Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 120 - 139)



  120. That is what I am saying. Do you have incentives, I can see some areas on Figure 12 triple the target vacancy rate, eight of them have doubled. Do you know which are the good managers or bad managers? Do you have an area manager of the month, Mr Wilson?
  (Mr Tebbit) It is important to say that the reasons for these differentials depend on what is going on in individual areas.

  121. I can believe that.
  (Mr Tebbit) Some are too small and have been rationalised.

  122. Do you have a manager of the month?
  (Mr Wilson) We do not operate a manager of the month scheme as such. We have now instituted a monthly review of the disposals in each area and we do it area by area. Most of the high figures in those tables do not necessarily relate to the inefficiency or efficiency of the manager, they relate to a particular location. There may be two infantry battalions moving in a year or two years' time, therefore it is necessary to hold additional property.

  123. These unit moves seem to be less of a problem. You are renting outside £11 million worth of property?
  (Mr Tebbit) That is not a bad figure, yes.

  124. Page 15, 1.10. If an officer refuses a house one down, accommodation one down, you rent the property.
  (Mr Tebbit) You mean if there is nothing for them at their right level or there is not anything one down, then they are eligible for a rental property? Yes.

  125. The right of refusal is not theirs then? If they say, "I do not want the one down", you say, "You are taking it"?
  (Mr Tebbit) That is right.

  126. How much of the £11 million rental could be as a result of officers not being able to be offered one down?
  (Mr Tebbit) It is usually where there is no accommodation of any kind for those officers. For example, when there was a major move to the Bristol area, Abbeywood, where we moved the Procurement Executive in a major way, there simply was not enough Service housing there and it has been quite difficult to work out what to do. We have a PFI programme going to build housing but meanwhile people are in this sort of accommodation.

Mr Williams

  127. Mr Wilson, you told Mr Griffiths there are cases where dilapidations costs are settled rather than repairs being carried out. How are they settled? Who determines what they should be? What process is there? In the event of that happening, if the building is then demolished who meets the demolition costs? Thirdly, in that process, what happens to ghost rent?
  (Mr Wilson) If we are proposing to release the properties to Annington Homes, what happens is that Annington Homes employ their technical surveyors, they have a look at the property and complete a schedule of what they think is wrong with the property. We, for our part, employ our technical specialists who do a similar sort of assessment and then there is a process of discussion between the two parties, and either there is agreement or disagreement, and in the event of disagreement in the final analysis cases could be taken to arbitration or to law. As far as a property which is demolished is concerned, generally speaking the demolition would have happened before we start the process of disposal of a particular site; demolition might have happened because of structural problems, for example, two or three years before. In those circumstances a compensatory payment is made to Annington Homes because that property no longer exists in accordance with the sale agreement.

  128. But you indicated in an earlier answer, or someone did, that there is also a ghost rent which is paid.
  (Mr Wilson) Whilst we retain that site, even if a house has been demolished, for example for structural reasons, then a ghost rent continues to be payable.

  129. Indefinitely?
  (Mr Wilson) Yes[9].

  Mr Gardiner: £1.625 million a year on 620 houses. In other words, over a 999 year lease they have the whole £1.66 billion back.

  Mr Williams: No, over a 100 year lease. Mr Leigh.

Mr Leigh

  130. Mr Tebbit, let me try and summarise. As of August 2000 we have 14,352 houses empty, 24 per cent.
  (Mr Tebbit) As at the time of the report being written. That was a year ago.

  131. All right. Despite this, the Executive had to house Service personnel in property rented from the private sector because appropriate housing was not available. £11 million cost. We have a target of 13 per cent.
  (Mr Tebbit) We have a target now of 10 per cent. The target was in the report at 13 per cent.

