The winning consortium, Annington Homes, includes Nomura, the Japanese bank, Amec, the construction group which has made rich pickings from previous privatisations, and Royal Bank of Scotland and Hambros, two banks with close links with the Conservative Party.
Annington made no secret of its intention to profit from the deal. Sir Tommy Macpherson, the consortium chairman, said it would be seeking a stock market listing in "five to seven years".
He refused to be drawn on the expected size of the profit from the share sale, but, if past experience is anything to go by, it will be considerable and will provoke a political outcry.
The Independent yesterday revealed that Amec has made more than pounds 30m from the resale of part of the Government's Property Services Agency.
Annington executives will now sit down with defence ministry officials to thrash out the final details on the housing sell-off. It is expected to see Annington agree to pay pounds 1.6bn for 57,700 homes. The Ministry of Defence will lease back the bulk of the properties from Annington under a 200-year deal. Some pounds 100m will be released from the sale to upgrade those homes, while 2,700 of the empty quarters will be sold off immediately. More properties will be sold over a 25-year period.
Most immediate anger was directed at the involvement of Nomura. Arthur Titherington, secretary of the Japanese Labour Camp Survivors Association, said: "I am almost speechless. It seems to me at times that certain senior members of the Government have no feelings about the past. The Japanese are succeeding to do with money what they failed to do with arms. This decision is just another nail in the coffin of conscience."
In response to the criticism, Nomura had already taken a lower profile and Sir Tommy stressed that Annington was a British company with predominantly British shareholders.
Last year, Amec, chaired by Sir Alan Cockshaw, made profits of pounds 16m - with Sir Alan's pay package soaring from pounds 235,755 to pounds 396,673. That was before the huge gain from the resale of the former PSA arm, Building and Property Management Services. At the same time, Amec is making inroads into other areas of government business, recently winning the pounds 150m contract to build offices for 13,000 civil servants in Newcastle.
In choosing Annington, though, Mr Portillo did at least avoid another backlash. If he had chosen another short-listed bidder - a consortium involving John Beckwith, a Tory party fundraiser - the political row would have been enormous.Reuse content