Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 140 - 151)



  140. What about the Duke of York's Headquarters, was it a good deal or not? I remember you coming to an earlier Committee saying that some of the losses would be huge.
  (Colonel Taylor) We are told they made a lot of money out it. That is one where the capital sale clearly was beneficial for the Exchequer. At the moment it is a pain for us, it is a pain for the Greater London Association, it is a pain for the units that have been decanted, but clearly it was a profitable deal and one cannot say any more than that.
  (Commodore Pemberton) Can I just come in, before we move too much away from the property. In my area, or certainly a large part of my area, where Defence Estates are selling our estate—we always did it ourselves but after the SDR announcement it was decided that Defence Estates would do it—we are having to pay what is known as the "works in aid", which is getting all the clearance certificates and what have you, without getting the benefit of anything to offer it from the sale, which we would have traditionally done. This is coming straight out of our property maintenance budget which is already greatly reduced as a result of savings measures and, therefore, further aggravates the problem of maintaining our Reserve and Cadet estate. It does vary a bit across the country but it is causing us a considerable problem and expense.

  141. Do you think that some of the proceeds of the sale should be coming to you?
  (Commodore Pemberton) If we are preparing a site for sale then that should be netted off from the sale value at the end, yes, undoubtedly.

  142. But beyond that would you say that you should be getting some of the proceeds of the sale anyway?
  (Commodore Pemberton) No, I do not think so. We acted purely as an agent in the previous circumstances. There are certain circumstances where there is a scheme where if it is of benefit to all round and we can recoup some but it is has to be reinvested in whatever the scheme is. SELLIT it is known as, and do not ask me what that means because I cannot remember. In this particular case what we should have is the cost to us of getting the site ready, certainly if it is going to be taken out of a budget which is for maintaining our buildings which are getting in a very poor state.

  143. I am sure that we will bear that point in mind when we come to our recommendations.
  (Colonel Robinson) On the buildings matter, there are two things which are falling out at the moment. One is that the budget for maintaining them appears to be coming to the end, they are talking about cutting it to nil next year or 10 per cent of what it was. The difficulty we have is that a lot of the buildings, although we have retained them particularly in my part of the world quite well—we have not got rid of anything I would have got terribly upset about—some of what we have got is quite old and needs maintaining. If it is in the city, it is the front-of-house part of the Army or the Navy or whatever it happens to be, and if it is falling into a state of repair it rapidly loses its appeal to everybody. Of course the problem we feel at the grass roots is that it is always us that catches it, a unit will say, "We never get the money, we never get it sorted out", and of course it always goes on and on and on. It is put back to next year and not the previous year. The second point is that the Cadets are the ones who are suffering mostly. I have a unit which had an excellent drill hall in Shirley, part of Birmingham, and it had a miniature range and it had a splendid shooting organisation in the Cadets but when it was reprovided for, because it is within five miles of a TA centre, it does not get a miniature range. If you can think of the administration and the logistics of getting Cadets five miles with their weapons to another location where they have to draw a key and go through all the machinations, this is hitting us quite hard. We were told that nobody would lose out from SDR but the Cadets are missing out badly in my view because of this small provision.
  (Colonel Taylor) There was provision made within SDR for £12 million to be set aside for preserving Cadet interests in the relocation of TA centres. We are watching that like hawks to make sure it does not get side-swiped into something else because that money is absolutely critical to make sure the Cadets are not disadvantaged. We are keeping very close tabs on that.

  144. But all of the detachments have homes?
  (Colonel Taylor) They have all got homes.
  (Colonel Robinson) Nearly.

  145. Not quite?
  (Colonel Taylor) Some of them may be portakabins but they have got homes.
  (Commodore Pemberton) Yes, they have all got homes. Some of them are still their original homes because Defence Estates has not yet been able to find alternative homes for them to go to. That is one of our concerns about this £12 million, that time is stretching out. There was originally talk of only a two year span for it and it will take longer than that in some instances. So, as the chairman has just said, we are watching that money like a hawk. I believe it was actually recommended in one of your earlier reports, Chairman, that that should be handed over to the TAVRAs so it did not disappear and if there was any surplus it could be fed into the Cadet estate. Unfortunately that recommendation was not taken forward.

  146. It sounds a good idea to me. I know these things are down to the Defence Estates if they have taken over these properties and we will have to ask some questions of them, but do you have any indication of how much has been raised from the sale?
  (Colonel Taylor) Not in money terms.

  147. Can you make a rough guess?
  (Colonel Taylor) The big one is the Duke of Yorks. Anything else pales into insignificance by comparison with that. I think the more important point is that the disposal of properties is proving to be quite a slow process so it is mostly book value at present rather than the real value.


