UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1714-i

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

DEFENCE COMMITTEE

THE ARMED FORCES COVENANT IN ACTION? PART 2: ACCOMMODATION

TUESDAY 7 FEBRUARY 2012

DAWN MCCAFFERTY, JULIE MCCARTHY and KIM RICHARDSON

GAVIN BARLOW, DAVID OLNEY, AIR COMMODORE OPIE and BRIGADIER WOOTTON

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Defence Committee

on Tuesday 7 February 2012

Members present:

Mr James Arbuthnot (Chair)

Mr Julian Brazier

Mr Jeffrey M. Donaldson

John Glen

Mr Dai Havard

Sandra Osborne

Sir Bob Russell

Bob Stewart

Ms Gisela Stuart

Examination of Witnesses

Witnesses: Dawn McCafferty, Chairman, RAF Families Federation, Julie McCarthy, Chief Executive, Army Families Federation, and Kim Richardson OBE, Chair, Naval Families Federation, gave evidence.

Q1 Chair: Let us start this first evidence session for our second inquiry into the Armed Forces covenant in action. This one is about accommodation.

I say to all three of you, welcome back and thank you very much for coming. Your evidence in previous inquiries has obviously been so valuable that we want you here in almost permanent session. As you have introduced yourselves on previous occasions, I do not think we need to ask you to go through that ritual today.

I would like to begin, please, by asking you the extent to which personnel and their families value the principle of being provided with accommodation by the Ministry of Defence. We shall come on to practice and condition in due course, but do they value the principle? If they do, what do they value in particular? Who would like to begin?

Dawn McCafferty: I would say that service families and the serving personnel hugely value the provision of service-provided accommodation, both single living and married accommodation, and I think that part of it is because they are joining a community, a family-it is a lifestyle choice to join the Royal Air Force or the Armed Forces-and they are having service accommodation provided right from the outset. So when you are a single person who has just joined up, you are given accommodation to live in as part of the team-you live close to work-and then as you move on, perhaps you get married, and there is provision of accommodation for you and your family, to enable you to move together as a family, and I think that is hugely valued by them.

Kim Richardson: I think they expect it, actually. I think it is almost part of their terms and conditions of service, so there is an expectation. The only thing that I would add is that, for some of our younger and more vulnerable people, Service Family Accommodation is the only affordable option for housing that they have.

Julie McCarthy: I agree with all of that and just say that, with the mobile Army that we have, it is the only real option that families have for living together and spending any sort of quality time together. In terms of Army personnel-certainly the families and service personnel that I speak to-they see housing as a staunch pillar of the covenant, and I do not think that it is necessarily represented in the deliverables against the covenant that we are seeing at the moment. They see it as very much a huge part of their terms and conditions of service and, putting aside everything else that is being offered, that for them is actually the big thing. They will not necessarily buy into the covenant until they see that housing and their terms and conditions of service are the pillar for the Government as well.

Dawn McCafferty: Evidence for how highly they value it is that, when we started asking questions in the surveys that all three of us did last year, as to how they would feel if the provision of accommodation was to be reduced or taken away, there was a very, very strong feeling against that suggestion. They felt that it would undermine team cohesion and put huge pressure on the families. That was the overriding vote that we got across all three services. So when you start to threaten it and take it away or start to mention alternative options-perhaps they do take it for granted at the moment, and see it as part of their terms and conditions-they are very quick to fall back and say, "No, this is part of my serving partner’s terms and conditions, and it is what helps us serve as a family."

Q2 Chair: Thank you, that is helpful. The first thing I should have said at the beginning is that we expect this part of the session to go on until 3.30, and the next part of this evidence session, with Ministry of Defence officials, to go on until 4.30, and we will hope that the answers to some of the things that you say will come out in the second session. During the second session one of the issues we will dance lightly over is this issue of the cohesion of units, and whether single accommodation in sometimes quite isolated rooms and units might be damaging to the cohesion of units.

Q3 Bob Stewart: Could I just ask, is it now absolutely 100% that a young soldier, sailor or airman, on marriage, gets offered a married quarter, or are there still some people who are not able to fit into the married quarter stock? In other words, they have to stay with mum or dad, or somewhere else, until there is a quarter available. Are we now 100% or not?

Julie McCarthy: It depends what areas people are moving into. In terms of eligibility you are right; it is on marriage or civil partnership that people become entitled. I know that is an area Dawn would probably want to talk about, in terms of eligibility and entitlement to quartering, and some of the Future Accommodation Projects we are looking at. We have particular problems at the moment with some families in Northern Ireland trying to get back to the UK mainland, to England, but moving, say, to Abingdon or other areas where there is very little Service Family Accommodation. They are having to stay in their current SFA till something becomes available. My biggest concern is that the rush to rebase back from Germany, not obviously backed up by significant investment, means that that will get worse and worse for our families.

Q4 Bob Stewart: My real question was about it being very important, I assume, from your point of view, for a young wife-or husband if it is the other way round-to be brought straight into the fold, as it were. If they are left out they tend not to feel part of the system.

Dawn McCafferty: Some of them may be allocated accommodation, which they are entitled to, but it is still quite some distance from the base, and if the partner cannot drive it is quite isolating and that can be just as difficult. I am sure in an ideal world every commanding officer would want to bring the married community and civil partnerships on to the base, on to the patch.

Q5 Bob Stewart: So the short answer to the question is that there are still some people who are not provided with accommodation on marriage or civil partnership.

Dawn McCafferty: No, they are, because they will be given substitute accommodation. So if there is an entitlement, whether it is because you are a single parent with care of a child, or married or in a civil partnership, you are entitled to Service Family Accommodation. If it is not available at your parent unit, then the DIO is obliged to find you what it calls substitute Service Family Accommodation, and that can then be at that distance. I am not saying this just about SSFA; some SFA can be isolating, as well, because it is on a patch, or indeed a unit, away from the parent unit. For example, in Lincolnshire you might be posted to Waddington, and be entitled to a quarter there. They haven’t got enough quarters at the moment, so you might be accommodated at Digby or at Scampton. Again, if your parent unit is some 15 or 20 miles around the city, that can be very isolating for the family.

Bob Stewart: Understood. I think I have had the answer.

Q6 Mr Donaldson: Just following up on the housing accommodation, I know that the experience in Northern Ireland is that where personnel are leaving service, and they have a limited time in which to find alternative accommodation when they are in service accommodation, they just join the housing waiting list. In Lisburn, in my constituency, which is home to Headquarters Northern Ireland, that is a very lengthy waiting list. Is there more that could be done under the military covenant to address this issue of where service personnel are just treated like anyone else?

Julie McCarthy: I think what should happen and what we are still not seeing from a lot of local councils is them accepting that certificate of cessation as notification that that person is about to become homeless. What they are doing is forcing DIO to take eviction proceedings, so that they are physically going to be removed from that house before they will leave, and then the person is put out on to the waiting lists.

Chair: We will get back to this later in the evidence session, and I think Bob Russell has a question that he wants to ask you about it. Getting back to the conditions of the property, I call Bob Stewart.

Q7 Bob Stewart: Do you have a feel for how single personnel view their accommodation? It is probably more a feel than something that you have a big handle on.

Dawn McCafferty: They are not necessarily all single from the start. Some of them are divorced and have perhaps gone through having a family life. It changes your perspective, because if you have just joined up and come from university halls of residence or from home and you go into a nice block that has had the SLAM upgrade, you will probably be very pleased with it. There are obviously a lot of blocks that are not yet up to that standard, but there is a push to improve. If you are a divorced senior NCO, however, and your room is now your home, a lack of storage and a lack of upgrades within senior NCO Single Living Accommodation can be a real issue. It depends at what stage in life you are.

Q8 Bob Stewart: So your answer is that it is variable.

Dawn McCafferty: Yes, very much so.

Kim Richardson: All I would to add that is that, by tradition, the Navy tend to put their roots down and live in their own home, so our serving person is the mobile one. We use Single Living Accommodation, and I sense-a bit like Service Family Accommodation-that it is a bit of a postcode lottery. If you talk to a group of Royal Marines, they would tell you that they would not necessarily like the individual room set-up, and I think sometimes our young people get quite used to the space that they have and then they join a ship with a lot less space.

Q9 Bob Stewart: The Royal Marines are totally out of bloody control-that is why. [Laughter.]

Kim Richardson: No, they’re not. I love the Royal Marines.

It depends what you are looking for from Single Living Accommodation. For some, it is a home; for some, it is somewhere just to stay during the week.

Q10 Bob Stewart: So, again, it is variable.

Kim Richardson: It is what you want from it.

Dawn McCafferty: Again, we have quite a proportion of our people who, as Kim has perhaps intimated, are living in the block or living in the mess during the week. They have a family home somewhere else and have chosen to commute, and therefore it is just a bed for the night in the working week and then home to their real home at the weekend. Again, the perception of what that room means to them will change depending on whether it is your only home or your work home.

Q11 Bob Stewart: So it is variable and à la carte.

Kim Richardson: Yes.

Dawn McCafferty: Yes.

Q12 Bob Stewart: Is that the same for you, Julie?

Julie McCarthy: It is. I would not add anything different. For some of the soldiers that I meet, it is just a place to put their head down, but for others, if they do not necessarily have a home to go back to-the singlies-and if they are not going home to mum and dad, it is home and they will feel much more that they have to make it that way. Dawn and I were recently in the Falklands, and the standards of accommodation there are very low in quite austere circumstances. When you are so far away from home is when we really see the difficulties. If they were brought up to standard, it would mean so much more, because of where they are.

Dawn McCafferty: We saw an improvement programme being put in place there, which was very impressive, but when we actually spoke to the lads and lasses living in the accommodation down there, they were very resilient and they were okay about it. They knew that they were a long way from home and that it was basic and functional, but they were making the most of it, so I was actually quite impressed by their approach to some pretty low quality Single Living Accommodation, which is in massive need of refurbishment.

Bob Stewart: They are on operations-that is why. They consider themselves on operations.

Q13 Chair: You have limited your answers, perhaps expectedly, to Single Living Accommodation. What about families? What do they think about the condition of the properties?

Kim Richardson: It is a postcode lottery.

Dawn McCafferty: It varies across estates. It varies within estates. It varies, again, based on expectations. If you have just got married and have just moved out of the block, your first home may well feel like a palace, but as you move on in your career and become more experienced and have to move from a modernised, upgraded quarter to something that has not yet benefited from an upgrade-and may not during your tour-you are going to feel let down and that you do not have the quality of accommodation that you were hoping for. It is very varied.

Kim Richardson: Depending on where you are looking for Service Family Accommodation, it is also about choice. You are asked to make three choices about where you want to live, but along the south coast and in other parts where the Army are, there is no choice. Although the overall management margin for the country looks pretty good, we actually have areas of the country where it is poor. That then influences where your children go to school, your local provision of dentists and doctors, and all the things that you take for granted when you are moving. On the postcode lottery, it depends on where you want to live in the country and on what is available.

