Ministry of Defence must resolve challenges of unsustainably large estate

22 Mar 2017 01:02 PM

The Public Accounts Committee report says that service families continue to face uncertainty around future provision of accommodation and its costs.

Risks will continue until estate challenges are resolved

The Ministry of Defence must address many complex and interconnected decisions around the future of its estate, says the Public Accounts Committee report.

In a new report, the Committee concludes "there will be continuing risks to both military capability and value for money" until the Department resolves the challenges posed by one of the largest estates in the country.

The defence estate accounts for about 1.8% of the UK land mass and is valued at £31 billion. It includes land and also buildings such as offices, houses, storage units and training facilities. It also includes some 50,000 service family accommodation units.

Still work to be done to overcome decades of under-investment

In July last year the Committee reported that service families were being badly let down and often left for too long without basic living requirements such as heating, hot water or cooking facilities.

Now the Committee concludes that while families have seen some improvements in the quality of maintenance of their accommodation, they "are still unclear as to what service levels they can expect and continue to face uncertainty around the future provision of accommodation and its costs"

More broadly, the Committee finds that while the Department's new estate strategy is "a significant step forward", there is much to be done to overcome decades of under-investment and decisions about the estate are still subject to considerable uncertainty.

Estate management model still not fit for purpose

The estate strategy "is dependent on reconciling different, and in some cases conflicting, pressures", says the Committee—such as the need to achieve a Government target of £1 billion of disposal receipts before April 2021, release land for 55,000 homes by 2020, and deliver an estate which both meets military capability requirements and provides decent accommodation.

Moreover, the Committee finds the Department's model for managing the estate is still not fit for purpose, which jeopardises the success of its long-term plans.

The Department is reviewing the model, which will include restructuring its Defence Infrastructure Organisation (DIO) to operate more effectively.

However, the Committee concludes the continued instability around estate management is likely to be bad for morale and retention in DIO, "an organisation which is already carrying around 500 vacant posts, and which has had three different permanent Chief Executives in two years".

Chair's comments

Meg Hillier MP, Chair of the PAC, said:

"Government has set challenging targets for the MoD to reshape its estate.

The Department now has a strategy for tackling these but serious questions remain as to whether, in fact, that strategy is deliverable and the estate can be managed effectively in the years ahead.

It is dismaying that there continues to be such instability in the Department's estate management model and we will expect it to set out the findings of its current review as a matter of urgency.

The Department intends the Defence Infrastructure Organisation to serve as an expert estate manager but it can only do so if fundamental weaknesses in its operation are addressed swiftly.

Even if the Department hits its targets for disposing of land, the overall condition of the estate has been declining for years and it faces projected unfunded estate costs running to billions.

Meeting these will be a significant ongoing challenge which poses risks both to defence capability and the quality of accommodation available to Forces personnel and their families.

There are critical negotiations to come on accommodation and it is vital the Department communicates clearly with families about what they can expect and the likely implications of any changes behind the scenes."

Report summary

The Department faces a huge challenge in maintaining its estate which, at 1.8% of the UK land mass, is one of the largest in the UK.

The overall condition of the estate has been in steady decline for many years as a result of under-investment and we welcome the fact that, after decades of indecision, the Department now has a strategy which identifies the estate it needs and the 25% of the estate it can dispose of by 2040.

£8.5 billion estate funding shortfall over next 30 years

However, even if the strategy is successfully implemented the Department still faces an estimated shortfall in estate funding of £8.5 billion over the next 30 years.

Until the Department resolves the challenges associated with an unsustainably large estate there will be continuing risks to both military capability and value for money.

The Department faces many complex and interconnected decisions around the future of its estate. It is essential that these are made on the basis of sound information, take adequate account of the impact on service personnel and their families, and are communicated clearly.

Despite the reforms of recent years the Department still does not have a "fit for purpose" model for managing the estate and faces continued uncertainty until it has restructured its Defence Infrastructure Organisation, renegotiated with its business partner and successfully embedded delegation into the Commands.