  132. Okay. In 1986, the accepted target for vacancies was 6 to 7 per cent.
  (Mr Tebbit) Sorry? 1986?

  133. Sorry, 1996. Am I wrong in saying that?
  (Mr Tebbit) I am not sure it is going to clarify things very much.

  134. Having listened to this debate, I still do not know how you arrived at the target we are now at and why you cannot put greater pressure on bringing it down.
  (Mr Tebbit) The target we are talking about is based on an assumption of how many people we will need to house and what percentage of management margin we need in order to achieve that efficiently to deliver operational effectiveness. The best guess I can offer you at this stage is that the core requirement will be something around, say, 42,000 because we are dealing with a declining requirement as we go—this is by 2005—and we will probably then need about 10 per cent on top of that as a management margin in order to move people around that core housing requirement. That is the best target I could give you at this stage as a general guess. We are a little way away from it right now. We have moved on considerably since the report was written for two reasons. Firstly, the report was written during a change, change was going on and now 12 months later quite a lot of things have happened, above all the 6,500 extra houses for disposal, above all the radical reduction in how long things are empty for long periods, which is a good indicator of how well we are managing it. We had 3,800 empty for more than six months when the report was written, we now have 632. We had 346 over three years, we have now got 50 empty for over three years. In fact, when I asked last week, the figure was actually 18 empty for more than three years. So these things are coming down rapidly.

  135. If Mr Griffiths when he was running his housing association had a vacancy rate of 24 per cent, he would have been out of a job. He would not have risen and been promoted to the position of real power he now enjoys.
  (Mr Tebbit) It depends what his job was. If his job was to run a housing association, I am sure that is right. But the job here is to provide operational capability. Service families move on average every 18 months to two years. They are moved by the organisation in order to deliver their job most efficiently. Therefore we require a high management margin, a high turn over is achieved. As we have said, 22,000 moves a year. We do not provide social housing, it is operational military housing, and comparisons with different sectors really are not valid, although it is absolutely right we use best practice bench marks for the areas we can compare it to, but we cannot compare it with housing in the ordinary rented or private sector.

  136. I accept you always come back with this argument in terms of your needs, national security, you must have this buffer and therefore you have this system—
  (Mr Tebbit) It is because we are moving people around a lot.

  137. I know but I was wondering whether it might be better to have a much lower target, to accept you will not always be able to accommodate people in these properties but to rent privately.
  (Mr Tebbit) There is not that much private accommodation to rent in Britain. A lot of our establishments are in fairly remote areas where there just is not the stuff there. In other areas, such as London or Bristol, we have found it is very expensive and this is a reasonably cost-effective way of doing it. We are not like other countries which do have large private sector rental markets, we have relatively little. If you are moving people around every 18 months to two years, which is very much the case in the Army, there is not much time for them and we do not want them to spend months of their time worrying about the details of how they are going to move from one place and settle into another; we want that dealt with. That was another reason why we had this system.

  138. Why do you think the demand for family and married quarters has fallen so steadily? Is it because you are still locked into a sort of paternalistic culture whereas actually people want to be in their own private house?
  (Mr Tebbit) There have been reduced numbers of people. Demographic trends make a difference, people having fewer children early. There is increased private purchase where the spouses' jobs matter and people say, "I do want to dig into one place and go and live in the mess[10] rather than live with my family in family quarters." So there are various demographic factors at work as well. We do try, and I am sure the Air Marshal is longing to say this, to capture these by surveys as well as forecasting unit moves so we get the overall picture right.

  (Air Marshal Pledger) Risk is something I think we have to acknowledge. In the continuous attitude surveys from each of the Services, one of the major priorities they put against retention is the availability of appropriate and, shall we say, modern Service housing in order to provide for their turbulent and mobile life styles. That is very much at the top end of their priorities. The cost of not meeting that is considerably greater, given the training requirements, even if we could recruit sufficient through this process. So we have to acknowledge the primacy our occupants put on this as a definitive and central condition of service.

  139. Maybe this is a naive question, but surely people do not want to be locked into houses either within the wire or outside the wire owned by somebody else, they want to have their own house, they want to be on the property escalator?
  (Air Marshal Pledger) That is not the answer that comes back from all these current members of the Armed Services. There is a proportion who are taking that particular move. The large majority are saying this is an essential condition of service, given their life-style.

9   Note by Witness: Under the Annington sale agreement, ghost rents on demolished properties apply for the balance of the first 25 years of the contract, ie until 2021 or until the site including the demolished property is returned to Annington Homes, if earlier. A site review takes place at the 25-year point. See Appendix 1, p 23. Back

10   Note by Witness: for clarification, my reply was intended to indicate that people were content to live in the mess during the week. Back

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