HOW MUCH? ANNINGTON NEWS ...

[SirToppamHat]

Unabridged From Private Eye No 1303 (9-22 Dec 11).

MILITARY HOMES SCANDAL

It all Annington's up

The housing market slump has killed off any hope the Ministry of Defence might have had of making a decent return from selling its huge military housing estate to Japanese bank Nomura at the fag end of the last Tory Government

Under the 1996 deal, in which the houses were sold for a cut-price £1.6bn, the MoD was entitled to a share of profits whenever the company set up to own them, Annington Homes, successfully offloaded them. But in the last financial year the arrangement, which came to an end this month, yielded precisely zilch for tax payers since only 275 homes were sold, and those at depressed prices.

While taxpayers take a hit, others are riding out the housing slump quite nicely.

The chief executive of Annington Homes, James Hopkins, who for the not terribly difficult job of collecting rent from the taxpayer and flogging a few houses, trousered £2,632,000 (up 3 percent on last year). This is far above his peers elsewhere in the housing sector who have much bigger tasks on their hands.

Hopkins' colleagues, commercial director Nick Vaughan and finance director Barry Chambers, haven't done too badly either, scraping by on £3,314,000 between them. All in what Annington itself admits has been "a testing year".

Fifteen years on, the numbers show just what a dire deal the MoD, then led by defence secretary Michael Portillo, struck. So far it has paid more than £2bn in rent to Annington and received £161m back in profit share on house sales. In pure cash terms, Annington has thus more than recouped its £1.7bn outlay (which the National Audit Office mildly criticised back in 1998). And it is still sitting on around 40,000 properties worth about £3.8bn, for which it paid less than £1.5bn. It hasn't set anything aside, however, for the £600m tax bill that this value ought to generate when the properties are sold since "there is insufficient evidence that the liability will become due". Thanks to adept tax planning, presumes Annington, it will keep the profits but not pay the tax.

The same goes for its annual operating profit, last year around £141m. None of this translates into compensation for the taxpayer by way of actual tax payments. All disappear tax-free to lucky offshore investors, marshalled by former Nomura big shot Guy Hand, who in 2002 set up private equity firm Terra Firma Caital Partners to manage investments including Annington (employing current Forein Secretary William Hague on its "Political Council" for a number of years) - a job he now performs from a lonely Guernsey tax exile.

Nor is Annington cursed with looking after the shabby military housing that it owns, a task long since outsourced to other private companies along with the painfully slow process of upgrading them, which would certainly benefit from Annington's riches.

[TBM-Legend]

Smart business guys got the better of a man sitting at his desk in a grey cardigan while eating his lunch from a tupperware box...:D

[SirToppamHat]

I was never quite sure how much the mandarins had to do with it - having been on the receiving end at the time, it felt to me like it was entirely a political move which was driven through by the SofS and his desperate colleagues.

From what I remember, the money raised was to be used to bring the remaining estate (which was, and mostly still is, in a pretty poor state), to 'Grade 1 for condition'. But of course, the money ran out/disappeared/was redirected/was the victim of 'annularity' way before the bulk of the estate was even touched.

As far as I can tell though, houses continue to be released nearby as 'surplus' even though loads of people round here are being forced into SSFA.

STH

[PICKS135]

I wondered why they were selling the quarters in Warwick Close at Leuchars off, especially as there was supposed to be 3 Typhoon Sqns.
Now with the Army taking over, I suppose it will either be a new estate built, or some of the houses already scheduled to be built in St Andrews being hired by the MOD.

[Easy Street]

How feasible would it be to build a new generation of MQ, using the spare capacity currently available in the construction industry (therefore presumably cheaper labour) and building on MOD land made surplus to requirements by reducing force sizes? Accept that the 1996 decision was wrong, end the farce of rental payments to a private company, let Annington sell their existing estate in their own time and wipe our hands of the whole sordid deal. Why bring ownership of the families' estate back into MOD hands? We will still need military personnel in 10, 20, 50 years' time and over that period surely it must be cheaper to own our housing. Economics was never my strong suit, mind.

[Easy Street]

After my post above, another (now deleted) stated that this was all part of MOD's plan to get us all into our own private accommodation. However a 2-year pay freeze and 1% capped pay rise ain't helping that aspiration. Long term home ownership also requires, counter-intuitively, increased Mess accomodation provision as moving home every 2-3 years is not financially feasible for most, even with the modest allowances available. Hence the seemingly inexorable rise of the weekend commuter, taking a Mess room (or expensive SSFA) mid-week, and giving rise to such phenomena as the Thursday night Happy Hour and Dining-in Night. Weekend commuting also puts strain on family relationships and is liable to push the divorce / PVR (delete as applicable) rate upwards over the longer term.