Julie McCarthy: I do not think you would find many Army families who aspired just to be in a grade 1 house, which is probably news to Alan Opie’s ears. When people look at grade 1, they see the rent, but what they actually want is just a good serviceable kitchen, bathroom and shower. A number of Army wives I have spoken to have said, "I could put up with this if I just had a shower that worked. That would be great." It is those little things that make the real difference-the fact that there is no mould, that the windows shut properly and that the house is a decent standard. There is also the fact that, when you move, you are not worried about what you are going to get. If there was a uniform standard across the piece, that would be a great thing. My husband is putting his postings in at the moment, and there is just that thought, "Where are we going to live next? What is it going to be like?" That trepidation sets in because people just do not know; it depends where they are going.

Dawn McCafferty: One of the most demoralising aspects, which we have had quite a lot of casework on in the last few months, is damp. If you have damp in your house, that can be really demoralising, particularly if you have young kids or a pregnant wife. That sort of casework reaches the media, and it reaches our attention very quickly. We perhaps still need to do some work to find out why so many of our properties have a damp issue and how DIO is tackling that from a grass-roots perspective, rather than just going in and painting over it, which is what the families tend to feel is happening. Most of the families are quite happy to accept the condition overall, they get used to the scale that they are entitled to and, as I say, they are broadly resilient, but if you move into those quarters, and they develop damp, that is one of the most emotive things a family comes across. The DIO staff will come over and try to fix it, but it comes back and comes back, and that is probably one of the biggest issues we have dealt with in the last six months to a year. We are not quite sure how to get over that.

Chair: Thanks. Sir Bob Russell.

Q14 Sir Bob Russell: Mrs McCarthy, in response to a question from the Chairman, you said that decent housing was a staunch pillar of the covenant. Is Parliament upholding what the covenant should be, or is it failing?

Julie McCarthy: In terms of housing, it is probably fair to say that most families feel it is failing. There are the reductions in funding for general upgrades, but look at the funding pause between 2013 and 2015, where there will be no upgrades at all. Families feel that that could be addressed. As part of the covenant, they feel that that should be addressed first. Before we get into all the other stuff, that should be right. Families feel that their soldier is going away on ops and serving their country, but they should come back to decent accommodation, and families should be provided with decent accommodation while they are away.

Q15 Sir Bob Russell: Do the others agree with that general overview?

Dawn McCafferty: I can’t recall the exact timing, but I do know that the covenant came out and, within a few months, the pause in funding was announced. We got feedback immediately from families to say, "That’s the covenant broken, then." They saw a direct link. Those things probably are not linked at all, but there was a direct link in families’ minds, because the Government had just published the covenant and said that they would try to provide and enhance service accommodation, but then announced the pause. It was seen as a definite breach of the covenant.

Kim Richardson: I would say that mobility has a role to play in operational capability. Our families tend to be mobile, and a percentage of them would need to be housed. But I would also say that where we are at the moment is unaffordable, and we have to look at what we do in future. We can’t carry on in the place we are at the moment. While I understand Julie’s point, I think this is more of an Army military covenant point than an Armed Forces covenant that is looking at the wider picture.

Dawn McCafferty: Again, I think families are quite astute to the idea that it doesn’t necessarily have to be service-provided accommodation in the longer term, as long as there is a capacity to have accommodation so that people can continue to serve near the base, and perhaps be accompanied. I don’t think people are necessarily tied into the idea that accommodation has to be MOD provided, but if you are going to take that away, be sure to put something decent in its place, and make sure it is affordable. There is a lot of concern about what is going to happen in the longer term. The Future Accommodation Project is exploring lots of different options. We have all tried to influence that research, but no one is sure what the future shape of accommodation is going to look like. Families are obviously jumping to the conclusion that it is going to be worse.

Q16 Sir Bob Russell: Thank you for that. What type of accommodation issues do families raise with you? I appreciate we only have until 3.30.

Kim Richardson: It is lack of choice at the moment. It is the "Why can’t I?" question. It comes back to Colonel Stewart’s point. We are not providing accommodation for the modern family. We are staying with the old, traditional rules and regulations that we have had in place for some time. Couples in partnerships with children would like to know why they cannot access Service Family Accommodation because they see themselves as a family. I certainly have seen a step change in the "Why can’t I?" question, and I think that they are all reasonable questions to ask.

Q17 Sir Bob Russell: What are the problems-if there are any problems-with allocations?

Julie McCarthy: It is where the houses are. For the Army, the particular areas are Catterick, across Salisbury plain and, coming into Oxfordshire, Abingdon and around that area. It is the availability. As Kim says, it is about a choice. There isn’t a choice; that is the house that is available. Sometimes, it is trying to fit in timing. We have had lots of conversations recently with the DIO about the impact of VERS on their civil service staff, the levels of staffing and whether we will see the customer service that we need for our families moving into summer churn.

Dawn McCafferty: We have got lots around the country from a RAF perspective. Some families just cannot get accommodation close to the parent unit. Probably 40% to 50% of the issues brought to the attention of our federation-and broadly the same across the others-are housing-related. They break down into lots of different types, but the common denominator in all of them is usually communication or a breakdown of communication. Whether it is about the policy and not understanding the entitlements, whether it is about allocation and the HICs staff not necessarily communicating particularly well with the occupant or whether it is about maintenance, it is nearly always down to communication. That is where the federations end up trying to link back interested parties and the occupant to make sure that they are talking to each other.

Q18 Sir Bob Russell: I will come on to maintenance in a minute, but what impact do you see the amalgamation of seven housing information centres into two having? Positive, negative or no difference?

Kim Richardson: We have a sense of nervousness about it. We are worried about a loss of local knowledge and understanding. I think that we have made our views very clear that our families are only just getting their heads round the fact that they had HICs, and now we are going to HASCs. We will watch the next few months with interest. I hope it is successful, but we have a sense of nervousness.

Q19 Sir Bob Russell: That was a very diplomatic answer.

What are the problems with maintenance? I represent a garrison town, so I have a rough idea. Can we have it on the record?

Julie McCarthy: To be fair to MHS, where there is a simple repair and the right man appears, he or she does the job and goes again. That works well. The majority of our families will say, "Yes. It worked well". I live in SFA. I know exactly what they get wrong. I was on the phone to the help desk this morning. Mainly, it is not a simple job so it gets misinterpreted at the help desk, and the wrong sub-contractor comes out. We need more than one sub-contractor: the electrician rips up the wall, so someone else needs to come to plaster and paint. The plastering and paint takes an age, and it is up to the occupant to chase. We have all heard that. If you are in your own house, you have to do that. I have my own house. I know that I need to do it, but when we are told that we will get the service, we expect a service delivery.

Q20 Sir Bob Russell: So there are problems.

Julie McCarthy: Yes.

Q21 Sir Bob Russell: What about special needs adaptations? Is that a problem?

Dawn McCafferty: I was going to highlight that. I have a particular problem. The DIO and the MHS staff are doing their best, but they are particularly difficult families to support during either a move-in or an up-grade programme, or when something needs repairing in the house. One particular group of families has come to our attention: those with children with autism, who really struggle with change. They cannot cope with contractors coming in and out with no warning. They need preparing for it. When there is major change in the house-some of the families feel that there needs to be a better understanding and a more empathetic approach from some of the sub-contractors, because they are the guys who actually go into the house. Again, it comes down to communication and planning around that family, and trying to make sure that they do turn up for the appointment that has been made and it is not a missed appointment, that they come out with the right kit and get it done as effectively as possible. If an adaptation needs to be made to a quarter for somebody with a disability or a special need, that is one of the most difficult areas. Fair dues to DIO for working very hard to improve delivery, but it is still a real issue. They must dread it when they get the call from a family saying, "I have a special needs requirement in a quarter," because that is one of the hardest things to manage and creates such a lot of emotion within a family if they get it wrong.

Julie McCarthy: One of the major delays for special needs adaptations is gaining an occupational therapist’s report, because if a family is not living in the quarter, they cannot access the local authority’s occupational therapist. The family are trying to access something in, say, Hampshire when they are living in Scotland, but because they are not living there, the local authority does not have to provide that service. Getting that OT’s report is the real difficulty, so we could smooth that over as part of the covenant work.

Q22 Sir Bob Russell: May I just ask a supplementary question? We used to have an issue with the statementing of schoolchildren, but we now have an arrangement whereby the statementing goes with the child to the next local education authority area.

Julie McCarthy: Not always. That is not a given.

Dawn McCafferty: More often than not they find that they have to start again.

Q23 Sir Bob Russell: If that is the case, the Committee and I would like to have examples, although not today, because that should not happen. I was merely going to say that, as I thought we had cracked it with education statementing, there was perhaps a way to do it with special needs.

Julie McCarthy: The trouble is that they are different housing.

Kim Richardson: People’s needs change, which I think is where an occupational therapist’s report needs to be current. As a child goes from being a youngster to a teenager, their needs will change. I understand why the delay causes problems, but I do not think it is something that could go with somebody.

Sir Bob Russell: Thank you.

Q24 Chair: But if it is something that could be dealt with by the occupational therapist in Scotland, could they send their report to Hampshire?

All Witnesses: Yes.

Julie McCarthy: We have had occasions in the past, especially with adults with a disability such as needing wheelchair access, where it is a relatively simple thing and that has happened. That happened with a member of my staff, and it has worked very smoothly for them; but where a new occupational therapist’s report is needed, there are delays.

Kim Richardson: Do you mind if I add one thing? I think we have to be sensitive to the bigger picture of special needs. DIO has the potential to become a local authority in terms of what it provides, I think. We have had contact from families who want adaptations to Service Family Accommodation because a wheelchair-bound elderly parent comes to visit on a regular basis. The pot is only so big, and I have a real sense of nervousness that we are never going to meet everybody’s aspirations or demands. I would like to register that.

Chair: Moving on to the issue of house purchase, I call John Glen.

Q25 John Glen: Recognising that there is a wide variance among the services in the percentages of families who own their own homes, and notwithstanding what Dawn says about the expectation of accommodation being part of the contract, I would like to explore with each of you the numbers of families who buy their own homes and the difficulties that they encounter in doing so. I have been doing some work on this over the past six months, and I think there is a lot of uncertainty about how enabling, or not, the MOD can be. Could each of you say something about your experience?

Dawn McCafferty: We did some survey work on this last year to inform the Future Accommodation Project. If we start with the aspiration, something like 90% of the RAF families who responded to our survey wanted to own their own home. A fair percentage of those, however, did not own their own home because they felt it was unaffordable, incompatible with mobile military life or because the housing market is too unpredictable and they did not feel comfortable with trying to dip in and out of it while they were serving. There is a real desire among serving families to own their own home, and not just families-I have met some very astute young lads who bought houses very early in their career and wanted to let them out.

