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Sir John Bourn, head of the National Audit Office, reported today that the Ministry of Defence is successfully introducing new management and contractual arrangements to deliver a better quality estate and has embarked on a major programme of estate rationalisation. However, more needs to be done to ensure that the benefits of these changes are realised.

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The MoD is one of the largest landowners in the United Kingdom with an estate of 240,000 hectares. The UK and overseas estate is valued at some £15 billion and costs some £1.3 billion per annum. The challenges faced by the MoD in managing its estate are growing, particularly in meeting changes in operational needs. The defence estate had suffered deterioration in its quality; a result not only of previous limits on funding due to other defence priorities, but also the use of traditional methods of managing and procuring estate services. Against this background the MoD has made good progress in delivering against its strategy – “In Trust and On Trust” – to meet the challenges it is facing.

To deliver an estate of the right size, the MoD has undertaken a major programme of estate rationalisation. The MoD has received £1.2 billion from selling off surplus land since 1999. The MoD’s estate requirements have yet to be brought together into a longer-term coherent funded plan but MoD has identified funding for some estate rationalisation in the current planning round and it is estimated that a further £732 million could be sold over the next three years.

To deliver the right quality estate, the MoD has introduced new management and contractual arrangements, based around five new Regional Prime Contracts. The MoD also has a number of ambitious projects being delivered through separate contracts and through Public Private Partnerships both at home and overseas. Insufficient funding due to conflicting defence priorities means that the MoD may not deliver all the expected long-term efficiencies, however, MoD has made a substantial investment in the estate. The move to large, centrally managed contracts needs a change in the culture amongst MoD staff and contractors. Whilst there is more to do to consolidate this change these arrangements do have widespread support in the Department.

Estate rationalisation, new management processes and new contracting arrangements promise much in the way of improvement, not only to the quality of the estate but also in terms of efficiencies that can be directed at improving the front line. In addition improvements in the quality of working and living conditions of Service personnel and their families will result . To ensure that this happens, the MoD needs to draw together a coherent funded programme for the rationalisation and development of the estate and develop a plan for the realisation of benefits arising from these changes.

I congratulate the Department on the considerable progress it has made in improving the way it manages its estate. This will mean a more effective and more efficient estate with wider benefits for the performance of the military and not least on the morale of service personnel and their families. This is why it is important that the MoD does more to strengthen its new arrangements to achieve the full benefits.

Sir John Bourn


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