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Ministers are set to create a new quango to run military housing after concluding the Ministry of Defence was not up to the job.

The new Defence Housing Service, to be announced by Defence Secretary John Healey on Monday, will take over management of service accommodation after years of complaints about poor quality homes.

It will operate as an arm’s-length public body, with Mr Healey saying the new service would “deliver better value for the taxpayer and fulfil our promise to provide homes fit for heroes”.

When created, it will be one of the largest publicly owned hou

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