Taxpayers have lost more than £3 billion from a controversial deal to sell military housing to a private equity company controlled by one of Britain's richest men.
A Daily Telegraph investigation has discovered that the Ministry of Defence's housing stock was sold to the private equity firm in 1996 for £1.6 billion, but taxpayers have already paid almost £1.8 billion to rent the soldiers’ homes back. The firm is expected to receive more than £1.5 billion in rent over the next decade.
Under the terms of the deal the company will also soon be able to retain the profits of selling the homes which are now worth more than £3.4 billion.
The decision to sell the properties at such a low price is now being compared to Gordon Brown's sale of Britain's gold reserves which has cost the country £2 billion.
Last night, a defence minister admitted that the deal had “not been good” for the armed forces and MPs called it a “national scandal”.
Bob Russell, the Liberal Democrat MP for the garrison town of Colchester, said: “Every single aspect of the privatisation of the MoD housing has been a scandal and an embarrassment. The whole deal with Annington needs to be investigated.”
Kevan Jones, the Defence Minister, said that that the agreement with Annington Homes had been a “bad deal”, but that the government could not avoid paying the rent under the deal brokered by the Conservative government.
“It was not good news for the taxpayer and it has not been good for the armed forces, but I and all my predecessors have looked at it since the Labour government came in and we can’t change it,” he said. “It is very, very frustrating.”
Under the terms of the deal, the MoD pays more than £150 million a year to rent back the homes. When the armed forces no longer need a property, the house is handed over to Annington, which can then sell it or rent it out.
Since 1996, almost 17,000 properties have been “released” by the MoD to Annington. The firm paid an average of just under £30,000 to the MoD for every home in 1996, but in 2009, the average sale price of each unit has been £169,363.
For the past 13 years, the profits of selling the unused houses have been split between Annington and the MoD. However, from 2011, a claused in the contract allows Annington to keep all profits from house sales.
There have been repeated complaints about the standard of military housing and the money made by Annington is far more than the £3 billion pledged by the Government to improve the standard of army homes in coming years.
The controversial "military homes" deal is also embarrassing to the Conservatives as the deal was brokered by Guy Hands, the chairman of the private equity fund Terra Firma and one of Britain's richest men, who is close to senior opposition politicians.
Mr Hands, who is worth an estimated £100m, coordinated the original 1996 deal that led the Japanese banking group Nomura to buy the Armed Forces’ married quarters by setting up and funding the Annington Homes consortium. In 2002, when Mr Hands left Nomura to set up the private equity fund Terra Firma, the Annington deal moved across with him.
William Hague, the deputy Tory leader who was Mr Hands’ best man, was paid around £450,000 to sit on the “political council” of Terra Firma over the last eight years. He stopped sitting on the political council earlier this year.
A spokesman for William Hague said: “The acquisition of Annington Homes by Terra Firma took place long before Mr Hague’s work for them and he has never had any involvement with any decision involving Annington Homes.” continues here
A Daily Telegraph investigation has discovered that the Ministry of Defence's housing stock was sold to the private equity firm in 1996 for £1.6 billion, but taxpayers have already paid almost £1.8 billion to rent the soldiers’ homes back. The firm is expected to receive more than £1.5 billion in rent over the next decade.
Under the terms of the deal the company will also soon be able to retain the profits of selling the homes which are now worth more than £3.4 billion.
The decision to sell the properties at such a low price is now being compared to Gordon Brown's sale of Britain's gold reserves which has cost the country £2 billion.
Last night, a defence minister admitted that the deal had “not been good” for the armed forces and MPs called it a “national scandal”.
Bob Russell, the Liberal Democrat MP for the garrison town of Colchester, said: “Every single aspect of the privatisation of the MoD housing has been a scandal and an embarrassment. The whole deal with Annington needs to be investigated.”
Kevan Jones, the Defence Minister, said that that the agreement with Annington Homes had been a “bad deal”, but that the government could not avoid paying the rent under the deal brokered by the Conservative government.
“It was not good news for the taxpayer and it has not been good for the armed forces, but I and all my predecessors have looked at it since the Labour government came in and we can’t change it,” he said. “It is very, very frustrating.”
Under the terms of the deal, the MoD pays more than £150 million a year to rent back the homes. When the armed forces no longer need a property, the house is handed over to Annington, which can then sell it or rent it out.
Since 1996, almost 17,000 properties have been “released” by the MoD to Annington. The firm paid an average of just under £30,000 to the MoD for every home in 1996, but in 2009, the average sale price of each unit has been £169,363.
For the past 13 years, the profits of selling the unused houses have been split between Annington and the MoD. However, from 2011, a claused in the contract allows Annington to keep all profits from house sales.
There have been repeated complaints about the standard of military housing and the money made by Annington is far more than the £3 billion pledged by the Government to improve the standard of army homes in coming years.
The controversial "military homes" deal is also embarrassing to the Conservatives as the deal was brokered by Guy Hands, the chairman of the private equity fund Terra Firma and one of Britain's richest men, who is close to senior opposition politicians.
Mr Hands, who is worth an estimated £100m, coordinated the original 1996 deal that led the Japanese banking group Nomura to buy the Armed Forces’ married quarters by setting up and funding the Annington Homes consortium. In 2002, when Mr Hands left Nomura to set up the private equity fund Terra Firma, the Annington deal moved across with him.
William Hague, the deputy Tory leader who was Mr Hands’ best man, was paid around £450,000 to sit on the “political council” of Terra Firma over the last eight years. He stopped sitting on the political council earlier this year.
A spokesman for William Hague said: “The acquisition of Annington Homes by Terra Firma took place long before Mr Hague’s work for them and he has never had any involvement with any decision involving Annington Homes.” continues here
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