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Rationalisation and disposal of central and local government property has now become a cornerstone of the Whitehall efficiency programme. Nick Werran investigates. A series of reports in 2009 identified property as an immediate vehicle for public sector efficiencies. In chronological order these were: Room for improvement, The Audit Commission, 21 April State of the estate, the Office of Government Commerce, 1 June The operational efficiency programme (OEP), HM Treasury, 17 June Smarter Government, HM Treasury, 9 December. Despite being written largely in isolation from one another, the reports, nonetheless, came to three common conclusions. These were that the public sector estate was poorly located, the scope for savings remained untapped, and finally, a need to increase the use of shared accommodation between organisations. Zooming further into the most influential of these four reviews, OEP, this was broken into five separate strands which included property: asset sales back office and IT procurement local initiatives, which has now transferred to the Total Place agenda property. All five strands can only be enabled by serious reform of the government estate. For instance, if any mileage is to be travelled on the road to procurement savings, estates management will feature heavily, given the public sector currently spends upwards of £35bn a year in running and maintaining its property portfolio. Similarly, asset sales, when not falling into the category of veiled privatisation, will rely on the disposal of office space deemed surplus to requirements. It is likely that this will be a key feature within local government, which owns more of its property outright than central government, the NHS or education. Back office and IT transformation is increasingly dependent on the property lifecycle as the catalyst, or requisite push, for outsourcing or updating – particularly given the obsession with shared services as the panacea for all government inefficiency. Finally, Total Place will also need to take into account the more hum drum questions on property strategy. The key obstacle to joined-up property strategies is the underlying tension within the public sector reform programme. On the one hand, we have all main political parties championing the new localism – bigger budgets and more responsibilities devolved to a local government level. At the same time, the ‘smarter government' ethos requires the pooling of the three Ps – procurement, people and property. Property strategy, in particular, needs co-ordination and a ministerial mandate to affect change. This has led to the establishment of a centralised property unit, under John McCready. Meanwhile, strategic approach to public property information and strategy is well under way. However necessary to reform all these initiatives are, the fact remains that they all emanate from the centre, which is not necessarily the political wind of the day. So, where does this tension between centralism and localism leave the public estate, and the professionals tasked with resolving all of this? Perhaps the solution lies in observing a few key facts: Size – A recent Audit Commission report observed that within local government, the value of the estate almost doubled in the past decade. Even when taking into account the contribution made by the school building programme, office accommodation in councils alone rose from just above £50bn to closer to £100bn. One would assume there is, therefore, leg room for savings without necessarily endangering the ‘family silver'. Facilities management – Possibly the most overlooked area of outsourcing. A 2009 Governetz survey identified only 49 local authorities with long-term outsourced FM partnerships. Central Government outsources far more, admittedly with mixed success. However, given the risks are fewer and the savings more immediate, this will surely be a priority area in the public finances recovery plan. Fit for purpose – location, sustainability and flexibility are the three biggest sores on the public sector estate. Even medium-sized cities such as Bradford count the number of separate government office locations in the dozens. Having been built in the cellular environmentally-unconscious decades after the Second World War also hasn't helped. Even new-builds generally fail to meet the BREEAM standard, with only 8% of new-builds or fit-outs assessed by the Sustainable Development Commission as meeting the required standards. Relocation of Whitehall – The Lyons report generally regarded within the property industry as a ‘damp squib' actually exceeded its target figure of 20,000 posts. The problem for developers and forward-thinking inward investment agencies was that the majority of these relocations were absorbed within existing civil service buildings. The next phase is currently under review, and is to be announced in Budget 2010, with a similar or perhaps larger target figure expected. The difference with the latest phase is that it will mainly require new offices, so this will be a real opportunity for dispersals to go to government ‘hubs' or campuses in the regions, where policy ideas can be put into practice. w Nicholas Werran is director of Governetz Public Property, a joint venture with the publishers of The MJ, which is organising a two-day conference and exhibition, Public Property Expo, taking place on 23-24 November

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WHITEHALL

Public property and efficiency

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