Sir Michael Lyons has delivered an upbeat assessment of the government's attempts to implement his relocation proposals.

Two years have passed since Sir Michael published his proposals for 20,000 civil servants to relocate out of London and the South East but the acting chairman of the Audit Commission remains fully engaged on this policy agenda.

Speaking at a Westminster Briefing event, which analysed the progress made in implementing his proposals, Sir Michael said he was pleased with how it has gone so far.

"Good progress has been made," he said. "There are signs that people are beginning to bring their plans forward because location ought to be part of the day-to-day thinking about public services."

Sir Michael was commissioned by the Treasury to investigate the scope for relocating national government activities from London and the South East.

"For the first time relocation was being explicitly linked with greater efficiency and cost effectiveness in government," Lyons told the event.

"In all of the previous exercises attempting similar relocations, the underlying rationale was the need to move jobs to regions where there were too many unemployed people.

"The difference with my review was that it was explicitly linked with the government's ambition of getting better value for money for the taxpayer and I think this was a very healthy change."

Sir Michael and his team concluded that potentially over £2bn could be saved over 15 years as a result of relocation.

"My report was part of a much bigger agenda," Sir Michael admitted. "It was part of the reform of the civil service, an attempt to increase trust and confidence in government and a way to challenge the widely held view that there is too much metrocentricity in this government."

Sir Michael told the audience that he was struck by interesting statistics concerning the geographic location of civil servants in Britain, in particular the fact that some 60 per cent of non-departmental public bodies were based in London. "You couldn't justify this on any other basis than the belief that you have to be in London to make a difference," he said.

However he was at pains to stress that he doesn't view London as anything less than a world class city. "It is a precious resource for us as a nation," he said. "It is the right location for a whole series of public and private activities that otherwise would be taking place in Paris, Frankfurt or New York. All the more reason then not to do things in London that you could perfectly well do elsewhere in the UK. After all there are much higher labour and office costs in London."

Sir Michael said that the cost advantages alone represented an open and shut case for moving those things which could be done elsewhere.

"Since 1973 the civil service in London has grown by 60 per cent," he said. "But even more staggeringly, at a time when very few private sector organisations would regard London, with its labour costs, as a serious place to run a call centre, the government had originally located a quarter of its call centres there. This tells us a lot about the myopia of planning as clearly there is no sensible cost basis for a decision like that."

He went on to reveal that one of the big issues he was interested in was the claim that senior civil servants need to be close to their ministers and, after some consideration, he accepted the case for this.

"Ministers need to be close to parliament and so the notion that we could move headquarters lock, stock and barrel around the country really wasn't very credible," he said. "But the notion that a department of 4,000 people were all joined at the hip and absolutely essential to the policy process in Whitehall was equally implausible."

Lyons was keen to cite the experiences of previous attempts to move civil servants out of London. "My report was based on lessons from previous relocations and this is always the best way of understanding an issue," he said.

"There was clear evidence of at least 20 to 30 per cent cost savings. Looking at the move of the Patent Office to Newport, they didn't anticipate that the biggest saving would come from the reduction in staff training.

"The history of relocation is that it gets bound up in a bigger debate about trying to get people to move who don't want to move.

"One of the big changes over the past 20 years is that we've realised that we owe it to ourselves as taxpayers to put the welfare issues second in line after the efficiency of the business."

"I was also clear that this isn't just about moving people - it is also about changing working practices," he said. "This includes using space better and stopping the presumption that the only way to get people together is getting them on the train to come back to London - a bizarre notion indeed."

Sir Michael went on to mention the lessons learned from the September 11 attacks.

"As I was writing the report, some increasing literature was beginning to emerge about what the financial services industry had lost and learned from the dreadful experience of the twin towers," he recalled.

"Financial companies who were had been based there found themselves incapacitated because they had to reconstruct their intelligence base. They are now committed to ‘multiple life systems' where they have more than one location for their business.

"There is a big lesson here for governments across the world – particularly those which are highly concentrated – like we are in Britain around that little Whitehall village.

"One government department's emergency plan consisted of placing 50 workstations the other side of Lambeth Bridge. This is ok as long as it is a very concentrated attack."

In his final remarks, Sir Michael looked at the changes that have occurred since the publication of his report.

"One of the most important changes was the Treasury's decision to bring in tighter lease holding controls," he said.

"We've only just seen the impact that this is going to have on forcing departments to think much more seriously about why they are paying London rental levels when it is possible to achieve extensive cost savings elsewhere."

Sir Michael also conceded that many of the moves have happened in relatively small numbers and said that this was partly because his review had coincided with Sir Peter Gershon's review of government efficiency.

"People have been thinking through how they can take the savings and efficiency gains from relocation and at the same time they have had to reduce their headcount," he said.

"This means relocations haven't been very visible and this has led to some frustration - most notably in the property industry. They thought that we would have a whole set of brand new towers outside of London and the South East filled with civil servants but this hasn't been the case."

Nevertheless, Sir Michael concluded by insisting that there is now even more of a need to push the relocation plans through. "London costs have continued to increase. If we did this report now there would be an even stronger case for moves," he said.