The Ministry of Defence is failing to raise as much money as it should through selling off property, the government’s spending watchdog warns today.

Defence Estates, which runs the MoD’s £20bn property portfolio, raised £3.4bn from disposals in the last decade. Yet the MoD has reduced personnel numbers three times faster than it has shrunk the size of its estate.

In today’s report, A Defence Estate of the Right Size to Meet Operational Needs, the National Audit Office says this raises “clear” questions about whether the MoD could reduce the estate further.

It says the MoD has failed to decide on the correct size of the estate, despite drawing up an over-arching disposals strategy with its development plan in 2008.

The National Audit Office praised the plan to earmark 12% of the MoD’s 525 sites for disposal, but said it was inadequate and had failed to increase the number of disposals.

In 2008/09, receipts totalled £110m, falling significantly short of the £305m target, and barely one-tenth of the £1bn raised in 2007/08 through the sale of the Chelsea Barracks.

The report says the MoD, which must identify savings of 25% in running costs over four years ahead of October’s spending review, has a “lack of clear rationalisation objectives, inadequate mechanisms, and insufficient central data.”

It means the department is poorly placed to adapt its estate according to its need to save money.

The findings support criticism by right-wing thinktank the Adam Smith Institute, which said the MoD could save more than the “modest sums” it had done so far.

Defence Estates was unable to comment, but Amyas Morse, head of the National Audit Office, said today: “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.

To read the report in full, click here: A Defence estate of the right size report

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