- The NAO estimates that by December 2024, the Ministry of
Defence (MoD) was around £14.5 billion worse off than it would
have been if it had not sold its Service Family Accommodation
(SFA) estate to Annington Property Ltd (Annington) in 1996.
- The repurchase of the estate in 2024 puts a stop to what
would have been billions of pounds of further lost value.
- Value for money ultimately depends on the MoD making the most
of the opportunity and some £9 billion that it now could invest
in service family accommodation.
- The MoD's deal with Annington should remain a cautionary tale
for government about the risks to long-term value for money that
can be inherent in sale and leaseback transactions.
A new report from the independent public spending watchdog, the
National Audit Office, looks at the process by which the MoD
bought back 36,000 homes for service families; homes which were
sold to Annington Property Ltd in 1996 and subsequently leased
back at huge cost to the taxpayer.
The report estimates that the public purse is some £14.5 billion
worse off as a result of the selling the properties to Annington
in 1996.
Setting out an overview of the background to the 2024 deal, the
repurchase agreement, and plans for the future provision of SFA,
the NAO report finds that the repurchase puts a stop to what
would have been billions of pounds of further lost value had the
MoD allowed the Annington arrangements to continue.
The 2024 deal to repurchase was the lowest cost of the options
considered in a process that was largely handled effectively, the
report says.
Challenges remain for MoD, however, including delivering on the
2025 Defence Housing Strategy which requires MoD to become a
property developer, regeneration organisation and a housing
service. But, the report says, it doesn't yet have the necessary
expertise or capacity.
The NAO makes a number of recommendations for MoD who should:
-
- Seek to learn from others in government about the
different models for bringing in the private finance and
private sector expertise required to deliver its plans, and
the benefits and risks of the different approaches;
- finalise its long-term funding plans for the defence
housing estate;
- establish the Defence Housing Service with the powers and
autonomy it requires to deliver the planned reform
efficiently; and
- prepare, and publish a summary of, its plans and timeline
for the refurbishment and rebuilding of the housing estate
and release of land for housebuilding.
, head of the NAO,
said:
Repurchasing MoD's service family accommodation has avoided
further lost value and now provides the opportunity to deliver
the ambitions of the Defence Housing Strategy. The MoD's
experience remains a cautionary tale about the risks to long-term
value for money that are inherent in sale and leaseback
transactions.
