SAC0046

Written evidence submitted anonymously

Good afternoon, I am contacting you to address your calls for evidence in relation to the following Military accommodation question: What are the benefits and drawbacks of the Future Accommodation Model? How successful was the Future Accommodation Model pilot and what should the MOD take forward to include in the new accommodation offer?

Firstly, I will address the benefits and then importantly the drawbacks which could have significant disadvantages to service personnel (SP). The New Accommodation Offer (NAO), formally named FAM, is a step in the right direction in allowing those in long term relationships to be recognised and have the ability to apply for Service Families Accommodation (SFA). The proportion of people across society who live as a couple that are cohabiting has been slowly increasing over the last 10 years[1], and with this reflecting in Defence it is important to adapt inclusive policies to meet these changes. In addition, it will stop SP from marrying or entering a civil partnership prematurely just to receive the benefits that assist in making family life more workable while serving. While these changes are positive and must happen, it should be acknowledged that changes to this policy may result in a surge of couples newly recording a Long-Term Relationship (established) LTR(E) status (additional 7,000 – 10,000 estimated[2]). If a large percentage of these wish to move into SFA this would be costly, especially considering the additional financial benefits such as disturbance allowance. For example, if the lower estimate of 7,000 were to take up the option of living in an SFA, disturbance allowance (£1,041) for one move for each SP would cost the public purse roughly £7m. It should also be considered that most Military personnel move on assignment every two years. However, on average in the UK, couples are together for between 2 – 5 years before they decide to marry or enter a civil partnership, therefore it is argued that whilst LTR(E) could remain recorded on JPA after 365 days, the move from eligible to entitled should align with society and be available only after the 3-year point. This will still demonstrate that the Army values LTR(E) couples but with a realistic timeframe that avoids the potential of a costly surge in SFA and associated entitlements. Recommendation: The acknowledgement of LTR(E) in policy is an important change to reflect the growing proportion of SP who do not wish to marry or enter a civil partnership. However, the change from eligible to entitled should only occur after three years of the LTR(E) being recorded to avoid the potential of a costly surge in SFA entitlements and to meet societal expectations when recruiting future talent.

Next and importantly, I wish to address the Need vs Rank allocation proposed changes. The NAO implements a shift in the priority allocation of SFA. In the past, soldiers were granted SFA according to their individual needs, while some WOs and all officers were allocated housing based on their rank. The proposed adjustment sees allocation of SFA to all personnel, regardless of rank, and instead is determined by the SP’s family size (based around the number of children they have). However, it fails to acknowledge that SP may define their needs differently based on a range of factors.[3] The policy also enables SP to opt for one above or one below their need and will see the monthly cost of SFA aligned to the type and size of the SFA, irrespective of the SP’s rank. Whilst the proposal appears equitable, the practicalities seem flawed as affordability issues may disadvantage the most junior soldiers. An example of this policy might see a newly promoted Cpl with three children on a salary after tax of c£24,945, providing them a monthly wage of c£2,078. Currently, based on need, this SP would require a Type C SFA.[4] If it were a Band A[5] SFA, the cost would be £322.71 per month (£10.41 per day); this would leave the SP £1,755.29 for the rest of the month. Under the new policy, the same SP may be offered the equivalent officer SFA (Type IV, Band A) which has the same number of bedrooms. However, this costs £506.54 per month (£16.34 per day), leaving them with £1,571.46 for the remainder of the month. This equates to £183.83 less when compared with the Type C option.

However, as per the proposal, if an officer is allocated an SFA based on their need, a Capt with two children could occupy Type C, Band A (formerly a soldier’s SFA) and be required to pay just £322.71 per month (10.41 per day). While a model based around need is ostensibly a fairer approach, it is not equitable. In the worked example, a Capt earns £41,313 after tax, thus deductions for SFA account for 9.3% of their salary. By contrast, a Cpl occupying Type IV SFA is required to pay 24.3% of their annual income on Service accommodation. Ironically, the result is that the least well-off are stretched most by a policy intended to improve fairness. This could lead to increased demand for financial support through welfare aid and unit finances or, more concerningly, taking out loans at unaffordable rates of interest. The NAO may argue that the SP can opt for one up or one down SFA rule, however it will come down to current stock availability and first come, first served so the new rule will not strictly allow for this.