  148. When you came two or three years ago there was some question that you doubted the competence of Defence Estates to raise the right amount of money. Set against other sales of Government assets, that is a view which has been vindicated time and time again, and you did say you had a lot of expertise within the TAVRAs which was not being properly accessed. Are you able to give a preliminary assessment, not whether these sites should have been sold having made the decision to sell them but Defence Estates is receiving good value for money from the sales?
  (Colonel Taylor) I think we put in our submission, Chairman, some comment on this and what we were saying was that disposals have progressed well in some areas, notably in the North of England, Yorkshire, the Humber and Lowlands, but in other areas planning permission and provision for alternative accommodation has led to delays. So there is a mixed pattern emerging around the country about those disposals and we really at this stage cannot give you hard figures. The Defence Estates really are now custodians of the property and their valuations and really they are the only ones who can give you the definitive answers, I am afraid. I would repeat that we feel saddened that the expertise which was available at association level has not always been tapped into. Where it has been tapped into, in Yorkshire and the North East, then it is working well.

  Chairman: It seems like a good inquiry for the Public Accounts Committee to see if value was obtained.

  Mr Cohen: Though I think we should ask the Defence Estates for a memorandum on these points we have raised.

  Mr Brazier: Yes.

  Chairman: Good point.

Dr Lewis

  149. Under the new RFCA Regulations, have you experienced any problems with the new funding arrangements? In particular, have you encountered any loss of income?
  (Colonel Taylor) I will pick it up and then my colleagues will come in. We were very careful in the Memorandum of Understanding that was signed off last year, about how this was all going to work, to emphasise what was required now with funding passing through divisions rather than coming direct from Headquarters LAND, a high degree of transparency with the clear understanding that was not meant to indicate that it was available for flexing across other budgets because that would have been rather damaging. To date the experience suggests that is working well. My two colleagues who sit on the boards where these things are actually debated in detail probably can add a personal dimension to that.
  (Colonel Robinson) The difference, of course, is that before the funding came through divisions all the RFCAs were on a level playing field and we all had the same instruction and everything worked roughly the same. Now it is coming through divisions, the divisional aspect is thrown down to us in that particular division and it is not necessarily the same as the one over the border and it does depend on what the divisional priorities are. First of all, we see this as equal pain all round because whereas the RFCAs previously had their budget not going through divisions and there were eyes glancing over the border and saying "How is the TA getting this, or how are the Reserves getting this, when the Regular Army is strapped?", now we are sharing the pain. It is almost too early to say whether we are going to be short of money but the indications, as I said earlier, are that the future funding, although the main part is supposed to be secure, the property management funding is looking distinctly doubtful at the moment. That is something we are watching very carefully for the reasons I outlined five minutes ago, that we suddenly find our buildings are falling around our ears and some of them are not in a good state, in particular in Ian Pemberton's area.
  (Commodore Pemberton) Yes, indeed. There is certainly a variance from one division to the other in the way they have had to take their savings in so far as the property management funding is concerned. In the division which Patrick and I are covered by, which I think probably has a far greater property portfolio than any other in the UK, we find there is a categorisation of need to be done to buildings. We are 100 per cent A1, which is the highest category, and only getting 10 per cent of A2 for the coming financial year. Our understanding is that in other areas, other divisional areas, they are getting 100 per cent of A1 and 100 per cent of A2. Our cadet huts come A2 and lower, so it means that these wooden buildings that require regular maintenance just to maintain them so they do not fall away are just not going to get done. We have got a major problem on our hands in trying to find ways of keeping these things going. The level playing field, which the Chairman referred to a moment ago, is therefore in that particular area not there any longer. One can understand the problems at the divisional level but that is an area where we are suffering and that level playing field has disappeared.
  (Colonel Taylor) I suspect your question actually dates back to one of the earlier appearances before this Committee when we were discussing and debating what was, to use the jargon, the netting off of our reserves. That decision was taken some time ago. We had previously had the facility to hold reserves and earn interest and so forth but that is now netted off when it comes to the budget allocation for the coming year. That, unfortunately, is the way it is these days and that is the way we have to manage. We have lost that and that is a real loss, but that has happened.
  (Commodore Pemberton) To be fair to the chain of command, they have increased our establishment grant by so much per head and for that part of our investment income, as we have called it, that would have been used for welfare for the TA side. Because the TA do not have NAAFI funds and other things which the Regular Army get, they now do give us an addition to our establishment grant which can be used for that sort of purpose. For the other areas in which we would have used our investment income such as to help top up our property management funding, we no longer have that income.

  150. Finally from me, there is a recent idea to make it compulsory for members of the reserves to inform their employers of their status. Do you agree that it should be compulsory for them to do this and do you have any fears this would be likely to affect recruitment?
  (Colonel Taylor) I have to say to you, Sir, that Richard Holmes put it very eloquently and I do not think I could add much more to what he said. His views seem to me to summarise perfectly the difficulty of this particular topic. Frankly, everybody you talk to will have a different view but I think Richard actually summarised it in a way which was most intelligent and sensible. That is my parting gift to Richard as he goes.


  151. Thank you all very much. It has been a very interesting session, it shows our continuing interest in the reserves and perhaps we will be publishing something in due course. Thank you very much.
  (Colonel Taylor) Thank you very much, Chairman.

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