The issue is whether you want to buy a house as an investment to move into after your service, or whether you want to make it your home and try to move while you are still serving. That is the real challenge. People have tried to do that and found themselves in real financial difficulties because they have not been able to sell. They have then had to either move into quarters or rent locally to the next parent unit, and found themselves in real debt and financial difficulty, because they have overstretched themselves trying to do both-trying to have a home and be mobile. Most of them then end up making a decision, at some stage, to stabilise, so they buy the home and settle the family.

You then split the family, because the guy or girl in uniform commutes and lives in the mess or the barrack block, with the life that brings for them, but the family are elsewhere. It is stable-the wife can perhaps have her own job and the children can have a stable education, access to doctors and all that good stuff-but you are actually putting huge pressure on the family. I do not know how many separated tours that family will sustain before they eventually turn round and say, "This is not what we want to do." Home ownership and the decision to buy the home can often be the reasons why people leave the Air Force.

Q26 John Glen: The uncertainties around market conditions, and whether or when to buy and so on-

Dawn McCafferty: There is nothing the MOD can do about that.

Q27 John Glen: In essence, that is a general consideration, but in terms of the specific barriers that exist-there is obviously the uncertainty of where one would be deployed-there is the prospect of renting a property out. What are the particular barriers that you think exist in their minds?

Dawn McCafferty: I think, for most, it is affording that deposit. The long service advance of pay is well overdue for a review. That is set at £8,500, maximum. Well, I claimed that when I was serving seven years ago, and it is still at that level. House prices have changed remarkably just in that period. If the MOD is serious about trying to support home ownership, it needs to look at that. It is only a loan; it is not a gift or a grant. It is taken back out of your terminal benefits, so it is a loan to the service person to enable them to pay that deposit. I think that that is one of the biggest challenges, and if they could review that-

Q28 John Glen: The amount, the timing or both?

Dawn McCafferty: The amount, in particular. Timing was changed and it actually became more accessible, because it used to be more of a Navy allowance, I think. Then the other services came into line, when we went into JPA, so we gained better access to that allowance. The access is good, but the amount is pitiful, when you are trying to afford a deposit on a modern home.

Q29 John Glen: In terms of the MOD’s role in this, is it optimal or are there more things that could be done?

Dawn McCafferty: As I understand it, they have reviewed it, but then they got hit with a £250 million saving in the allowances bucket and, therefore, it was unaffordable. I think the intent is still there to try to provide-again, under the Future Accommodation Project-better ways of supporting home ownership and schemes for assisted house purchase, but whether it is affordable, I do not know.

Kim Richardson: I would say that the Navy has the highest separated service of the three services. We go to sea so, for a long time now, our families have opted to settle down, either close to home or close to the ports, and to put their roots down and buy a home. If you look at the statistics, do we have higher problems with marital breakdown? I sense that we probably do not, because we get used to it. What our families would say is that you are rewarded by the MOD for being mobile; you are not rewarded for being static, and a mobile lifestyle is expensive.

If I were going to pitch for anything today, it would be about a pilot we had for home ownership. It is still under way. It was predominantly taken up by the Navy. I think we need to look at more pilots, or to turn the pilot into something more substantial, to help our people get on the housing ladder. I sense that, if we are not careful, we will build a dependent group of people who, when they actually go out to civvy street, have never paid a deposit on a rented property. We need to start earlier and encourage them to do what we are traditionally doing, by nature, and which we are actually making work; that would be my view.

Julie McCarthy: Taking it on from there, we are probably the most mobile service. Over 17 years, I had 11 houses-12 at the end of this year. It is that frustrating thing that, for the Army families, it is about mobility. We cannot get our heads around having the separated service as much as the Navy has done, and sometimes I wish we would.

I would like to see our encouraging people to buy earlier. I think that many people do not because of the cost of buy-to-let and the admin involved in renting your house out, even if you want to get on to the housing ladder early. In our survey, the reason why people were buying property was to get a foot on the housing ladder and as an investment. They knew that they needed to do it. When you start to get into buy-to-lets and you look at the extra costs involved, you end up paying towards that and towards your SFA. With everything that is going on, and with so many single-income Army families because the spouse cannot get employment-either because they are moving around, or because in the current economic situation a job is difficult to come by-it is an extra expense that they do not want and they cannot really afford. Maybe something around the buy-to-let mortgages, which would encourage our people to get on the housing ladder without having to move into the house, would really help.

Q30 Chair: Do you think the Ministry of Defence should be giving the sort of financial advice that that implies, by encouraging young soldiers to buy buy-to-let property?

Julie McCarthy: I don’t know whether the MOD should encourage soldiers to be buying buy-to-let, because when they lose money, does that give them a liability? I don’t know whether there is a reluctance on the part of the MOD. A lot of it is personal choice. It is about educating our soldiers and allowing people in. Maybe if people are looking at the Joint Services Housing Advice Office, does it need more resources to get out there and tell more people about home ownership, about what is available and about what their personal choice could be? It is important to remember that buying a house is a personal choice. We chose to do it a long time ago because we could see the benefits.

Q31 Chair: Since then, house prices have gone up.

Julie McCarthy: They have, yes.

Q32 Chair: House prices can go down as well as up.

Julie McCarthy: They can, as I found out with my latest house that I am trying to sell.

Q33 Mr Brazier: Can you indulge me for a moment in a pre-amble? This sounds terribly similar to the position in the mid-1990s when I went into all of this. There was a really quite well resourced scheme called "buy, let and settle." The Army-it was just the Army, because there is a very big difference between the Navy here and the other two services-did a survey at the end of it, which showed that families who bought were almost twice as likely to PVR as other families. That was your point, if I remember rightly, Ms McCafferty. It seems to me that there is a gaping gap here between a service that, apart from submariners, is entirely settled on the south coast of England, and the other two services where you have got very large moves-even leaving Germany out of the equation, because it will eventually go.

Chair: Before you move on from that point, just for the benefit of the record, please will you translate PVR?

Mr Brazier: Yes. Premature-what was it?

All witnesses: Premature voluntary release.

Kim Richardson: Putting your papers in.

Mr Brazier: I can also produce the Army personnel research establishment survey from 1994, which really put the lid on it. The question I was really going to ask was this. Is it realistic to expect a family to buy a property and let it if they are not going to live in it, because the financial risks involved-trying to make phone calls from Scotland because the neighbours tell you that the tenants are beating the house up, or whatever-are so great? Is it ever going to be a realistic prospect for families with one income in the more junior ranks of the Armed Forces to buy stuff to let?

Dawn McCafferty: It is about education.

Julie McCarthy: There is a difficulty in that, no doubt. I have done it, following my husband around-living in Germany and getting that phone call saying, "The tenants are leaving next week and, by the way, they have not paid the rent." There are risks involved, but we recognised that in order to be able to buy the size of house we wanted when my husband left the service, we would need to start thinking about it earlier.

Maybe buy-to-let is not the way-you are right that there are risks involved-but perhaps savings schemes. I don’t know whether the scheme you were talking about was the one where you put in £3 and got £1, which they closed just before my husband got into it. There could be something like that scheme where people are encouraged to save. There needs to be something, and buy-to-let is not the panacea for everything but it is preparing people. It is an education.

Dawn McCafferty: I don’t know the full details of it, but I know that the MOD is working at the moment with the Royal British Legion and Standard Life on a new initiative, which is called, I think, "financial capability." That is aimed at improving the awareness and the education of all service personnel and their families about finances in the round, not only about house purchase but about pension planning and savings. That is the sort of thing we should be doing. We are not encouraging people to take a particular option; we are telling them about all the sorts of things they need to take into consideration at various life stages in their service career, so that they can make their choices and plan according to their income. As you say, a youngster-I have met young single airmen who have managed to get into the housing market at the right time. I blew it as a junior officer. We went into the housing market and went into negative equity for 10 years, just because I got in at the wrong time. So I have been there as well and had a rented property that lost me money, because we thought it was an investment. Perhaps if I had been better aware of the risks I might not have done it.

There is a real need to educate a lot of our service personnel and the family members about the options they can take for house purchase and long-term saving and pension planning. Pension planning in particular is an area that we really need to look at, because so many of our service partners do not have their own pension in their own right.

Kim Richardson: Can I just add, I think we need to treat people like adults? I think we need to give them options and let them choose, and that is the route I would take.

Just to correct something you said, Mr Brazier: 5% of the naval service have next of kin around Liverpool, so we do not all live around our home ports; we are sort of spread country-wide.

Q34 Mr Brazier: No, but the postings for surface Navy for a very long time have all been on the south coast.

Kim Richardson: But we tend to live throughout the whole UK.

Mr Brazier: Just for the record, please don’t think that I underestimate the difficulties the Navy faces. The last time I looked at the statistics, marital breakdown was significantly higher in the Navy than the other two services because of the pressures. That may have changed recently. So please don’t think I devalue it. But it is a different set-up.

Q35 Sandra Osborne: Could I ask you about future needs as far as accommodation is concerned? I believe you have carried out various surveys among your families. But first, you are talking about people who want to buy because they want to be on the housing ladder. Are there people who would prefer to be in their own home, even if it means being separated during the week?

Kim Richardson: I think we almost need a basket of fruit, as it were, for people to choose what works for them, because it won’t stay the same. We will always need Service Family Accommodation, because for certain families that will be the only affordable-or the only-option that they can take up, particularly if they want to stay mobile and claim continuity of education allowance, and those sorts of things. But I sense at different times during a service career you want different things.

My husband and I chose to put our roots down and buy a home when my children reached secondary school age, because we felt that was the right time. He became the weekender. It worked for me. I had all week to do what I wanted to do and then I tidied on a Friday. That does not work for other families, so it is about each family being an individual. But at the moment I sense that the problem is that they have not got the choices that perhaps they would like in order to make those informed decisions when it is right for them.

Dawn McCafferty: Certainly, the future package needs to look at what we call the 21st-century family, in that it does not do that at the moment. We have been asking the Future Accommodation Project team to at least consider the needs of the unmarried couples with children and without children, divorced dads, those with elderly parents and those with older children. We have casework, for example, involving children who go past the age of 18 who are not in full-time education-you lose the entitlement to that bedroom. The child, therefore, is now either sleeping under the dining room table or is expected to find their own accommodation. Families are coming back at us and saying, "You know, I’ve been in the Air Force for 20-odd years, my son has been with me throughout. He’s come back from college or uni and can’t find a job or somewhere to live, but now he’s being asked to share with his younger brother. He’s not entitled as a member of our family any more." It is a question of asking the policy makers at least to recognise that the family structure has changed and is changing-it is really difficult and probably unaffordable-and come up with a solution that allows those different family types to enjoy accommodation as well, and be able to live together as a family.

Julie McCarthy: I agree with Dawn. It was recognised that some of that will mean sacrifices in other areas. I know that our families, when we spoke to them about that, and with the Future Accommodation Project, said, "Keep it as it is. There’s already not enough housing and not enough money to go around, so what do we do?" What a future family will look like is a really difficult thing to balance.

