxed about any of
that actually. I do not like deferrals; it is just putting off
the problem until later; but I think at least we did manage on
the whole to protect accommodation.
Q22 Mr Jenkins: While listening to
your plans for bringing back individuals and increasing the Estate,
I heard nothing in regard to the opportunity of serving members
to buy or get on the property ladder. Do you have any plans for,
say, earmarking some of the MoD land, giving it or selling it
very cheaply to a developer with a view to building houses on
that site which would be reasonable, or to a good standard, to
allow serving members of the military to buy it? They may not
be there, but somebody else would rent it, but they would have
a foot on the property ladder; with the condition, of course,
that only persons in the serving forces could actually live on
that Estate?
Vice Admiral Laurence: Absolutely.
There are lots of ideas on that front. David Olney might be the
best person to answer that.
Mr Olney: You are absolutely right,
we are looking at a number of opportunities to see whether we
can do an equity share scheme or purchase to buy, and we are talking,
for arguments sake, with housing associations to see how they
work it; and we are talking to some banks and insurance companies
to look at options there to see whether we can get investment
from that quarter. It is early days but we are exploring a number
of avenues to see whether we can get our people on to the housing
market.
Vice Admiral Laurence: The overall
policy is for a mixed economy of housing to encourage people to
buy a house where they want to, and where they have the means
to do so.
Q23 Mr Holloway: I think that is
very much the point that Mr Jenkins raises. Soldiers that I served
with who have now done their 20 years and are just leaving now
a lot of them are in all sorts of grief in terms of the property
ladder. When do you think some proposals on that might come up?
Vice Admiral Laurence: The policy
has been in place now for a couple of years, but there is an inevitable
(perhaps "conflict" is too strong a word) balance to
be struck between, on the one hand, encouraging unit cohesion
and encouraging people to live on the patch, so to speak; and,
on the other, encouraging people to buy their own house which
brings responsibilities away from the unit. There is a balance
to be struck there and I think we are moving forward slowly. I
personally think one of the most important factors in all this
is to meet the aspirations of our people. If they are wanting
to buy houses, if that is what they see as the way ahead, then
I think we ought to help them to do so where we can.
Q24 Mr Holloway: They might also
be encouraged, because it probably does not occur to a lot of
squaddies.
Vice Admiral Laurence: Absolutely.
Mr Olney: As you know, the housing
stock is leased back to Annington. Where we do release housing
back to Annington they do have a policy of, in effect, first refusal
to our former Armed Service. That has certainly happened in a
number of cases.
Q25 Chairman: Mr Olney, could we
look at a sentence from our brief, and I do not often do this:
" . . . there has been some disquiet that the Service families
currently in such properties have not automatically been given
first refusal on the purchase of their homes". Is that wrong?
Mr Olney: They do not automatically
but they are certainly given help and support to acquire property.
The recent one which was in the newspaper was Cottishall where
there were a number of former servicemen who acquired property.
Q26 Mr Jones: I was speaking last
night to Bob Russell, Member for Colchester, who was quite exercised
about this. He said what you have just said is not true; families
are not given first priority for these homes. That is why you
have the situation about the people camping out. By your answer,
I am not really clear what this priority is. What does it actually
mean?
Mr Olney: Would it be worthwhile
if I provided you with a note, which would provide a fuller answer?
Chairman: Certainly it would; but if
it leaves us in confusion we might need to ask you to come back
in front of the Committee, because it is something that we will
want to clear up, so if you could give us a note.[3]
Q27 Mr Jenkins: Could it not include
the number of properties actually sold as a total? What the ratio
was would be very interesting.
Mr Olney: Could I just clear up
that point. We will hand properties back to Annington. I just
want to make it clear, we would not sell them.
Mr Jones: We know how it works.
Chairman: Could you give us a note, please.
Could you also explain how it is that they are sometimes given
the right of first priority but not automatically, and when that
difference arises.
Q28 Mr Jones: Chairman, could we
have the percentage of homes that have actually been sold; that
would be interesting.
Vice Admiral Laurence: We will
try to find that information out. I have a feeling it may be difficult
to produce, but we will see what figures we have got.
Q29 Mr Jones: Chairman, I am sorry,
but if you do not know that information how can you monitor that
the actually policy is in place that you just told us about?
Vice Admiral Laurence: It is a
fair point.
Mr Hamilton: Mr Olney indicated about
selling to housing associations. I might point out that they sell
houses; they do not purchase; you cannot buy from housing associations.
If you have sold houses in Scotland and you have sold them to
housing associations that means effectively that anyone in that
house cannot purchase a house because they do not have that policy.