Simultaneously, the cohabitation of a Capt alongside a junior soldier, living in equivalent accommodation but paying proportionately different rates, Type C SFA may lead to feelings of frustration and resentment among the ranks. This is due to the observation that both are paying the same rate for the SFA, even though the junior soldier is earning significantly less. This is why, historically, many officers have been assigned to the more costly SFAs, as they earn more. It also allowed for officer and soldier patches to be separated to allow both cohorts the ability to relax in their respective peer to peer environments without the fear of ‘remaining on duty at all times’ or for crosspollination when discipline matters are involved.

It is equally important to acknowledge that one of the primary drivers for the NAO policy change is from the growing demand of soldiers needing access to larger SFAs to accommodate their family’s needs, especially the Type D houses, which provide four bedrooms and can cater to soldiers with larger families. NAO have £400M[6] over the next two years for improvements and procurement of further SFA stock, this should be used to buy more Type D SFAs for families with more children, instead of penalising officers by removing their entitlement.

Recommendation: The practice of creating significant financial disparities between soldiers and officers residing in the same type of accommodation should be discontinued. Instead, NAO should focus on acquiring more Type D Service Family Accommodation (SFA) units to cater to the growing need for additional bedrooms for soldiers with larger families. It should retain the allocation of SFAs to Officers as rank based, allowing their salaries to meet the higher SFA costs. This adjustment will ensure a fair and equitable housing arrangement for all ranks.

It should also be communicated that Defence stock can only accommodate up to a certain number of family members. Moving forward, SP should be informed of the maximum number of bedrooms the SFA stock can support. SP are responsible for their lifestyle choices and those wishing to exceed their family beyond this should be prepared to self-fund, as would be expected in a civilian organisation. This could be through renting larger rental properties, looking to buy their own home using the excellent Forces Help to Buy Scheme or understanding they may be required to share some bedrooms (even after being offered the largest type SFA).

The change of policy causing me the most concern is the potential significant outflow of Warrant Officers (WOs) and the officer cohort of the MilitaryThe current policy sees WOs and officers allocated accommodation based on their rank entitlement. This system extends to Single Living Accommodation (SLA) within the Messes, with no sharing of accommodation across rank strata. However, the new policy will result in numerous WOs and officers losing their entitlement to rank-based SFA despite many years of enjoying this benefit. The NAO roadshow panellist indicated no negative responses were received to the proposed need-based changes during the FAM trial research and analysis survey.[7] It is argued that this analysis is flawed. A more in-depth examination reveals that out of 8,474 FAM pilot participants, only 69 individuals – 0.8% of the total participants – contributed to the research.[8] The NAO did not adequately survey SP and their families who will be adversely affected by these changes to assess the potential impact on retention. Indeed, it is argued that those who would be disadvantaged by the previous FAM trial did not take it up, therefore the only results offered were from those who benefited from the scheme, making the analysis flawed and not an accurate representation from those seek to be most affected.

Questions raised during the NAO roadshows[9] revealed significant concerns about the impact on retention, especially among the Military command cohort (WOs and officers), instigating many to raise their concerns through your inquiry to the Defence sub-committee.[10] Many WOs and officers view the policy change as a significant reduction in ‘the offer’. Accommodation offered on rank is an incentivisation for direct entry (DE) officers who arguably could earn much more in a civilian job, meaning the current policy allows the Military to attract the very best talent from across society to become the future Military leaders. Equally, it is a huge incentive for those long serving personnel to commission from the ranks or indeed junior soldiers’ talents to be recognised for conversion to the DE officer cohort. This change could see a reduction in the ability to recruit DE officers and for those already serving who will witness the reduction it is likely to demotivate their aspiration to commission, instead seeing valuable SP depart at the end of their ‘Other Ranks’ (ORs) contract.

This would be hugely disadvantageous to the Military, as it risks losing personnel with extensive knowledge, skills, and experience—resources it has invested heavily in and comes at a time when the world is facing unprecedented uncertainty, with a high demand for the Military's global commitments. Arguably no civilian job acknowledges its people based on the size of its family, instead it is based on meritocracy, rewarding people for their hard work and in conjunction with a bigger salary, bigger pension and a bigger house but caveated with more responsibility and accountability. This proposed scheme erodes the value it should show its people and disadvantages those who have loyally served over a long time due to the fact they maybe; cannot have children, choose not to have children or indeed because their children have now grown up and the policy does not recognise young adults (over the age of 18 but may still need to live at home). As alluded to, this change would likewise diminish the motivation for junior ranks to pursue a commission, as when their families surpass 18 years of age, they would also return to smaller, necessity-based accommodation. Currently, the average age for downsizing property is 60 years of age[11] and in line with society, those on a higher salary are more likely to purchase a larger property as they grow in seniority as opposed to those just starting out in their career when they earn less, irrespective of their family size, they buy what they can afford.