In terms of people wanting to live in their own homes, speaking from an Army family point of view, we do, but actually we also want to spend as much time as possible together-given the nights out of bed that our soldiers have, at the best of times. We had quite a scary response when we asked those who were living married and accompanied-23% got home only twice a month and only 6% got home once a month. Although 45% got home every weekend, it is the constant breakdown-

Q36 Chair: Sorry, but which group are you talking about?

Julie McCarthy: These are married and accompanied-people living in their own homes who answered our survey-and 23% were getting home only twice a month. My husband serves with a hybrid unit-the TA and the regular unit-so it could be that he has to do weekends, so I would see him even less if we lived separately.

That is what Army families see-if they are together in the unit when the soldiers go away they live together and have that support from each other. They see that the support they gain from the community that they are surrounded by cannot be quantified. If you talk to TA families, they will tell you what it is like when it is not there. That is the thing. We can’t quantify it, which is what worries me. It has no economic value at the moment, until it is so far down the line that we are in trouble.

Dawn McCafferty: In our survey of RAF families, some choose to live away and live in their own homes and the service person commutes. But when we asked them for the reasons why they enjoyed living in Service Family Accommodation-a lot of them do-they said that mostly it was down to the low charges, which they very much appreciate, and being close to work for the service person. From a non-serving perspective, the partners were voting to say, "It’s because I want to live with other service families." The point that Julie has just made is that that neutral support, particularly when the guys and girls deploy, and having people around you-your neighbours-who are going through and have experienced the same thing, is really important.

The Navy has obviously learned to cope with that by going into its own communities and engaging with the community support networks, but for an awful lot of Air Force families, knowing that they are on the patch with other service families around them when the guys and girls are deployed is a really important part of living in service accommodation. Many would choose not to have their own home, but to have that comfort blanket around them and to then perhaps move into their own home later on.

Kim Richardson: We don’t have units in the same way as the other services, so we could have somebody from HMS Sutherland living next door to somebody who works in one of the medical units. We don’t have these patches of people from the same units. We also have people from the other services living around us. What I come back to every time is that it is about choice and what is right for your family at any given time, not one-size-fits-all in this instance.

Julie McCarthy: Can I read you two quotes from our survey, both from married and accompanied personnel? One says: "We haven’t chosen to live apart, but due to SFA shortages and schooling issues we have had no option. This has impacted on us emotionally as we feel that as a family we have no time together, and financially as we live nearly 500 miles apart, so it is expensive to travel home."

Another lady-a soldier’s wife-told us: "We plan to move into SFA at the end of the year. Living apart whilst holding down a job myself and raising young children single-handedly is difficult. We have decided that moving into SFA is the only option for us to ensure we continue to be a happy, well-balanced family." For me, that sums it up completely for Army families.

Q37 Sandra Osborne: Can I take you back to your comment about the family structure in the 21st century? Are there actual rules that say that if people are living together, rather than married, they are not entitled?

Dawn McCafferty: They are not entitled. They have some rules. You are not allowed to cohabit in service-provided accommodation if you are not married, but you are allowed to visit four nights a week-who polices that, I don’t know. There are many instances, certainly in the Royal Air Force, of co-serving couples, or a guy or a girl who is serving and has a partner or child.

If the female is serving, she will normally take the quarter and live there with the child. The lad will live either in the mess or the barrack block and will visit four times a week, unless he is caught going more often, but they are not allowed to cohabit. The guy is expected to go back to the block and not live as daddy in the house. That causes all sorts of casework, because those are the rules as they stand.

Kim Richardson: We also have rules where if you are an officer you are allocated accommodation by rank, and if you are another rank you are allocated your accommodation by your family size. We often end up with someone who has been serving a long time going into Service Family Accommodation for the first time as a warrant officer and being allocated a house that is a small property, and he feels, "You know what? I’ve been in the service a long time." The rules need looking at. They are not modern.

Dawn McCafferty: Not at all. As I say, on this issue about the children who reach a certain age and are not in full-time education, it has an impact on your entitlement. So you may have been living in quarters, but when you next move, you will be entitled to a smaller house with one less bedroom as a direct result of that. The rules are not written for what I would call the 21st-century family. The Future Accommodation Project will have taken that well on board, and we look forward to seeing how it is going to resolve it.

Q38 Sandra Osborne: So presumably gay people in civil partnerships would be able to get accommodation whether they were married or are not.

Dawn McCafferty: They are entitled.

Q39 Sandra Osborne: So it is not equal in that respect. Could I ask you what your perception is of how the families view the MoD’s intentions for the future? Do they have fears that family accommodation will be less?

Dawn McCafferty: They think there is an agenda running to get them out of quarters as a cost-saving measure. If you listen to the families, they feel that everything is stacked up against providing accommodation long term. They know it is an expensive, unaffordable, unsustainable solution and they fear that it will be taken away. The biggest fear is that the quarter charges are going to start going up very soon and very dramatically. That worries them because they are used to the present situation and, again, it is part of what they consider to be their terms and conditions of service.

Part of the covenant is that they are entitled to have subsidised accommodation for all sorts of different reasons, not least of all because is not theirs and they cannot paint it or personalise it. It is recognition of the fact that the guys and girls are in uniform and are doing a unique job for this country. If they have that taken away and are threatened with, "Well, you’ll be paying market rate before you know it," they will then start really demanding decent quality, good maintenance and access for all-not just for those who fit the particular rule box. There is a genuine fear that there is an agenda running, and it is all about cost.

Julie McCarthy: Yes, I would agree.

Kim Richardson: All I would add to that is that I sense there is so much going on out in civvy street at the moment that our families are looking at the bigger package. We have still got redundancy. We are looking at pensions. It is the bigger package, and housing is but one part of the bigger picture, to be perfectly honest.

Mr Havard: I am trying to make some sort of sense of what you say. It is interesting-

Chair: They think it is very sensible.

Q40 Mr Havard: I did not mean that, Chair. What you seem to be saying is, for example, 83% of Army families said that they would rather serve accompanied, so they want the ability to do that. You said that you cannot put a cost on that, but there is a huge cost to that in terms of it being a force multiplying morale and all the rest of it. There will be people in the MoD who will understand that, whether they are prepared to recognise it publicly at the moment in terms of pounds, shillings and pence. That is where the debate is. But it is real and it will be real.

Monetarising some of these things as far as bean counters might understand them is where you are, it seems to me. For example, on RAF families, you said something about there being a high level of ownership, but a third still think that it is unaffordable. You were talking about the business of not having enough capital to inject or whether or not if you buy something, there is the whole facilities management process that goes with that. There are then the moves, and so on.

Is there an argument that there should be a provision across that helps you with those aspects of the process of making those transitions as people need to make them? You seem almost to suggest that, even if you are in the process of having bought a property or a buy-to-let property, the maintenance and management of that process over time is not assisted either in terms of financial education or by having someone taking some of the problem away from you temporarily and releasing your equity so it can go somewhere else and so on. Is that an area that should be being considered in terms of providing the flexibility that you want, even once you enter into the process-never mind getting into the process in the first place?

Julie McCarthy: I don’t know. In a perfect world-

Q41 Mr Havard: It does not necessarily have to be a perfect world, because it is the alternative to having costs the other way. If there are to be trade-offs and the subsidy is to go, what is going to be provided in its place is the question you are asking. Is the price of reducing one thing to provide another? Would that facility process help you?

Dawn McCafferty: That would be very welcome. If there were a trusted agent who could be used as, if you like, the fount of all knowledge for service personnel who are looking to buy houses to let out and who could manage it and provide professional expertise at a decent cost, that would be a very welcome service. At the moment, people are out in the private market trying to find an agent that suits them, and some are good and some are not so good, so, yes, I think that that would be a benefit.

In the survey, we asked questions along the lines of, "One way of skinning the cat would be to say, ‘Let’s have provision of accommodation for a period of your service, say your first five, 10 or 15 years, and thereafter you are expected to stand on your own two feet in accommodation terms.’"

That did not go down at all well with our audiences. The families felt very strongly that accommodation should be provided throughout, because, as Kim says, for some, they will need to be mobile throughout their whole career. Alternatively, they might be mobile at the beginning, when they are young and single and going around the world doing their deployments, then they may want a period of stability when they are with their families, bringing up children, and then, as the kids leave and you reach that later stage of your career, you will want to be mobile again and want service accommodation at your beck and call. Even though we tried to think of options that might give you that cost saving elsewhere, the families were actually fairly wedded to the idea of long-term provision.

Q42 Mr Havard: I would just like to know whether or not this has been part of a discussion with you when there has been a revision or discussion of the New Employment Model.

Julie McCarthy: There have been agencies before that were aimed particularly at serving personnel to help them buy houses and then run them for them. I am thinking of a particular agency that went under last year and left people with debts and owing rent and all sorts. Unless it is very well run, it is a tricky area and I would be very nervous about the MoD providing-

Q43 Mr Havard: I wonder what elements have been discussed with you when you are talking about the New Employment Model and all that?

Kim Richardson: There is a view out there that we look at how much housing costs-the whole package-and we take that figure, divvy it up and give everybody a certain amount of money and they choose what they want to do with it: whether they want to rent or buy. There is a view out there that that might be the radical solution. I do not know.

I think that we all feel at the moment that the New Employment Model and the Future Accommodation Project is under way. We do not know what it will deliver and we do not know what its findings will be. We do not know whether it will deliver anything. I think that we are all hopeful that it will come up with some good suggestions-a lot of work has gone into it-but, at the moment, I sense that the answers that you are going to get will be about where people are today and how housing is impacting on them, and we are back to one size not fitting all.

Q44 Ms Stuart: At the risk of being accused of being a terrible popularist by the Chair, have any of you read Joanna Trollope’s "The Soldier’s Wife"?

Julie McCarthy: I started it on the train this morning. We get a mention on page 162.

Q45 Ms Stuart: It has the public buy into this debate. When she was on "Woman’s Hour" with-

Julie McCarthy: Kimberley MacGillivray, our north London co-ordinator.

Q46 Ms Stuart: What struck me in the debate was that there was this perception that the world is moving on incredibly rapidly in terms of the attitude of those in the service. The younger they get the more they want extraordinary flexibility. They felt that a lot of the portrayal was caught in a historic vault and that those on the frontline now want-

Dawn McCafferty: I think that is why that younger generation are challenging some of the rules and entitlements that are in place now, because they do not recognise those boundaries. The framework is different and they are challenging it.

Kim Richardson: Our expectations and our families’ expectations are much higher than they were before. If you go back 25 years, when you were given Service Family Accommodation, you would have taken anything. I moved into a house where they had taken an extra foot off round the carpet, because my husband was not the right rank for us to have it fitted. That has changed and we have moved on. With expectations now, you would not accept that.

Julie McCarthy: Spouses have changed too. More of us are working, we are getting married later and we have older spouses coming in, so there are different expectations.

Chair: Moving on, briefly, to the issue of leaving the services, which we have touched on already. Bob Russell.