This stuff does far more damage to unit cohesion than can ever be repaired by a few PTIs running high-ropes sessions, or a trivia-filled staff ride. Yet another factor in the impending retention crisis that everyone, except Manning themselves of course, can see coming a mile off.

[Melchett01]

But that's just it the MOD don't want people to live in quarters and messes. They want everybody away in their own houses.
24th Dec 2011 00:09

I'm afraid Easy Street has hit the nail on the head. Not only does the weekend commute do nothing for morale, the RAF's divisive policy of charging some home owners (singlies) full accommodation charges whilst waiving them for other home owners (married types) even though they might both be still paying the mortgage and trying their hardest to hold down some vestige of a life outside of the Service, seems to be totally contrary to the MOD's implied intent of getting people into their own homes and all the demographic indicators suggesting more people living on their own.

Seems to be just another example of how out of touch the MOD & RAF actually are when it comes to the life outside of the 'light blue bubble'. Given the general incoherence of many policies, especially concerning infrastructure in general - and for policies read knee jerk politically motivated reactions over the years - the fact that this one has also gone horribly wrong from a military personnel perspective really shouldn't come as too much of a surprise.

[The Old Fat One]

Anybody conversant with OODA loops will understand that people orientate. Military people, especially aircrew, orientate, very well, since they are often rapid decision makers and used to being outside their comfort zone. Easy Street, has indeed hit the nail on the head, as the smart thinkers in the military orientate their lives around the optimal financial outcomes for their family.

Deserted messes at weekends and the ongoing trend towards the end of service life outwith the professional sphere are regretably inevitable. It's also called the law of unintended consequences.

As to the original deal...it was clearly a stooshie at the time. Just one of many where a one or two individuals trouser waste swathes of tax payers money.

It's called capitalism...sometimes it sucks.

[Wee Weasley Welshman]

I find it mind boggingly curious that the MOD cannot just build some houses, on land it already owns, to house its key personnel.

Having spent a fair bit with builders I know that you can put up a decent three bed new house for £58,000. All in. Kitted out. Complete. From nothing. With services. MUch much much less if building 30+ units.

Surely the State could do itself a favour and reward military staff with great accommodation at a very cheap price?


Is this difficult?


WWW

[Pontius Navigator]

the weekend commute do nothing for morale, or indeed unit cohesiveness whuch is supposed to be the greatest strength the UK Forces.

The rot probably started with the military salary and the end of free accommodation. Pay was increased and accommodation charges deducted.

The first law of unintended consequences was the financial viability for living out and freedom of choice kicking in.

The second law was the probably unforeseen imact on pensions. Suddenly the free food and accommodation elements became subject to annual pay increases.

The third law that took longer to kick in was the additional increase in pensions.

All fair but probably all overlooked.

[JFZ90]

Is this a sign of things to come with a potentially privatised DE&S?

E.g. Misplaced reliance on industry to deliver and get value for money, where the reality is they will make masssive profits and not act in the 'mod' interest at all......

If a private company starts spending the £20bn a year defense budget, who will stop massive profiteering?

[Seldomfitforpurpose]

Whilst I sure its all well intentioned but for those of you suggesting that the MOD should consider building houses for service folk I would caution you to stop, take a step back and ponder.

Now pick a project over the last 20 years that came into service on time, on budget and as advertised.

I am sure a couple of clever clogs will point out the odd thing that has satisfied the above but Future Brize and the A400 just roll of the tongue as classic examples of why we should think twice about asking the hierarchy to spend more tax payers bucks.

[airborne_artist]

The big housebuilders won't be busy for a few years. It would not be hard to do a deal with them to build houses to an agreed price and specification with a fixed profit margin in the order of 15%, which is what they make building houses for the open market right now.

[sidewayspeak]

'm afraid Easy Street has hit the nail on the head. Not only does the weekend commute do nothing for morale, the RAF's divisive policy of charging some home owners (singlies) full accommodation charges whilst waiving them for other home owners (married types) even though they might both be still paying the mortgage and trying their hardest to hold down some vestige of a life outside of the Service, seems to be totally contrary to the MOD's implied intent of getting people into their own homes and all the demographic indicators suggesting more people living on their own.

I exercised my Option for exactly that reason... posted down to London and expected to pay full living in charges as I'm a 'singlie' - only living with my partner. I'm not spending life miserable in the mess Mon-Fri when I have a home elsewhere. It felt like 'constructive dismissal' as there was no other option other than leave.