The NAO team emphasises that accommodation is not a 'reward' tied to rank, as this would render it a taxable benefit. However, they do not clarify why this taxable benefit was not previously enforced and has only become an issue now. It is agreed that SFA is not a reward but rather as outlined by HMRC is a necessity for its SP to do the job asked of them, often in a geographical location they would not choose to live. Hence, some argue that the proposed reallocation of SFAs is driven by cost-saving motives, as it involves moving officers from larger SFAs to accommodate service personnel who have chosen to have larger families, even though this decision isn't typically governed by societal rules. Moreover, the NAO's decision to extend entitlement to those in LTR(E) implies a greater need for SFA resources. An alternative approach could be to align the policy more closely with societal norms, considering that many individuals do not choose to live together until at least three years into their relationships. If the MoD opts for this path, it should be ready to address potential consequences, such as the potential loss of a significant portion of its command cohort across the services and the reduced incentive to promote senior non-commissioned officers, leading to a loss of knowledge, skills, and experience.

It's worth noting that the NAO is introducing a three-year Transitional Protection (TP) period[12] to support those who will lose their current entitlement. However, this essentially provides a three-year window for Warrant Officers and officers to plan their departure from the Military once the TP period expires. Furthermore, the TP period aligns with the NAO's future satisfaction survey. Running these concurrently might not provide a comprehensive understanding of the potential outflow impact, as service personnel won't lose their entitlement until after the survey period concludes. There's also no confirmation regarding how or by whom the outflow process will be monitored. Alarmingly, the repercussions may only become evident after individuals in leadership roles have left the service, making it too late to address. This is a concerning situation, especially when the outflow is already surpassing the inflow.[13]

Additionally, as previously mentioned, there hasn't been consideration for service personnel who may encounter a situation where their children are no longer eligible for a separate bedroom due to reaching the age of 18 (primarily impacting Warrant Officers and officers due to their age and time served). However, with rising property costs and rental challenges, many young dependents continue to reside with their serving parent(s), typically until around the age of 25.[14] The proposed policy fails to account for these societal factors and might prompt some personnel to leave the Military prematurely if they lose their entitlement to larger SFA, especially if they feel that the Military no longer values their service.

Recommendation: Due to the risk of significant outflow from the command element of the Military and the unknown impact this change would have on the ability to attract future officers, it is strongly recommended that the proposed change from rank to need base for WOs and officers must be promptly abandoned.

Finally, if the Military is trying to provide a policy more in line with societal expectations it must immediately reassess its current upper age limit which is set at 18 years of age for a bedroom entitlement (unless in education, joining the Military or for medical needs where this is extended). In accordance with the UK national statistics outlined above, this age limit should be raised to the age of 25 to offer consistency and be more equitable with societal expectations.

Thank you very much for taking the time to read these points. May I ask for your support in raising these matters with the Defence Sub committee and the recommendations are considered for immediate action.

 

27 October 2023


[1] Office for National Statistics, People’s living arrangements in England and Wales: Census 2021’, Feb 23

[2] Internal MOD estimate provided during the sprint.

[3] These include but are not limited to: requirement for office space to enable WFH; space to care for vulnerable family members; young adults living at home due to cost of living; dual service couples; rooms for pets.

[4] JSP 464, Feb 23, 3-A-3.

[5] MOD, ‘SFA-SLA-Accommodation-Charges, 19 Jul 22, The example has not included garages or furnished SFA which may also be a requirement and extra cost to the SP.

[6] Forces Net,Defence Command Paper: How the £400m will be invested in service family accommodation 21 Jul 23.

[7] MOD, Your New Accommodation Offer Roadshow, held Wed 25 Oct 23

[8] MOD, Service personnel satisfaction with the Future Accommodation Model pilot, 19 Sep 23.

[9] New Accommodation Model Roadshow Q&A, screenshots of questions submitted on ‘Slido’.

[10] UK Parliament, Call for Evidence - Committees - UK Parliament

[11] Estate Agent Today, Downsizing survey 25 Aug 23.

[12] From 11 Mar 23 – 11 Mar 27.

[13] ‘In the 12 months to 31 March 2023 there was a was a negative net flow of personnel, meaning more people left the forces than joined, the intake was 11,090 while outflow was 16,510, so there was net decrease of 5,400 personnel.’ E. Kirk-Wade and Z. Mansfield, HoC Library, ‘UK defence personnel statistics’, 18 Jul 23, 4.

[14] Office For National Statistics, More adults living with their parents - Office for National Statistics, 10 May 23