Do our strategic decision makers consider the impact of their policies on leadership at the tactical level?
The challenging uncertainty of the Future Accommodation Model (FAM).
The changing nature of combat has seen a paradigm shift in the defence capability required for today and future combat operations. The financial implication of extended campaigns in Iraq and Afghanistan and a global recession has tightened the purse strings and limited expenditure. Defence leaders have had to maintain the output of the forces whilst aligning them with political needs.
Poor contracting decisions made two decades ago when the MoD were paid £1.67bn for 57,400 MoD houses by Annington homes and then would rent back the homes at a discounted rate until 2021. It is likely that rent will increase to be closer to market rates after 2021 as the leaders of today are facing the challenges from decisions made nearly 20 years ago. Cost saving measures are inevitable, but this system, known as The Combined Accommodation Assessment System (CAAS) has resulted in rental increases for 81% of military personnel housed in SFA.
‘Mum, can we use room service?’
The Future Accommodation Model (FAM) is assessing the viability of increasing the number of rental properties available to service personnel. Currently, the process of allocating rented accommodation to service personnel is contracted to Mears Group. A freedom of Information Request from the MoD revealed that, from 1 Jul 16 until 30 Aug 16, 677 MoD personnel had been placed in temporary hotel accommodation. The average wait for a family was three weeks (the average for single personnel was 4). The longest personnel have had to wait for a rental property is 22 weeks. Needless to say, a family living in a hotel for a period like this is seriously disruptive, and is unlikely to be retention positive. Unless significant steps are taken, an increase on the requirement for rental property could further exacerbate this issue, leaving more uncertainty for service personnel for longer.
‘Dad! The hot water is off again!’
The maintenance contract given to Carillion-Amey in 2014 (worth £626 Million) has come under constant scrutiny, as they fail to maintain houses effectively in a timely manner. There were almost 5,000 complaints raised between March and May 2017 alone. The end result is service families feeling undervalued, living in substandard accommodation whilst having to pay more for their homes thus putting extra strain on the family.
‘Mum, none of my school friends understand the Army.’
The FAM, if it were to go forward as proposed could erode one of the support structures currently in place for service families, the ‘married patch’ where service families have a community. These communities are particularly important during operational deployments, when being housed in rented accommodation, which may be far away from the service community. Decision makers should think very carefully before binding the Army into a system which may have long term implications for service family life.
‘I’d love to buy round here, but have you seen the prices?’
The encouragement for service personnel to purchase a property has proved beneficial through the Forces Help to Buy Scheme but the availability of mortgages remains inadequate compared to the increasing house prices. Service personnel have experienced mortgage providers regarding FHTB as an additional loan thus reducing the amount they can borrow. Furthermore, if posted to a location that is unsuitable for commuting, interest is charged on the FHTB loan with tax having to be paid on the income received from rent further eroding disposal income.
The Office of National Statistics reports a 25% or £56,319 increase in the average house price from Jul 2011 to Jul 2017. This increase, compared to a pay freeze over the same period below the inflation rate, reduces purchasing power thus making it more difficult for the government’s vision of more service personnel living in their own homes. As house prices have increased, mortgage availability has reduced and unfavourable interest rates offered due to increasing the loan to value ratio of the mortgage. Additionally, the military has not yet developed the required stability for military personnel to confidently purchase their own property.
The importance of the long view.
Defence leaders and politicians need to take into account financial, morale and welfare impactions when developing cost saving initiatives. They must understand the long-term implications, rather than looking at short term initiatives that are at the financial detriment of the soldiers that serve our country. Ultimately, if service personnel do not feel valued, recruiting and retention will be affected which will have an adverse impact on operational effectiveness.
The ever-increasing costs of living with the implementation of CAAS compared to the stagnant salaries will continue to impact retention as real wages are reduced year on year. Although decisions made by defence leaders decades ago will continue to impact leaders today, the decisions made today will have long term implications on the capability of our forces in years to come. Let’s make the right ones.
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