The MOD, one of the largest landowners in the UK, has strengthened its estate planning and achieved significant receipts from disposal of property. However, the changes are not yet sufficient to drive value for money for the taxpayer rigorously.

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The Ministry of Defence, one of the largest landowners in the UK, has strengthened its estate planning and achieved significant receipts from disposal of property but the changes are not yet sufficient to drive value for money for the taxpayer rigorously, according to the National Audit Office. While the defence estate primarily exists to support defence capabilities, the Department has not matched its focus on operational needs with enough attention to efficient use of its estate assets and to reducing costs.

Today’s report acknowledges that, between 1998 and 2008, the MOD identified and took opportunities to rationalise that part of its UK estate not needed for training, generating £3.4 billion from the sale of surplus property. Nevertheless, over the same period the Department reduced the number of civilian and military personnel three times faster than it reduced its built estate. This raises a clear question about whether there are opportunities to reduce the estate further and secure cost savings and further disposal receipts.

In the context of the Strategic Defence and Security Review, the Department needs to consider what minimum estate will be required to meet future needs of the reshaped Armed Forces. The MOD has identified 12 per cent of its sites, comprising two per cent of its estate by size, as suitable for disposal. The NAO concludes that the Department’s process for categorising sites is rightly driven by operational requirements but it does not give sufficient weight to other factors such as how heavily a site is used, running costs, or potential income from sale.

The Department has strengthened its estate planning, particularly through a new Defence-wide estate plan. But the plan lacks supporting measures allowing progress to be judged and does not articulate what the right size of the estate would be or how much it would cost.

The MOD also lacks sufficient data centrally to conduct the necessary analysis to help it reduce costs in a structured way. The NAO has identified five categories of information needed to identify the scope for further estate rationalisation: operational importance; utilisation; condition; potential value; and running costs.

"The Ministry of Defence needs to change its mindset towards its estate, so that not only does it, rightly, focus on operational needs, but also gives due emphasis to making the reductions in costs needed in the current fiscal climate.

"The evidence is that the Department could substantially build on the progress it has already made in rationalising its estate and reducing costs. But it should do this, not by simply responding to individual opportunities as they occur, but in a systematic way, based on clear objectives, adequate mechanisms for achieving them and good quality central data"

Mr Amyas Morse, head of the National Audit Office

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