Q47 Sir Bob Russell: Just before that, I want to ask Mrs McCarthy a question. You mentioned the importance and the strength that the Army Estate has and the RAF Estate has for the military personnel’s wives supporting each other. That is particularly so when a whole regiment or battalion is deployed overseas.

Have you had any evidence back from the people you represent where a whole chunk of Army houses are being sold on into the private sector? You start having a dilution of that because you have civilian families who, with the best will in the world, perhaps have a less disciplined lifestyle than military families.

Julie McCarthy: We haven’t, and I think Colchester is probably the place to get it, because I know that is where it has happened more. What it has meant is that those left in the areas have just pulled together more, and what makes me nervous is that that creates an even bigger divide. What I would like to see is those two communities coming together.

Q48 Sir Bob Russell: I will leave that one, Chair.

Kim Richardson: Actually, we have seen some problems where houses have been sold off. Sometimes it is because when the properties are taken on by whoever is buying them, the work done makes them look as if they are a better quality of provision, so we have had problems from having them close.

Q49 Sir Bob Russell: I am fully aware of exactly what you are saying, but I do not want to test the patience of the Chair. We can return to that on another occasion.

Does the MoD assist personnel and their families with planning for their accommodation needs after they have left the services, in some cases having been made compulsorily redundant?

Kim Richardson: You said after they leave the service, but I think that they need to start their planning while they are in the service. It brings you back to everything we have talked about today. Everything is there to equip them-people who can talk to them about what is available-but is it straightforward? Do people think about it before they go? Not necessarily, and I would say that for our compulsory redundees it is not even on their radar. I think that the service does its bit, but it is a personal responsibility to start thinking about what you want at the end of your time long before you need it.

Dawn McCafferty: There is an automatic trigger. When you come to, I think, the last two years of service, you are entitled to resettlement if you have served a basic number of years, and there is a housing element within that resettlement package, so you would go to a housing brief. But actually that can be a little bit too late in the day, if you haven’t considered housing at all at that stage, to think about getting into the housing market.

Also, quite a lot of our service personnel get lulled into a sense of, "Well, it’s okay, I’ll be entitled to social housing", but if they leave and have a pension, albeit quite a small one as a young corporal or a young sergeant, and they cannot find work, they will not actually be entitled to social housing. No matter what the covenant has done about recognising cessation of occupancy of SFA, they are not going to be entitled to jump the queue. They are going to have to go out and find private rented or buy, and they are going to struggle. As we have said all the way through, early education about long-term housing needs is critical right from the start, so that they can start planning and so that they don’t fall off at the end of that cliff and find that they do not have a home.

Sir Bob Russell: Thank you.

Q50 Chair: Is there anything else you would like to say? Are there any burning issues you would like to make us aware of in this particular inquiry into accommodation?

Kim Richardson: No, but thank you for asking us. All of us.

Q51 Chair: Not at all. We shall do so, I’m afraid, on every one of our covenant inquiries, and you will get sick of the sight of us.

Julie McCarthy: And I would just like to say that we have managed to get all the way through without mentioning Annington, so I think we have done quite well.

Chair: We got quite close to it.

Sir Bob Russell: I bit my tongue.

Chair: Thank you very much indeed. We have all learnt a lot in this hour, so many thanks.

Examination of Witnesses

Witnesses: Gavin Barlow, Director, Service Personnel Policy, David Olney, Chief Operating Officer, Defence Infrastructure Organisation, Air Commodore Alan Opie, Head of Operations Accommodation, DIO, and Brigadier John Wootton, Director, Infrastructure Army HQ, Ministry of Defence, gave evidence.

Q52 Chair: Thank you very much indeed, gentlemen, for coming to give evidence. I would also like to begin by thanking you for organising a most helpful visit to Catterick, a few weeks ago now, in which we saw a lot and learned a lot, and it has helped us in this inquiry. We are most grateful.

You have been listening to the evidence we have had this afternoon. Can I begin by asking what is the policy on providing accommodation for Armed Forces personnel overall, and how is it different in the different services? Who would like to begin?

Gavin Barlow: If I may, Mr Chairman, I will take the lead on answering questions on policy, where I can, and David will lead on the delivery issues.

Chair: By all means.

Gavin Barlow: It is a condition of service, in recognition of the mobile lifestyle of the service person and the fact that they frequently serve on remote bases, that they are provided with accommodation, whether family or Single Living Accommodation. That is an entitlement for all regular personnel. Whether they get Service Family Accommodation or Single Living Accommodation depends on their circumstances, and you had a discussion earlier about the current entitlements. Normally the accommodation would be provided at, or within a reasonable distance of, their duty unit. Policy on the provision of living accommodation is set out in tri-service regulations now, and that is fairly common to our service personnel policies across the board, where we have converged policy a lot over recent years. Barring a few very small variations on entitlements and charging, there is no significant difference between the three services.

Q53 Chair: You may remember that in Catterick we raised the issue of at the end of the working day young, single men, particularly, going into the single rooms and in a sense being isolated from the rest of their unit and less likely to join in and be cohesive with their unit. This is something we are likely to raise with the Minister when he comes before us. We will ask whether this will cause a problem or whether people, certainly in the initial stages of being in a unit, should perhaps be in more multi-room accommodation. I know we have been moving towards spending more money on this single-unit stuff. Is there anything anybody would like to say about that issue?

Brigadier Wootton: The Army policy is that we aspire to Z scale, which is single room, en suite. That is the target policy and we are not there by any means at the moment. We see that as important for recruitment and retention and because it acknowledges where a lot of the recruits come from and what their aspirations are in this day and age. As we are building accommodation for the next 30 to 50 years we need to have an eye to the future so we are not building something that might be obsolescent according to the norms of society and what the Army needs later on. There is discussion about whether the policy needs to be reviewed in terms of the Army and that is ongoing work. At the moment, the Army believes that the targets should be there, accepting that the circumstances when you are building-the building may not suit moving to a single, en-suite solution-and the financial situation at any particular time may mean that we have to go for lesser option but we should retain the target.

Q54 Chair: And each single, en-suite room costs £70,000?

David Olney: It is about £70,000 to build. As the Brigadier said, we are reviewing the cost drivers in that, some of which are scales and policy and some of which are the fact that we take a long-term view over the quality of the build, as opposed maybe to elsewhere in the private sector. So we are reviewing the cost drivers of Single Living Accommodation given the times we face.

Chair: Thank you. We will come back to that in later evidence.

Q55 John Glen: For clarification, Mr Barlow, could you set out what changes in policy have occurred from the MOD’s perspective in terms of entitlement of armed service personnel to Service Family Accommodation? Have there been any changes to this point, and what have been the most significant changes in recent times that the Committee would be interested in?

Gavin Barlow: In recent times, in terms of changes to entitlements, I suppose the most significant is the introduction of the entitlement for same-sex couples in civil partnerships, which was enabled essentially by the change in the law on civil partnerships themselves. That enabled us to regard those relationships in the same way as heterosexual marriages, if you like, which was the traditional ruling on entitlements.

In terms of the future, we are looking at the possibility of much wider-ranging changes, to take account of the sorts of changes in circumstances that modern families experience. The previous session with the families federations involved some discussion of the challenges that modern families face in trying to comply with the current set of entitlements.

Q56 John Glen: Apart from that specific change around specific partnerships, there have not been any significant changes in entitlements.

Gavin Barlow: Not unless you want to jog my memory, Mr Glen, with something specific.

Q57 John Glen: No, I am not trying to catch you out. I just want to get a picture of where we are at, so we can understand what will change in the future and how it relates to that. Obviously, we have seen the discussion this afternoon about the way family structures and relationships are different. I am inviting you to make any observations around things you have done-that’s all.

Gavin Barlow: The only other point, which a colleague has reminded me of, is that we have extended the time that bereaved spouses can stay in Service Family Accommodation, but changes of that kind are relatively minor-even though they can be significant for the individuals-rather than substantive.

When we look at wider policy changes, we have considered, on a number of occasions, the possibility of extending the right to live in Service Family Accommodation to couples in stable relationships who are not married or in civil partnerships. We have never been able to come to the conclusion that that was possible, primarily because of affordability in recent years, rather than any strong issue of principle, but that is definitely one thing that we are looking at again within the New Employment Model world.

Q58 John Glen: Okay. Finally, in your opening remarks to the Chairman-to return to the first question-you said that there were no significant differences between the services. What differences exist and are still a cause of anxiety or concern from a policy point of view at the MOD?

Gavin Barlow: Well, I am not sure that they are a cause for anxiety or concern. Generally speaking, we allow for tolerable variation, which I think is the term of art used in service personnel policy.

One example is that in the Army, personnel over the age of 37 pay no charges on Single Living Accommodation, if they are living there during the week and in their own home at weekends. Another would be that the RAF cannot oblige personnel to accept accommodation that is below entitlement, whereas in the other two services, they are allowed to be offered accommodation that is a scale below what their normal entitlement would be, but these are very minor variations in entitlement.

Q59 John Glen: It would be quite significant nevertheless to the people at comparable ranks in the other services. Is it not a cause of significant dispute and frustration from the others? Or, do they just accept that there is an inequality at that level?

Gavin Barlow: For the most part, yes.

Q60 Chair: You said it is insignificant. Looked at from the point of view of the Ministry of Defence, it is insignificant, but from the point of view of that particular family who has suffered that particular issue, it is 100% of their housing entitlement that has been reduced.

Gavin Barlow: Yes, absolutely.

Q61 Mr Havard: You have made my point, Chair. That is absolutely right, so how is it going to be accommodated and rectified when you change the policy through the New Employment Model? That is something I am looking at. The New Employment Model has five elements, one of which is future accommodation, looking at, among other things, policies, entitlements and delivery. In there somewhere is presumably a discussion about these aspects in terms of the New Employment Model. What changes is it going bring to resolve some of these difficulties?

Gavin Barlow: The New Employment Model as a whole involves us looking at the extent to which we can alter conditions and terms of service to deliver a model that is more affordable and more attractive than the current one and that enables us to manage service personnel in what we are calling a more agile way. I will leave that last part to one side. Clearly, if we are looking at affordability for the New Employment Model and at accommodation, we need to look at entitlements in the round. One way in which we might be able to change the overall entitlements package is to look at whether there are groups of service personnel for whom a different accommodation deal might be possible. If we are looking at the New Employment Model in terms of our career structures that deliberately makes some personnel less mobile than others and offers them an employment package that does not include obligations to move in quite the same way as the majority of service personnel currently have, that might enable us to change the balance of their own particular remuneration package.

Somehow out of this we must find a way of releasing enough resource to meet the changes to entitlements that we want to bring into play in order to meet the needs of families as they present them-for example, the unmarried partners’ question, the question about who is able to live in your house and what scale it can be, and questions on whether people should have a greater ability to vary the accommodation they get according to their personal circumstances. We really want to move to a position where we are able to accommodate people’s needs more flexibly. Equally, I cannot conjure up within the New Employment Model as a whole more money in total to meet all those needs. We must look at how, over time, we might be able to vary the investment that we are making in service personnel to meet a different set of needs from the ones that we currently have.

