Rosyth was sold for a tenth of its value

THE CONSERVATIVE government sold the Rosyth Naval Base for little more than one-tenth of its market value, the Government's spending watchdog said yesterday in a critical report on Ministry of Defence property sales.

Although Rosyth 2000, the consortium which bought the Scottish base, bid pounds 9.5m for it in an open competition, it later beat the price down to just over pounds 1m. It won a reduction of pounds 4.5m for the cost of changing the electric supply and other infrastructure works, pounds 2.78m for decontamination work and pounds 1.15m for a change in the area of land leased back to the department.

The ministry had admitted it should have done more to maintain "competitive tension" between the consortium and other bidders in the 22 months which elapsed between the offer and completion of the deal, the report said.

The report, from the National Audit Office (NAO), also revealed that cuts in military personnel since 1980 have not been mirrored by cuts in defence spending or by sell-offs of defence property. In the past 18 years the number of defence staff has dropped by 42 per cent but net defence spending has dropped by just 22 per cent, and the size of the MoD estate by just 18 per cent.

Although further sell-offs are planned, which would bring the disposals to 31 per cent of the land held in 1980, the report says they could take some years. The ministry must find ways of completing sales more quickly, of achieving better prices on them and of reducing the cost of consultancy and other fees on the sales, it adds.

The NAO examined 45 individual sales of defence property and found that 22 of them were below market value. However, 21 of those were houses sold at a discount to forces staff or civilian tenants and the remaining one was of an electricity substation sold to the local electricity company for pounds 300.