When our servicemen and women join the armed forces, they sign a contract vowing to serve and protect our country. In return the Government ought to provide them with adequate pay, decent accommodation and the professional and personal support that they need.
It is increasingly clear that under this Government that contract has been broken. Whether it is the deepening cuts to the defence budget, the public sector pay cap or the poorly maintained military housing, this Government is letting down our armed forces.
Much of the blame should be put at the feet of the Chancellor who is hellbent on enacting even further cuts to the defence budget, while engaged in a public spat with the new Defence Secretary over the £20bn shortfall Britain’s military is facing over the next 10 years.
In this context, the Chancellor in the third finance bill of the year is unveiling plans for a tax exemption for an armed forces accommodation allowance, which is being trumpeted as helping members of the armed forces rent or maintain accommodation in the private housing market.
Labour is clear that this is a sticking plaster on the wider housing crisis the Ministry of Defence is facing over the provision of adequate and well maintained accommodation. The Armed Forces Covenant says Service accommodation should be of “good quality, affordable and suitably located” yet fewer than half of regular personnel are satisfied with the overall standard of their accommodation.
The Public Accounts Committee in 2016 also concluded that Service families are not getting the accommodation service “they have a right to expect” and “have been badly let down for many years.” Even Conservative backbenchers are critical of the Government’s record, with Ann-Marie Trevelyan MP describing the military housing crisis as “a real and present danger” to retention.
The Government has still offered no details over which members of the armed forces will be entitled to this new allowance? What rate the allowance will be set at? Or any information as to whether the Treasury has undertaken an impact assessment, looking particularly at local housing supply? If service personnel increasingly move into the private rented sector as this allowance will encourage, there is a strong likelihood of costs going up. Most military personnel currently spend around 10% of their monthly salary on accommodation compared to the 30-40% civilians spend. It begs the question, as the cost of private rental housing goes up who will make up the shortfall?
The country and most importantly our armed forces continue to be kept in the dark by the Government. The proposed allowance appears increasingly influenced by the Treasury’s desire to continue its fire sale of government owned assets. As the Ministry of Defence (MoD) has a target in the 2015 the National Security Strategy and Strategic Defence and Security Review to sell of 30% of its estate by 2040.
Under this new model the Government is increasingly selling off its military housing stock and forcing more service personnel into the private rental sector. The Treasury argues that this will raise some revenue and be more cost effective. However we only need to look at the example of the agreement between the MoD and Annington Homes under the Major Government to see how disastrous this plan will be.
Under the agreement reached in 1996, the MoD sold most of its Service Family Accommodation in England and Wales (57,434) for £1.6 billion to Annington Homes. They then granted a 999 year lease back to the MoD at a 58% discount, under the stipulation that the MoD would be responsible for maintenance, and could terminate individual leases and Annington Homes had the right to include five yearly rental reviews and a breakpoint at 25 years. The National Audit Office has since stated that the MoD has not benefited from the rise in house prices since the agreement was signed and has in fact paid higher rental costs to Annington Homes. While the Centre for Social Justice has concluded that when the rents are reviewed in 2021 they will inevitably increase, describing it as effectively the largest PFI in history.
The example of Annington Homes demonstrates how ill-thought out the Treasury’s plans are to force the MoD to sell its housing stock and move towards increasing the amount armed forces members renting from the private sector through a tax exempted allowance. It ignores the fact that many military bases are not near a supply of affordable housing to buy or to rent, or the potential added stress for military personnel and their partners having to deal with alternative landlords.
Instead this will open service personnel and their families to the vagaries of a failing and overheating housing market and rent hikes. Once again, the Chancellor show’s that he knows the price of everything and the value of nothing.