Q62 Mr Havard: Just help us a little in terms of what elements there would be in that. Are you saying, for example, that there might be certain things for reservists, given that the balance is changing? Are they going to be brought into the equation? How is that going to apply to them? What happens to people’s entitlements when they move from being regular to reservist? Will there be something for that group of people? Is there going to be something to deal with the question that was raised earlier about the amount of capital that somebody might be able to put up to buy a house for certain groups of people if they are less mobile than others? What other elements are under consideration in this particular part of the employment model?

Gavin Barlow: Well, certainly we are going to look at support to home ownership and the extent to which we might be able to put more resource into that. In the last session, you heard the concerns expressed by the Families Federations about the fact that long service advance of pay has been static for many years at £8,500 and it is a long-standing aspiration for them, and indeed for many in the services, to see that figure raised. We have tried to look at those kinds of changes in our investment, or our allocation of resources, to get better value for money out of the overall package.

As far as the reserves are concerned, we will very much look at what comes out of the implementation of Future Reserves 2020, which is still in its early stages to see what specific requirements come out of that in terms of changed conditions of service for reserves. We are not actively looking at that at the moment. We just have not got to that part of the process.

Q63 Mr Havard: It is interesting. You said at the start that you wanted to set aside the agility part. That seems to be the most difficult bit, in the sense of structuring your processes to allow for that agility and to predict who you want to be agile, when you want them to be agile, and how you facilitate that. Is the imperative to provide that agility or is it to save money?

Gavin Barlow: It is not to save money in that sense. The New Employment Model is not a major cost-saving exercise. There are some savings targets associated with specific elements, like the allowances package, but overall we are trying to look at how we can balance the resources that we have within the defence programme for personnel in a different way. It is not a pursuit of savings for their own sake.

Q64 Mr Havard: Can I ask you about the subsidy? You heard earlier evidence-I think you were in the room-and people’s concerns about costs increasing. Where is that? Is that in jeopardy? Is it in play? What is going to happen?

Gavin Barlow: Well, we certainly do want to look at accommodation charges and the level of subsidy in the round. It is a fact that the level of subsidy in comparison to market rates at the moment is rather greater than, say, the one the Armed Forces Pay Review Body use as their rule of thumb for the appropriate subsidy for grade 1 for charge accommodation.

It is not necessarily the case that that means having to look for a wholesale or radical shift in the level of subsidy, and certainly not in the short term. I know that this is a concern of the families federations and perhaps more of personnel themselves, who do not have as much contact with the policy staffs-probably fortunately. If we were suddenly going to do something radical and make an enormous change of some kind, I just do not see how we could.

Charging is a matter for the AFPRB to make recommendations on. They would be bound to make such recommendations clearly in the light of evidence provided by the Ministry of Defence, but they would want to look at the value of the overall package. It would be completely unrealistic for the Department to simply say, "We are going to stop subsidising Service Family Accommodation" and for us to expect that to have no impact on other elements of the package, which the AFPRB would want to give advice on. We certainly do want to look in the long term at how we can stabilise the level of subsidy and in certain cases reduce it where it is appropriate to do so.

Q65 Mr Havard: It is a long-term aspiration to reshape it rather than reduce or eradicate it?

Gavin Barlow: We certainly want to make sure that the subsidy is appropriate to the quality of the accommodation-quality in its widest sense-that service personnel are provided with. It is not clear at the moment that that is the case.

Q66 Sandra Osborne: On changes to terms and conditions, we heard a point of view in the last session that simply putting resources into salaries and then allowing service personnel to make their own decisions about their accommodation could be considered. Is that something that is on the agenda, or is it just a point of view?

Gavin Barlow: No, that is very definitely something that we are actively looking at. It looks on the face of it like a possible radical change that one could make, to move to a position where we give an allowance of some kind to service personnel and allow them to spend that either on some form of subsidised publicly provided accommodation or in the open market. That would enable them, under various scenarios, to be more flexible about what they chose to have. Potentially, it could also reduce our own risks and costs associated with providing accommodation.

But it is not straightforward, particularly from a purely financial perspective, especially in the MOD’s case. We have a large number of personnel who do not take up their entitlements, particularly to the Service Family Accommodation. Essentially, they live on the market without any subsidy or support from us for their own private housing. Moving to a situation in which one an allowance is made more generally available to personnel to enable a wider range of choice for the majority might be quite expensive and difficult to do, but it is certainly on the table. There are different ways in which you could make such an allowance work-at least in theory.

Q67 Sir Bob Russell: Who is driving this agenda? It looks as though the sticky fingers in the Treasury might be here.

Gavin Barlow: Absolutely not. As I said, the New Employment Model is not being driven by a cost-cutting agenda at all. In fact, the drive behind it is very much from the principal personnel officers in the three services. They have set the vision for the future that they want to pursue. Indeed, it has to be that way, because the three services and the centre need to come to a collective view about what the right overall set of terms and conditions of service will be in future. Primarily, it has to support the delivery of operational capability, and that is what we are here to do. It would be quite wrong to see it as some kind of savings exercise-it is certainly not a Treasury-inspired one. That is not what is going on.

Q68 Ms Stuart: I want to come to the provisions for housing. Gavin Barlow has given us a very good sense of the centre’s view, but what are the views of the various services on the kind of support they get in acquiring housing?

David Olney: Do you mean purchasing housing?

Q69 Ms Stuart: Yes-encouraging home ownership. Within that, on a historical note, can you remind the Committee how long ago you fixed the £8,500 rate?

Gavin Barlow: Yes, I am sure that I can clarify that by the end of the session.

There is a lot of desire among the service community for increased assistance in home ownership. We have been doing a lot in recent years, at least to look at what we can do. Clearly, it is not just a Ministry of Defence issue; the Government generally run a number of schemes to assist people to acquire affordable homes. Service personnel have been given priority access to those schemes in some cases, and they can certainly make use of them all.

From an MOD point of view, the long service advance of pay is the scheme that is taken up by the majority. Pretty routinely, about 2,500 personnel sign up to it every year, so that is our cost in terms of the outgoing investment of about £20 million annually.

Q70 Ms Stuart: Can I press you on that topic? Currently, some 13,000 people receive long service advance of pay for that. What numbers are entitled to it? What is the percentage?

Gavin Barlow: Essentially, most service personnel can go for long service advance of pay if they want to, but it is an interest-free loan-they have to pay it back.

Q71 Ms Stuart: Is there a difference in uptake between the three services? That is what I am trying to get at.

Gavin Barlow: There are some small differences about when people are allowed to start long service advance of pay. I can’t remember which, but one of the services you have to serve in rather longer to get access to it. Certainly, after four years’ service anyone can take it up.

As well as long service advance of pay, more recently we have introduced an Armed Forces home ownership scheme as a pilot. That has had relatively limited funding-£5 million per annum. It is a pilot that has proved extremely popular. It allows eligible personnel, those who have between four and six years’ service, to apply for a shared equity deal with the MOD, where we will fund between 15% and 50% of the value of a property, up to a maximum of £75,000. We are spending pretty much the full £5 million per annum on that. Clearly, that is helping a relatively small number of personnel.

Q72 Ms Stuart: I know it is early days, but in terms of geography, could you tell us where the pilot has been taken up? It is across England, isn’t it? Presumably, success of this pilot would be 100% take-up, or not?

Gavin Barlow: Yes, we are getting pretty much 100% take-up. We are getting far more than that in subscriptions, once you are into establishing the personnel who are eligible-so far we have had 1,830 applications of which about 550 were eligible. We have seen completions through to November last year run to 113 so far. It is a steady process. It is not a matter just of applying; you do actually have to go through and buy the house and establish the deal.

Q73 Ms Stuart: I was listening to you earlier. Whenever I hear an official talk about taking something "in the round" or "looking at it anew", it always tells me there is something on the way out. Is there concern in the MOD that probably the long-term view is that SFA will completely disappear?

Gavin Barlow: There may be some people in the MOD thinking that, but I would be pretty clear that it is not an official view. It is pretty clear, on whatever basis you look at what we might do under the future accommodation programme, that there are going to be long-term requirements for publicly provided accommodation of some kind. Any efforts to move away from that on a significant scale could be done only over the long term, consistent with the development of the Army’s super garrisons. So not in this decade I would have thought.

Q74 Chair: At the beginning of that series of questions you said that if you hadn’t, during the course of questions, given us the answer to when the £8,500 long service advance of pay was set, you might do so by the end.

Gavin Barlow: I still don’t have the answer.

Chair: If you don’t have the answer by the end of this evidence session, please write to us with it. We would be grateful.

We will move on to the three-year pause in the accommodation upgrade programme.

Q75 Sir Bob Russell: Well, gentlemen, this is appalling, isn’t it? Whom should we chase to get this three-year pause un-paused? Whose fault?

David Olney: Fault is probably for others to consider. I would make three points. You could say why did DIO have to offer up savings in accommodation as opposed to other elements of its budget? That might be a reason to start and then we could move forward. Over the past few years-from ’09 onwards-we have faced cuts in the money we have been able to spend on the estate in general; for argument’s sake, the technical estate and the training estate. We have preserved our ability to modernise accommodation, both Single Living Accommodation, and SFA. As part of SDSR, the screw was tightened and further savings and efficiencies were made and promised. But of course, as we all know, SDSR does not solve the Department’s financial hole, and you will be as aware of that as I am. Therefore, when looking at the major funding problem facing the Department, we have had to look further at our budgets to see where we could make further savings.

Regrettably, and I say this from the heart, we have come to the conclusion within DIO that we can no longer simply look at the remainder of the regular estate-technical accommodation, airfields, office blocks, workshops, etc.-nor can we look at the training estate any more, because we feel there would be a severe risk of operational impact. When you go down our budget, you conclude that there is only one other place to look, and that is housing and single living. When looking at that, what must we absolutely protect? We must absolutely protect reactive maintenance on both. We must absolutely protect the planned maintenance programme, and we fought hard and succeeded in protecting minor upgrades and improvements, and the asset replacement programme. What we were, unfortunately, not able to save, given the circumstances in which the Department finds itself, was the major upgrade programme for three years for Single Living Accommodation and SFA.

Q76 Sir Bob Russell: Gentlemen, I do not blame you for a minute; that is why my earlier question about the Treasury was put in. As you know, we are doing an inquiry-"The Armed Forces Covenant in Action?"-and you have heard the excellent evidence given by the families federations, particularly Mrs McCarthy who said that housing is a staunch pillar of the covenant. It was Mrs McCafferty, I think, who took the view-her two colleagues did not disagree-that the covenant was already breaking, and that was before the three-year pause. The Committee will be preparing a report which will no doubt go to the Government, so how long will it be before the Single Living Accommodation is in a condition that you wish?

