Defence secretary Ben Wallace has said he is “not shy” over taking action on armed forces housing standards, warning the Ministry of Defence (MoD) will keep contracts “under review”.

Cabinet minister Mr Wallace said he was “most concerned about mould and dampness” when questioned by Labour MPs over the state of accommodation for serving personnel.

He told the Commons: “We are going to do more about it, we will hold them to account, we will take financial action against them, or whatever, if we have to and I’m not shy about doing it.”

His comments came as Labour’s Dan Jarvis (Barnsley Central) asked the Government whether the procurement process is “fit for purpose”.

Speaking at defence questions, Mr Jarvis said: “There have been more cases of poor repair and poor service, so can the secretary of state say specifically – with regard to defence accommodation – is the procurement process fit for purpose and does he have confidence in the current providers?”

Mr Wallace replied: “This weekend I looked at the different options about whether we can find either compensation or recompense from the providers in the first place, and I get a weekly update on each individual case, how many cases are in the queues.

“In some areas they have made progress, in some areas their progress is comparable or better than the private sector. There is still work to be done on it, I’m most concerned about mould and dampness… in areas around heating we have seen some success.

“But we do expect a better service … the minister for defence procurement is regularly meeting with them, but it is also important to note that we will keep even their contracts under review and, if we don’t get a better standard, then there are other steps I will take.”

Shadow armed forces minister Luke Pollard warned defence procurement “is failing” as “many of these homes are still awaiting repairs”.

He said: “The Government’s failure on defence procurement isn’t limited just to weapons and ammunition, you only need to speak to those people in defence housing with leaky roofs, black mould and broken boilers, to realise that defence procurement is failing the people who serve our military and their families.

“The MoD last year paid £144 million to private contractors to maintain these service families’ accommodation, yet many of these homes are still awaiting repairs, not getting the service that they deserve… So as one of his ministers has admitted these contracts do not represent value for taxpayers’ money, why did the MoD sign these contracts in the first place and when will he be able tell all our troops that they have home fit for heroes?”

Mr Wallace replied: “We always want our homes to be fit for men and women of our armed forces and I distinctly remember my time in Germany and indeed in the UK living under a standard of home when it was done in-house and I can assure you there were issues then, if not in some cases worse.”

He added: “What we have been monitoring however is making sure we get these reports answered… We are going to do more about it, we will hold them to account, we will take financial action against them, or whatever, if we have to and I’m not shy about doing it.

“We will try and seek compensation for those people suffering and improve what’s happening, but we are also seeing in some areas that waits over five days are getting better.”