in the back
MoD homes fit for zeroes
Annington sell-off, Issue 1463
A MERE 22 years after the Ministry of Defence under Michael Portillo sold its family accommodation so the military could rent it back, the National Audit Office has put a figure on the rip-off: had the 55,000 houses remained in public hands, taxpayers would have been up to £4.2bn better off.

This corresponds broadly to the amounts that have been siphoned offshore in vast interest payments to the funds behind owner Annington Homes that are run by Guernsey-based Guy Hands’ Terra Firma outfit (highlighted in Eye 920 way back in 1997).

Buried in the NAO report were details of the extreme returns made by the investors: “Rising rents and house prices mean the actual [annual] rate of return was 13.4 percent for the period from the sale [in 1996] to the end of March 2017.” Looking ahead: “Assuming the current owners were able to sell the entire property portfolio, they would achieve a return on their equity investment of 56 percent.” Not without reason did public accounts committee chair Meg Hillier call the contract “a rotten deal for the taxpayer”.

Captive rental market
The auditors were too polite to mention the others making a killing on the deal, as the Eye has reported regularly. Jamie Hopkins, chief executive since 1998, becomes a millionaire all over again each year, thanks to his position sitting on investments and with a captive rental market. Last year, the latest accounts show, he trousered £1.4m, up on the regular £1.3m of recent years except 2012, when he bagged £2.7m.

With a major rent review on the way, and Annington citing a consultancy report recommending it be paid £84m a year more than it is now, Hopkins’ and Hands’ prospects don’t look too shabby. The MoD, meanwhile, is being helped in these negotiations by its “strategic business partner” on military housing, which happens to be… Capita.

Meanwhile, the rent MoD personnel pay has been almost static since 2010, due to the relationship between military rent and pay and public sector pay restrictions. The MoD has to make up the ever-increasing difference between what it collects from service families and what Annington Homes charges in rent. If the MoD increases its rent charges to military personnel, it will somehow have to increase wages too. This would be a double hit as wages impact on pensions, which would also increase.

There is no solution to this financial problem. As long as armed forces families live in tied housing, the MoD will have ever-reducing control of rents and their impact on wages and pensions, no matter which rent payment option the MoD chooses. As the deal grows less attractive with each passing year, the outsourcing nightmare continues.

More top stories in the latest issue:

The UK ports that are now owned increasingly by a medley of foreign governments, billionaires and tax-avoiding conglomerates.

The inquest opens into the death of Sean Benton – the first of four recruits to die from gunshot wounds at Deepcut barracks between 1995 and 2002.

Leaky (but thirsty) Southern Water faces the Environment Agency at a water abstraction inquiry next month over plans to limit how much it can draw from Hampshire’s already struggling chalk streams.

Why the auditing of doomed Carillion by beancounters from KPMG was little more than a mutual back-scratching exercise.

Despite Rolls-Royce being fined £671m for bribery, UK Export Finance gives it a clean bill of health and has nothing to say on its own policing of dodgy deals it supported with taxpayers’ money.

Ten years on from the failed FiReControl PFI project to merge 46 emergency control rooms into nine regional centres, many remain empty, with the government still paying millions on annual leases.

Bad news for flat owners after the appeal court sides with a big London estate in a case concerning the huge amounts charged by freeholders to extend a lease.

Good news (and bad) for families of the 21 people who died in the 1974 terrorist atrocity after a helpful high court ruling is challenged by the coroner.

Trouble at the Haemophilia Society over its plans to represent victims of the contaminated blood scandal of the 70s and 80s, at the overdue public inquiry.

Filthy toilets, broken windows and dangerous guttering at a fee-paying school run by a former advertising chief whose exploits have featured in the Eye.

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Next issue on sale: 20th February 2018.
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Private Eye Issue 1463

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20th February 2018
In This Issue private eye
Theresa May Defies Critics by Pledging to Remain Tory Leader Until The End of This Article… Moron Interviews Moron: Those Killer Questions in Historic Trump Interview… Fantastic Mr Fox Warns ‘Things May Not Be Fantastic Right Away’… It’s Eugenie vs Meghan in the Big Wedding Play-Off!... Ban the Catwalk Fashion Girls, Says No One At All… Sarah Ferguson’s Diary, as told to Craig Brown

And also...

- Service industry: The soldiers, sailors and airmen on loan to the arms trade
- We are sailing…
British ports and their offshore owners
- Worst among equals:
How the BBC made the pay gap crisis worse

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Private Eye Issue 1462