David Olney: That is a difficult question to answer. We will have achieved 50% of Single Living Accommodation in the right condition and scale. I introduce scale here because we cannot differentiate between condition and scale in the way we measure the estate at the moment. Our aspiration is to move to a considerably higher figure of 90%, but with the money we have in the budget I cannot predict when that is likely to be. However, there are two components that may help, but don’t ask me to put figures on them. One, of course, is rebasing.

Rebasing has two implications. One is the capital we can spend on rebasing, and in all likelihood that will mean capital being spent on Single Living Accommodation as we rebase troops from one place to another. The second is that we will disinvest ourselves of sites, and consideration of which sites we will dispose of must include their condition, not only their disposal value, because the running cost of the estate is too great for the budget. Therefore, one could fairly suggest that we would be getting rid of some of the worst accommodation.

Q77 Sir Bob Russell: Single living.

David Olney: Yes, single living

Q78 Sir Bob Russell: Coming on to Service Family Accommodation, the vast majority of which is not owned by the Ministry of Defence, how long will it take to get all SFA accommodation up to grade 1 or 2?

David Olney: I will pass that down and give you some statistics. Some 96% of SFA is in grade 1 or 2 condition. Clearly, 4% is not, and as from January this year, we do not now allocate that family housing. Some people still live in it, but we do not allocate that housing. We would suggest that we have made huge strides in recent years in the quality of housing we offer our service families. Now, we offer housing only in those two conditions.

Q79 Sir Bob Russell: What impact is poor accommodation having on the morale of Armed Forces personnel?

David Olney: I have two service personnel beside me, one from the RAF and one from the Army. I would look to them to give you an honest assessment of that.

Brigadier Wootton: The measuring of morale is a difficult activity to put a precise score on. It is also difficult to take that score and put cost terms or effectiveness terms on it, in the context of military capability and output. Therefore, it is a difficult question to answer.

Q80 Mr Havard: It is real, isn’t it?

Brigadier Wootton: Absolutely. I don’t deny the importance of the question. It is just difficult to give a precise answer to it. If we look at the data we have on people’s attitudes to their accommodation, the Armed Forces Continuous Attitude Survey shows that 57% of people are happy with the condition of their accommodation.

Q81 Sir Bob Russell: What was that percentage?

Brigadier Wootton: It was 57%; these are 2011 data. Some 65% were satisfied with value for money; 42% were satisfied with quality of maintenance; and 43% were satisfied with the response to requests for maintenance. If you look at those figures and say, well, if you are going to reduce the impact on the number of service personnel, in terms of the families who will not get refurbished quarters or soldiers who will not be in new accommodation-it is going to take a hit on those statistics.

Q82 Sir Bob Russell: Those statistics are already not a ringing endorsement. What is the strong message that we need to convey to Parliament in our report on morale?

Brigadier Wootton: The statistics are as I have given you, in terms of what the continuous attitude survey says. I would suggest that if fewer people are getting improved accommodation, that might go down, but it is difficult for me to quantify that, as perhaps you would wish me to.

Q83 Sir Bob Russell: But if you were a betting man, is your expectation that the satisfaction levels would go down, and thus the effects on morale would get worse?

Brigadier Wootton: I would expect it to have a negative effect.

Air Commodore Opie: If I could focus on the housing perspective first, the key objective for us was to get all accommodation in the UK to a standard 2 for condition. When we went to Catterick, we saw what standard 2 meant. The important thing for us is to make sure that we maintain that standard and that we deliver at "move in", and then maintain it all the way through the tour.

If we look at customer satisfaction going back over the last 12 months, as MHS in particular has worked on its business improvement plan, we have seen customer satisfaction pick up quite markedly. One of the pieces of work we have been trying to do is to marry the customer satisfaction that MHS is measuring in its 5% survey of all tasks-that is a task-by-task review-with the AFCAS assessment over a year as to why only 57% of people are satisfied. An element of that is in the fact that most houses have, on average, six to eight tasks done in a year. If they are hitting about a 90% acceptance under the MHS measure, over the year, that may well average out at the 57% for how people feel overall throughout the year. The key for us is keeping at that standard 2, and ensuring that people understand and manage their expectations around that.

Q84 Sir Bob Russell: But you don’t anticipate a rosy future, with the cuts?

Air Commodore Opie: What we do anticipate is being able to keep to that standard. We based ourselves on the 2009 National Audit Office report to get to this commitment by 2013-we got there one year early-to reach that standard 2 for condition, and we feel that we have achieved that. Rather than taking our properties up to standard 1 for condition, which we would have liked to do with the upgrade programme, we are having to use the asset replacement programme to protect, in effect, the standard at standard 2.

Q85 Sir Bob Russell: On the Single Living Accommodation, I can contrast the "Auf Wiedersehen, Pet" building we saw at Catterick barracks with the state-of-the-art Merville barracks in my constituency, and I assume that we wish to go for the latter rather than the former.

Finally, how many families are currently living in condition 3 or 4 housing?

David Olney: There are currently 797 families in standard 3 for condition and 127 in standard 4. What we have offered is that if anybody wants to move to standard 2 for condition or above, we would move them. For quite a number of these properties, people are still in a standard 3 property only because they have asked us, rather than upgrade their property in the middle of their tour, if they could stay there until the end of their tour, and then we would pick up. Certainly if they came to us and said that they would rather move, often there may be six months to a year before they move anyway and they would rather not have the disruption.

Q86 Mr Havard: Can you just help us? The upgrade programme has been in effect cut or put aside. You or the Ministry of Defence have given us today some supplementary information on what its effect will be. I was going to ask you about what the effects will be on the maintenance budget, and you tell us that it is potentially £90 million or £100 million in lost revenue; there are elements of improvement costs in there, as well as lower customer satisfaction, a higher number of complaints, higher energy charges and higher carbon. These are the effects-you say-over a 25-year period in order to provide a £47 million annual cash saving. That is over a 25-year period. Coming back to the question about when the completion will be, if your costs in terms of these savings are set out over 25 years, where are we in relation to 2013, 2015 or even 2020?

David Olney: We would maintain our stock to standard 2 for condition. There are two elements to this impact statement: one is the loss of rent income to the MOD, because in effect 2,400 properties would be upgraded-800 per annum-for those three years.

Q87 Mr Havard: What alternatives to doing that were not decided on? Were there any other alternatives or was this seen as the only way to save the money?

David Olney: I think, as I suggested earlier, that when you go through the DIO budget as I did, and you look at the savings that we have had to make elsewhere, you are left with the painful conclusion that, given that we have protected this for the past four years, there was nowhere else to turn. That, frankly, is a fact of life in relation to the budget that I run across the whole estate, given the cuts that we have had imposed upon us in previous planning rounds and the savings made as part of SDSR.

Q88 Mr Havard: Can I ask you a couple of questions then from the construction industry point of view? It is obviously a bit surprised as well-they see Building magazine and go, "Oh, look at that." The next generation estate contracts is a sort of industry standard for doing these things that the MOD adopted. As I understand it, some sort of revision of that will be going on and some sort of legal team is possibly looking at that to transfer more risk to them. Are we going to go back to bespoke contracts for the MOD with the building and construction industry or are we going to continue to adopt the industry standard?

David Olney: I can assure you quite clearly that we will be using the NEC3 contract, which is the industry standard.

Q89 Mr Havard: Right. In terms of the delay and the contract process you already have, people have a view into it, so is any consideration being given to where that might fit in with competition law, particularly EU competition law? As a consequence of the delay, the people involved might have a favoured position in that. Are there any concerns that putting in the pause might cause liabilities to the MOD in some other form in the industry?

David Olney: By that, I assume that you mean that there will be a backlog of maintenance on the estate, which will have to be factored into the data pack, which we will be giving all industry, against which they bid. In answer to your direct question, I do not consider that there will be any procurement or vulnerability. There will be an impact, and we outlined some of those earlier, but as far as the procurement of the next generation estate contracts is concerned, we are within the OJEU procurement programme principles and law.

Q90 Chair: You have all given the impression of considerable reluctance to go down this path. If we were to put into our report the notion that this pause represents a false economy, would you be able to quarrel with that?

David Olney: Over the longer term, I think it would be difficult to quarrel with that.

Q91 Chair: We would not describe it as a grotesque false economy. [Laughter.]

David Olney: In any walk of life, you have maintenance on a house-whether it is your own house or another house-and you have to take decisions as to whether you have the cash to do it. That is what the Department has done. Someone at some time will pay for that.

Q92 Chair: Moving on, do you have enough accommodation of the right size in the right locations?

Air Commodore Opie: From our perspective, we particularly looked at the void properties. If we again go back to the 2009 NAO Report, 18% of our stock was empty at that stage and costing us a lot of money that we could not invest for the benefit of families. We set ourselves a target that we felt a management margin or a void rate of 10% was what we would need to manage the estate effectively. We need that rattle room, because about 40% of our families move every year. We have, in effect, got to that 10% in the net rates. We have a further 3% that is sitting empty and waiting for the estate rebasing programme to be confirmed. The 10% average across the UK means, as we heard in the first session, that there are hotspots. Particular hotspots would be Salisbury Plain, Culdrose, and Lincolnshire. They are obvious ones that were mentioned before.

Q93 Chair: Where you have insufficient accommodation.

Air Commodore Opie: At present, we do. We are looking at the estate rebasing programme. In the short term, we are plugging that gap with substitute accommodation picked up from the rental market, and there will be a bulk hire on a five-to-10-year lease, again to plug that piece. We are now waiting for the estate rebasing decisions to see whether we now need a long-term fill in those areas or, because of the rebasing decisions and because of the draw-down in elements of the three services, whether demand will go down. We obviously also need to factor in elements of the Future Accommodation Project and the New Employment Model to see how they factor on these long-term procurement decisions.

Q94 Chair: What is the time scale of decisions on this being made in relation to returning troops from Germany?

David Olney: The plan is that we should start to see the emerging thoughts from the Army’s consideration of how it restructures itself by the first half of this year. In parallel with that, we are doing work to look at the size of the estate-not in the general, but in the specific about what estate could accommodate what-so that as the two become clearer we can start to map out the structures in the three services versus where they could based. By the end of this calendar year, I would expect to start to see some real meat on the bones, recognising of course that we are already going ahead with some early moves into Pirbright, Cottesmore, and the like. That is the time frame that we are working to.

Q95 Chair: Thank you. So by the first half of this year?

David Olney: We should start to see-I think I said-emerging plans from the Army, and CGS said that in his briefing notes. I am only quoting from what Sir Peter Wall has said. Then, along with our work on the sites and the opportunities, we can start to merge the two and see where the basing takes us.

Chair: On the allocation of accommodation, I call Dai Havard.

Q96 Mr Havard: The idea, as I understand it, is to amalgamate information centres down from seven to two. Could you say something about what you think the impact and effects of that are?