Looking forward to the real world and control of my own life, but another experienced bloke walks out the door because of a $%%% personnel system. I would have been happy to live at home and bounce around the mong stream jobs for a few more years. But I suppose they want us out the door without redundancy anyway.

[Seldomfitforpurpose]

The big housebuilders won't be busy for a few years. It would not be hard to do a deal with them to build houses to an agreed price and specification with a fixed profit margin in the order of 15%, which is what they make building houses for the open market right now.

Now if only we had someone in the MOD savvy enough to put that deal together :p

[Melchett01]

I exercised my Option for exactly that reason... posted down to London and expected to pay full living in charges as I'm a 'singlie' - only living with my partner. I'm not spending life miserable in the mess Mon-Fri when I have a home elsewhere. It felt like 'constructive dismissal' as there was no other option other than leave.

Playing devil's advocate, has this ever been subject to a formal challenge? Over the course of a typical tour, Grade 1 accommodation would leave a singly almost 5K down compared to a married colleague in the otherwise identical situation. If not legally dubious, it is certainly morally dubious.

[Widger]

A complete disgrace along with Pay 2000, pay as you dine, reduction of LOA and a raft of other entitlements.

There is NO MONEY to build new and probably none to continue current arrangements. If the MOD can get everyone out of quarters and charge 'market rates' for Single Living Accommodation then they will save a packet, which will go towards filling that black hole. Don't kid yourselves that things will improve.

Look on the bright side, someone somewhere got promoted or a MBE for proposing/driving through these changes. I remember having a 'firm debate' with a senior type some years ago about pay as you dine and the obligation to ensure our men had a proper diet. Of course he did not get it, he having a private income and a large estate somewhere in the shires.

Despite the efforts of some to make a difference, the MOD as an organisation does not care anymore. It has only 1 objective and that is to reduce the deficit as quickly as possible and hopefully without any loss of life/embarrassments.

Merry Xmas everyone.

[Green Flash]

What about other countries (NATO)? I have seen SLA on German, French, Dutch, Spanish, Italian, Greek etc etc etc bases but do they do MQ's too? Do other Airforces have the move every 3 years nause?

[Pontius Navigator]

GF, lowly aircrew tend not to move (ever).

Widger, believe it or not but PAYD was around 37 years ago.

If the MOD can get everyone out of quarters and charge 'market rates' for Single Living Accommodation

Actually they started that 38 or so years ago too. SLAM is just an easy rental option. Good news for the system as it keeps people on base and available; easy option for the serviceman. No reason why a serviceman could not be posted to Little Snoring and left to make his own arrangements.

GF, are other nations SLA at a standard much above national service standards? I stayed in the mess at Fursty many years ag and admittedly it was quite good. We were in quarters type buildings not OM style. Like the RAF now it was deserted at weekends.

[Grimweasel]

Makes the blood boil- remind me, when are those Tranche 2 numbers announced?

[artee]

It looks like there's some wrangling going on with the MoD's attempt to forcibly acquire 30,000 of the homes.:

Firm backed by billionaire withdraws £105m offer to repair military homes it owns (https://www.theguardian.com/uk-news/2022/nov/07/firm-backed-by-billionaire-withdraws-105m-offer-to-repair-military-homes-it-owns)

"A property company owned by Guy Hands’s private equity firm Terra Firma has withdrawn a £105m offer to repair the “appalling” military homes that it owns and is leasing back to the Ministry of Defence (https://www.theguardian.com/uk/ministry-of-defence).

The proposal by Annington Homes, which owns about 38,000 service properties, had been contingent on the MoD dropping its attempt to forcibly buy-back the estate sold to the firm in 1996.

In a letter to the defence minister Alex Chalk, the former Labour cabinet minister Helen Liddell, who is the chair of Annington Homes, said the decision to kill its offer of a “modernisation fund” for the 30,000 homes occupied by military families “pains” her.

“We made this offer as an attempt to rebalance our relationship, improve housing conditions on the estate and to avoid protracted and expensive legal proceedings in relation to the enfranchisement notices issued by your department,” she wrote.

“To date, we have received no formal response to our offer and as a result have been forced to reconsider our position. Please accept this letter as notification that Annington Ltd withdraws its offer of £105m in respect of the married quarters estate.”

In 1996, the MoD, under the then defence secretary, Michael Portillo, sold about 55,000 military homes to Annington Homes – a company now owned by Terra Firma, the private equity giant founded by Hands – for a £1.66bn cash sum."