24 Not Addressed

We asked for an update on the renegotiation of rents for service family accommodation leased...

Conclusion
We asked for an update on the renegotiation of rents for service family accommodation leased from Annington Property Limited, on which the Committee last reported in 2019.75 The Department currently benefits from a 58% reduction in the market rent that Annington charges for these homes, but this is due to end in 2025. The Department said that it and Annington had differing views as to what was an appropriate level of discount and as a result, the matter was subject to formal arbitration. The Department agreed that the sums of money potentially at stake are very significant and could, depending on the result of the arbitration, put significant additional pressure on the Department’s finances. The Permanent Secretary suggested that, if the decision went against it, the Department will expect the financial pressure to be absorbed by Defence as a whole, and not just infrastructure and accommodation. In an extreme situation, the Department might draw on its departmental contingency.76 72 Q 49 73 Q 50; C&AG’s Report, para 4.7 74 Q 51 75 Committee of Public Accounts, Military Homes, One Hundred and Second Report of Session 2017–19, HC 2136, June 2019 76 Qq 8–9 18 Improving single living accommodation for service personnel
Government Response Summary
The government response outlines its broader Defence Accommodation Strategy (DAS), which will consider Annington Homes rent renegotiations as a 'key dependency,' but does not provide an update on the arbitration or address the specific financial implications raised in the conclusion.
Government Response
Not Addressed
HM Government Not Addressed
1.3 The Defence Accommodation Strategy (DAS) will be published by the end of 2021. The Ministry of Defence (the department) will write to the Committee by December 2021 to outline the changes it will include in relation to Single Living Accommodation (SLA). The department is implementing the National Audit Office (NAO) recommendations, including assigning the Chief of Defence People as the Senior Sponsor for SLA and reviewing SLA governance structures. 1.3 The department already plans to invest £1.5 billion into SLA over the next decade and, beyond that, the DAS will provide clearer strategic direction for the defence accommodation estate to a 25-year planning horizon. The Defence Infrastructure Organisation (DIO) and single Services will develop clear delivery plans to sit alongside the DAS with regular monitoring and evaluation points to ensure that improvements and progress can be evidenced. The DIO and single services will be held to account for delivery of these plans through the department’s quarterly holding to account process and the Strategy itself will be reviewed regularly. The DAS will formalise the department’s vision for service personnel accommodation and outline how standards will meet the expectations of service personnel now and in the future. It will identify strategic dependencies across Defence-wide accommodation and infrastructure programmes including the Future Accommodation Model and Defence Estate Optimisation. It will also consider wider initiatives such as Net Zero Carbon and People Transformation, and key dependencies such as the Annington Homes rent renegotiations and DIO void reduction plans.
Addressee Bodies
HM Treasury
Timeline
Recommendation age 5.3 yrs
Report published 23 Apr 2021