Service Housing (Hansard, 30 November 1995)

§ Mr. Portillo

Earlier this year, the Government created a specialist housing division within MoD, the Defence Housing Executive, to undertake the management and maintenance of the married quarters estate on behalf of all three services. That has provided the estate with a unified, professional housing management organisation which we intend should offer a more responsive and efficient housing service to our personnel and their families. There is a great deal to be done in this area, and the executive has some challenging targets to meet. Over 90 per cent. of its budget is already spent on buying maintenance and other services from the private sector. But further improvements in cost-effectiveness are both possible and necessary.

The DHE will continue in its current form, as a unit within MoD, for a guaranteed period of at least three years. That will enable it to focus on the management improvements we expect it to deliver. I pay tribute to the DHE and its chief executive for the progress already made.

Beyond that, the Government have been considering, with financial and other advisers, possibilities for transferring ownership of the married quarters estate to the private sector. I am satisfied that we should take this forward.

The main points of our proposal are that the MoD should transfer the ownership of the married quarters estate in England and Wales to the private sector on a series of very long leases, renting back the accommodation which is needed to meet service housing needs. To that end, we would enter into detailed agreements governing the maximum and minimum levels of MoD occupancy, allowing sufficient flexibility to cater for inevitable uncertainties about our long-term accommodation needs. Several thousand surplus properties would be transferred on a freehold basis immediately—and future surpluses would similarly be returned to the new landlord. Special arrangements would allow the MoD to share in the enhanced value where the subsequent disposal of such properties was particularly successful. The MoD would retain, through the Defence Housing Executive, responsibility for maintenance and the allocation of housing. It is intended to include the bulk of the official service residences in the sale, where it is possible and sensible to do so.

Our fundamental requirement is to be able to provide our services with the housing that they need and deserve. That requirement flows from operational circumstances which demand mobility of service families, and from the imperative to deal fairly with our personnel and their families, upon whose commitment, dedication and forbearance we so heavily rely.

809W

Meeting that requirement, however, is not dependent upon retaining ownership of the married quarters estate. Indeed, it is inappropriate for Government to own a large estate of this kind if they can avoid doing so. As far as possible, I want to place the business of owning married quarters, and disposing of them when they are no longer required, in the private sector, where significant efficiencies can be expected. Accordingly, I have decided to take forward the transfer of the married quarters estate to the private sector.

I am confident that this proposition will meet the services' housing needs, in a manner consistent with operational and security requirements, and will safeguard the welfare and interests of our personnel and their families. We will also be able, if such a transfer is successfully achieved, to fund additional investment in upgrading the housing stock where necessary. Much of the married quarters estate is in good condition, but there are areas where improvements are overdue, and this sale offers the opportunity to put this right more quickly. It also offers the prospect of real progress in dealing with the current empty homes problem. At present some 20 per cent. of our housing stock is unoccupied; even allowing for the unique requirements of service housing, and the particular difficulties associated with the changes and redeployments of recent years, that is unsatisfactory. By involving the dynamism and expertise of the private sector in dealing with surplus properties, I believe we can help to put that right and improve the supply of housing to the public.

I therefore intend to test the market. If a good price is available, the Government will transfer the stock. Such a transfer would depend upon reaching agreement on terms which satisfy the interests of the Services and on a price which properly reflects the public interest.

The Government will in due course publish a preliminary information memorandum, which will set out the proposals in greater detail, and invite interested parties to prequalify for the opportunity to tender for the estate.