Further to my statement HCWS323 on 17 December 2024 on developments in military housing, the Ministry of Defence (MOD) has a new cash requirement to fund the transaction to purchase 36,347 properties from Annington Property Ltd.
The deal represents a decisive break with the failed approach of the past and reverses a privatisation that currently costs the MOD £230 million a year in rent. It offers excellent value for money, as well as opening up the “once in a generation” opportunity for a new military housing strategy which will provide service families with a better standard of accommodation while contributing to wider Government objectives on house building and growth.
The agreed purchase price is nearly £6 billion but eliminating the liabilities associated with the leases creates budgetary headroom to partially fund this purchase, meaning that the public expenditure impact of this measure, and the impact on public sector net debt, is confined to £1.7 billion. The ONS has agreed this fiscal impact approach. Funding for the deal is being provided by HMT. The Treasury scored additional funding to the reserve at autumn Budget for this purpose.
Parliamentary approval for additional capital of £1,698,300,000 for this new expenditure and additional cash of £4,296,200,000 will be sought in a supplementary estimate for the MOD. Pending that approval, urgent expenditure estimated at £5,994,500,000 will be met by repayable cash advances from the Contingencies Fund.
This is funding for a one-off financial transaction, and therefore does not reflect the MOD’s cash management position.
[HCWS350]