David Olney: I’ll let Alan add to this, but the concept we’ve always had is of more choice and modernising the service, but at the same time-I’ll be honest with you-being more efficient in the way we do our business as well, so it’s a win-win. For at least a year or so, we’ve had an electronic form that allows people-I think it’s mainly the Navy and the RAF that have taken it up-to bid, as it were, for accommodation. We are expanding that, so that by, I think, April this year we would expect an increasing number of people to use that service, but in so doing, we are offering them far more information. We are offering them floor plans and pictures of the accommodation. We are showing them what is available, so they choose, rather than us allocating.

Q97 Mr Havard: We heard earlier that the jury is out on that as far as the families are concerned at the moment. It is early days.

David Olney: It is early days, but we also looked very carefully at what the Australians had done with their self-service allocation system and took the good points from it, while recognising we are different, hence why we don’t do total allocation. We do self-preference, so that there is an element of chain of command input into it. Also, we have to be cognisant of other issues that may come about. We may know of upgrade programmes that are going to occur that would mean that housing stock may not be available.

Q98 Mr Havard: This question is sort of related to allocation, but it is really about where your organisation is in the round in relation to fulfilling all these requirements and the other transformation activities that are taking place. For example, the accommodation service review has just gone on, you’ve been transferring staff around and so on. There’s a bit of a sorry tale about how the staff found out about this. It was told to us. They didn’t really understand what was coming and were told, not necessarily in the best fashion, that this cut was taking place. As I understand it, in terms of your capacity to deal with these things, towards the last quarter of last year, you had 617 leavers, 1,245 vacancies and 186 staff without jobs in the MOD’s redeployment pool. This question is really about your capacity as a DIO to make the changes, because at the same time as you’re being asked to do these huge projects, you have your own internal change and a reduction and a reshaping. Are these two things together sequenced terribly well? It seems to be part of the reason being given as to why there have been certain delays. What’s the relationship between the two? Do you have the necessary capacity?

David Olney: It is an enormous change programme; I wouldn’t deny that fact. Transforming a business that would be a top 30 FTSE company on the scale on which we’re doing it, while delivering the changes to the three services in particular, is an enormous challenge. I won’t deny there will be hot spots. But with the programme of backfilling that we’ve done, where we have to go out to the market to bring in short-term temporary employment, we believe, in relation to the housing at least and the single living, that we are managing that programme. So I am not anticipating a drop in service to our users. Indeed, I would turn it on its head and say that given that I have lost all those people-"lost" is an interesting word-given that those people have chosen to leave and we have allowed them to leave, and given that I have contributed massively to the transformation programme, I do not believe-my words-I have dropped a ball, and I am responsible for delivery, in the period of that change, other than maybe the balls that might have been dropped had it not occurred. In other words, to me, there is a positive nature to this, given the numbers of people that we have taken out of this organisation.

Air Commodore Opie: Can I just add something on the allocations review and what it offers us? While we would centralise the allocations process, making good use of the technology to increase the transparency to individual service personnel, at the same time it would be balanced by our regional staffs focusing purely on supporting both the command chain and the local service families. I’m very keen to ensure that we are meeting on a regular basis at each major garrison with the garrison commanders and with local families in our families clinics. I also meet each of the services on a three to four-month basis. We try to ensure that if issues arise, we are able to nip them in the bud and address them. We try to ensure that we have good systems out there. Inevitably, when we are doing 250,000 response maintenance jobs a year through MHS and 250,000 planned maintenance posts, there will be problems in those 500,000 jobs. The important thing for us is being able to capture those problems, address them and ensure that families are not too inconvenienced when they occur.

Q99 Mr Havard: One of our concerns is about the transfer of responsibilities to people who are not able to discharge them and whether the military could discharge those responsibilities. There is also the question of whether, if you do not have the capacity internally, you buy in the capacity.

May I ask you about contractors? As I understand it, the next generation contract programme started in 2008. On implementation support, for example, you have been using contractors. Where are we in relation to your organisation having to buy in services, as it were, because it cannot provide them internally through the contracts process or by transferring them to other people?

David Olney: You have moved into implementation support, which is more about the wider transformation programme than accommodation per se, but it is perfectly true-

Q100 Mr Havard: That is one example. There may be others.

David Olney: Yes, but what I am suggesting is that a change of that size will eventually save some £1.2 billion a year and transform the organisation, so it would not be unreasonable to suspect that we would need some outside help to do it, which is what we have gone for. Within the ambit of day-to-day service delivery, we try as far as possible to use military and service personnel; where we cannot, we will go out and bring in the necessary consultants, whether that be to help Alan with HICs or because we need to recruit some quantity surveyors for a major building programme.

Q101 Mr Havard: I am not questioning your need to use contracts in some fashion or another, but we are trying to gauge the cost of using those things vis-à-vis other costs, because, as you know, there have been questions about the use of contracts in other parts of the Ministry of Defence for a long time. In this area, we just want to be clear about the attendant costs of making these changes and what the balance is between having to use skills from outside through contractors, should they be required, and using internal resources.

David Olney: The answer I would give you is that, if you look at the next phase of the early retirement scheme, which will take place in the next financial year, we have taken a conscious decision that, because we will not have reorganised ourselves by the time the first people could leave in June, we will not be making any large numbers of calls on that programme until such time as we have reorganised our processes and organisation to allow us to make the cuts without impacting on service delivery, nor are we going for short-term fixes by going into the recruitment market. We have taken a deliberate decision to delay some cuts because there is a cost impact.

Chair: There may be questions arising from that that we want to ask the Minister, because it is a very interesting area. Moving on to the maintenance of accommodation, I call Sir Bob Russell.

Q102 Sir Bob Russell: I have just the one question. We met some lovely families in Catterick, and they told us that repairs were often not completed on the first visit and had to be logged as a further job. Are there perverse incentives in the MODern Housing Solutions contract that encourage that practice?

David Olney: As I said at Catterick when that point was raised, the contract is incentivised and, indeed, MHS’s payment plan is such that they only get paid for one visit, so the fact that they may take three visits-apart from the annoyance it would cause me because it would annoy families-would result in the contractor making a loss.

Q103 Chair: They only get paid for one visit?

David Olney: Yes. In other words, if you were to phone up the help desk to complain about, say, a broken tap, and they turned up to repair the tap-assuming they could repair it in one call-they would get paid for that repair. If they turned up and had a look at it, or did some bodge job, and the occupant phoned up five days later-there are time limits, but it is not five days-to say, "My tap is still not working," and MHS had to send the plumber out again, the plumber would not get paid for the second visit, and we would not pay them either. To make it clear, the incentive is for first time right, and we have put in an extraordinary effort, as has MHS, to improve the statistics on first time right over the past few years.

Sir Bob Russell: I am grateful for that answer because the perception was the opposite.

David Olney: I accept that that is the perception. Clearly, if it were a deliberate act, it would be fraud on the part of the contractor and we would chase it down as far as we could.

Q104 Chair: How can such a perception have been allowed to arise?

Air Commodore Opie: The key for us is really in communication. Again, something that we have really picked up since 2009 is getting messages across. I don’t think we are there yet, however, and we must still keep working hard on getting that piece across and ensure that we meet regularly. MHS, for example, supports all our local meetings as well as our meetings with the services and the MOD, and we need to go down that route of communication and get people to understand the service that is provided. When they suspect that there is a problem, they should use the complaints system so that we can investigate it fully.

Q105 Chair: But you have heard this afternoon about the issue of damp being the most debilitating and concerning. We heard about that in Catterick-people raised the issue of damp being just painted over, and the answer given was that sometimes applying a particular type of paint can be an appropriate treatment for damp. Nevertheless, if damp is one of the top issues about the condition of housing felt by the families-and it clearly was at Catterick-the issue of communication is a major one.

David Olney: It is. Interestingly, after the Catterick problem we spoke to MHS about how we can improve communication in that field, even though there is advice on the website about damp and how it can be avoided as far as possible. Interestingly, we discussed the idea that when a worker goes in to paint-to use your example-they should take time to explain what they are doing and show that they are not just painting over the cracks but putting on a special paint that helps to alleviate the mould problem. A conversation should take place, rather than someone doing a simple repair and walking out of the house. We are learning all the time. That was good feedback, and we will take on board the fact that we have to get better at communication.

Q106 Chair: May I remind you about the story of the smoke alarm?

David Olney: The carbon monoxide alarm.

Air Commodore Opie: We have been unable to trace it.

David Olney: The individual did not leave us a name. That is unfortunate because if it were true-which we doubt-it would be a serious failure.

Air Commodore Opie: We can only suspect that it was perhaps a subcontractor, or certainly taken in that way. If we could track down that type of incident, we would take action-that is why we encourage people to give us feedback if they feel that such a thing has happened, and I know that MHS would support us in that.

David Olney: All the telephone calls to the help desk are recorded, so if we get even an indication of when it was we can at least play back the records and see who phoned up. We have been unable to do that at this stage.

Q107 Chair: Perhaps there is a culture within the Armed Forces of soldiering on and not complaining when, in relation to the condition of one’s housing, it ought to be absolutely clear that you should not put up with bodged jobs.

Air Commodore Opie: Absolutely. I totally support that, which is why in our local meetings we must ensure that we get that message across the chain of command. People should be encouraged so that when they have issues, they don’t need to wait for us to visit but can feed the problem into the system and we will investigate. Obviously, the Families Federation is another way of feeding things in, but we feel that we have a good complaints system that we keep encouraging people to use and, if they were ever to come across a problem, we hope that they would report it to us and that we would investigate.

Q108 Chair: Thank you. Is there anything else that you would like to raise, or anything that has been raised in the evidence session but that you feel has not been covered by questions?

Gavin Barlow: I promised to give the Committee one fact about long service advance of pay and when that was last uprated, which, I gather, was in 1990. I think it would take too much effort to find out when LSAP originated, and it would probably require consultation with single services’ historical branches.

Chair: I am aware of the fact that house prices have changed a bit since 1990.

Gavin Barlow: Indeed. Mr Chairman, with your permission, may I just refer to something in the written memorandum we gave you recently? In our answer to question 57 in the memorandum, which is about trends in home ownership across the three services, we referred to evidence from the families Continuous Attitudes Survey, which has shown a relatively steady, slow rise in trends in home ownership. What we did not do, and should have done, was refer to evidence that points in the other direction, from the Armed Forces Continuous Attitudes Survey, where, over the last four years, we have actually seen quite a substantial fall in the number of families who report home ownership.

Whether this is a long-term trend or a short-term blip caused by the current economic situation we just do not know, and it is quite difficult to be sure how many home owners there are among the service community, because it is not something on which we collect specific data. We can only go by the attitude surveys. I just wanted to draw your attention to that: we made a definitive statement there about home ownership increasing, and I just do not feel that that is something that we can back up.

Chair: I am most grateful to you for clearing that up, even though it adds a bit of confusion to what the reality is, whatever that may be. Thank you very much for your evidence-most helpful.