Recommendation 24

We asked for an update on the renegotiation of rents for service family accommodation leased from Annington Property Limited, on which the Committee last reported in 2019.75 The Department currently benefits from a 58% reduction in the market rent that Annington charges for these homes, but this is due to end in 2025. The Department said that it and Annington had differing views as to what was an appropriate level of discount and as a result, the matter was subject to formal arbitration. The Department agreed that the sums of money potentially at stake are very significant and could, depending on the result of the arbitration, put significant additional pressure on the Department’s finances. The Permanent Secretary suggested that, if the decision went against it, the Department will expect the financial pressure to be absorbed by Defence as a whole, and not just infrastructure and accommodation. In an extreme situation, the Department might draw on its departmental contingency.76 72 Q 49 73 Q 50; C&AG’s Report, para 4.7 74 Q 51 75 Committee of Public Accounts, Military Homes, One Hundred and Second Report of Session 2017–19, HC 2136, June 2019 76 Qq 8–9 18 Improving single living accommodation for service personnel