If you indicate who you are selling the houses to, you need to
also tell us what the policy of that organisation is in relation
to the purchases of the council housing. Another thing we should
be mindful of is when you are talking to various organisations
you should also be mindful that many local authorities prioritise
Service personnel when they come back; and, therefore, that should
be a factor driven into the issue of selling houses. They should
be considering the local authorities who actually prioritise Service
personnel who come back in again. It would be interesting to see
that.
Chairman: Could you frame that into a
question? Would you like a response on that?
Mr Hamilton: I am making an observation
when Mr Olney said they are selling houses, including housing
associations. If you are selling to housing associations, housing
associations do not have the right to buy in Scotland.
Q30 Chairman: Is there a distinction
between England and Scotland in that respect, Mr Olney?
Mr Olney: There is a distinction,
in the sense that in Scotland we own the houses and, therefore,
we do dispose of them. Mr Hamilton is correct, in some cases we
do dispose of them to housing associations; and in others we dispose
of them individually, whereas in England and Wales the vast majority
of the houses are leased.
Mr Jones: Can I turn to something which
the Chairman has got form on, and that is the sale of the SFA
to Annington Homes.
Chairman: By the way, everything you
are giving evidence on you need to know this is all my fault!
Q31 Mr Jones: It was 10 years ago,
but could you give us an assessment, has it been successful in
delivering the expectations that were in the sale; and what lessons
could be learnt? Could you also perhaps give us an overview, and
I know this did not apply to Northern Ireland or Scotland, of
how Northern Ireland and Scotland are managed?
Vice Admiral Laurence: Let me
start with an overview of the Annington's deal, and this is an
issue which has been crawled over at some length of course and
I know that this Committee and the Public Accounts Committee have
looked at. I think with the benefit of hindsight, looking back
now, it does not strike me as being a great deal; and the price
of the property that was sold has risen very significantly; but
what I would say is I think we make the arrangements work well
at the moment. The relationship with Annington is good, and the
rent we pay to Annington is fair. We maintain the houses through
a new contract which is just settling down; it is taking time
to settle down but it is beginning to work a lot better. The arrangements
are satisfactory. If we had our time again perhaps we would have
done this in a different way.
Q32 Mr Jones: It says in the brief
that some properties are now being sold by Annington as the leases
expire. How does that work? Are different properties on different
leases?
Mr Martindale: The Annington transaction
is essentially, the MoD sold the long lease on all the land for
999 years, and leased back all the houses for 200 years. Every
house is on effectively a 200-year lease. As the MoD decides it
has no longer any use for that house it effectively then releases
them in batches back to Annington who then sell them, as David
explained earlier. Essentially where it refers to the lease coming
to an end, it means the MoD no longer has a use for that house,
rather than the lease coming technically to an end.
Q33 Mr Jones: In terms of when the
house is sold, am I right that a certain percentage comes back
to the MoD?
Mr Martindale: To the Treasury
through the MoD.
Q34 Mr Jones: Is it correct that
by 2011 that deal finishes and goes to 100%?
Mr Martindale: Yes, correct.
Q35 Mr Holloway: Do you have any
idea what has happened to Annington's share price since the deal
was made?
Mr Olney: It is part of a bank.
Mr Martindale: The asset value
has gone up is the answer to your question.
Q36 Mr Jenkins: When you give up
the 200-year lease, how much do you get for that?
Mr Martindale: Nothing.
Q37 Mr Jenkins: Do you give it for
free?
Mr Martindale: Essentially the
Annington transaction was a sale and lease-back transaction. Annington
gave the Ministry of Defence £1.67 billion in return for
us leasing the houses back for up to 200 years. Essentially when
we effectively no longer require the house we hand it back and
have no rental obligation beyond that point in time. In a sense,
what we get back is the savings on rent and rates.
Q38 Mr Jenkins: I tell you why I
find that interesting because I have got a local football club
and the local authority bought the ground and they got a 99-year
lease; and now they want to move off that ground into a new stadium;
but to move off that ground will probably cost either £1
million or £2 million because the council then can redevelop
the site and make £3 million or £4 million and the football
club will share by giving up their lease. You do not appear to
do that. Are they smarter than you, do you think?
Mr Martindale: The Treasury shares
in the profits that Annington makes when they sell the house.
Q39 Mr Jenkins: They are giving up
their lease now as it rolls out, it is a valuable asset so the
company is going to enjoy the benefit of that; but you are not
going to share in it at all?
Vice Admiral Laurence: The equivalent
for this is say we give up a block of houses somewhere because
we no longer need them and Annington decides to sell them; there
is a share that comes back to the Government but, sadly, it does
not come back to me; it comes back to the Treasury.
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