Saving money is very much on the agenda of people across government – and, indeed, the wider public sector. Fresh from the efficiency drive kicked off by Sir Peter Gershon’s review, officials are now gearing themselves up for a far tighter squeeze on finances in the years of austerity ahead.

In April, the Treasury published its five-stranded efficiency review of government systems and processes: the operational efficiency programme. Among these strands was the examination of potential efficiencies in government property undertaken by Lord Carter of Coles, a Labour peer, and his findings are likely to shape the agenda in the years to come. To discuss Coles’ recommendations, and the broader issues affecting property efficiency Civil Service World, in association with outsourcing company Capita, convened a discussion with a range of experts from across government.

Lord Carter’s review team was represented at the event by Simon Roberts, a commercial property consultant who worked on the report. And his main concern is that, although there are pockets of good practice in government, not enough people take the issue of property use seriously.

“We are really trying to drive everybody towards the top end of best practice,” Roberts said, “which is a pretty easy aspiration, but I think will be very difficult to achieve.” Among its recommendations, the report calls for the setting-up of a central property unit to coordinate estates policy and encourage ‘rationalisation’ – increased sharing of office space – plus greater efforts to sell off excess property. The creation of such a central unit is important, Roberts said, because responsibility for estates management is currently widely diffused and complicated. “We gave up trying to work out how many silos government property is held in, but it’s something in excess of 1,000,” he commented.

Achieving clarity

This does create a coherence problem, agreed Mike Burt, who leads the government estates team at the Office of Government Commerce – probably the nearest thing to a central property unit that currently exists. Burt said that, although his team has made progress in pushing the agenda within central government, there is still a lack of coordination and collaboration with some public bodies – local authorities in particular. Sean Lewis, head of defence estates in the South-West at the Ministry of Defence (MoD) echoed widespread frustration at the diffusion of responsibilities. Lewis said that MoD has five different “regional prime contracts” to manage estates within the UK, and another one for overseas property. “We just did a coherency study [to examine] doing things in a national way – for example, on asbestos – but it’s going to cost so much money to try and streamline everyone into using the same approach.”

One of the major stumbling blocks in achieving clarity in property strategy within one department – let alone across the entirety of government – is the difficulty of getting reliable data. The operational efficiency review estimates that the entire UK public sector estate has running costs of £25bn annually, but Simon Roberts said that the poor quality of the available data means that this is merely a best guess. Another panellist, Andy Holdsworth, agreed; he has encountered similar problems. Holdsworth is head of central government services at DVS: the commercial property arm of the Valuation Office Agency, which values property for government. But his team, he said, is currently finding it extremely difficult to calculate a market value for the entire government estate.

All participants agreed that both government and the wider public sector need much improved data if we are to improve efficiency through sharing office space, selling unnecessary assets and refitting existing properties. Neil McLocklin, head of business transformation at Capita’s property subsidiary, Capita Symonds, said that as well as improving efficiency, sharing space with different agencies and public bodies also encourages staff to collaborate and work creatively with each other. “The sharing [of office space] isn’t the real gain; often it’s the collaboration that goes on through sharing – for example, in multi-agency working in the local authority sector,” he commented.

Peter Jones, assistant director of property disposal at Birmingham City Council, agreed that sharing of space between central departments, public bodies and local government can improve services – but only given clear, transparent information on the quality and availability of space. “We have got to start doing strategic planning across different parts of the public sector, and without decent data we are never, ever going to be able to do that,” he said.

Mike Burt noted that his OGC team has had some success in collating a database on central government property – with information on buildings’ space, energy efficiency and lease status – but agreed that this should be extended to cover the larger public sector.

Changing workplaces

The Carter Review recommends a 30 per cent reduction in central government’s office accommodation, with average space per person going down from 14 to 10 square metres, and more desk-sharing and mobile or home-working. Burt, who has been selling the benefits of such changes for some time, said he prefers to characterise it as “workforce transformation” rather than simple property reduction. “I think we’ve moved from the concept of work being a place where you have to go and be at your desk, to work being something you can do anywhere,” he said. He pointed to the Department for Children, Schools and Families’ (DCSF’s) Sanctuary Buildings as an example of an efficient space that has had a positive effect on staff productivity. Birmingham’s Peter Jones told a similar story, saying he had piloted a flexible working environment within his own estates team: “We are now getting people from across the council sneaking in there to use the IT system and to work in the place because they think it’s so good.”

But making the necessary transition to more flexible working involves overhauling other back office functions. Burt said that property, IT and human resources professionals need to coordinate to help achieve more efficient workspaces. Illustrating the current barriers, Andy Holdsworth related the story of a local government official who had wanted authorisation to work from home and was presented by his HR department with a 42-page form to complete. “No-one’s going to want to go to home-working if they’ve got to do that,” he smiled. Richard Jenden, interim head of estates at the Department for Environment, Food and Rural Affairs (Defra), said that employees should be able to log into their own server from any government. Holdsworth agreed. “If you have the ability to move in and work on a broadband connection rather than needing your own corporate IT network, that certainly changes the ability to share space,” he said.

Speaking up on behalf of the operational efficiency study, Simon Roberts said that two of the other review strands– Martin Read’s on back office functions and Martin Jay’s on collaborative procurement – are directly linked to his group’s work on property efficiency, and this will have to be reflected when the recommendations are implemented. Those reviews called for improvements in data and better strategic management. The areas of common interest are obvious, with back office and IT upgrades facilitating property savings, and the potential for collaborative procurement of facilities-management services. “I think there will be a debate and then some design work on what is the right mix for implementation,” Roberts said.

However the plans are implemented, another major hurdle will be opposition by both individuals and organisations resistant to this brave new world of desk-sharing and property efficiency. Richard Jenden said that Defra is overhauling its estates, including changes to workplaces, as part of a “business transformation” strategy – but revealed that many arms-length bodies have been “kicking and fighting” against the agenda. He noted that Defra does not allow arms-length bodies or agencies to keep the money saved through reducing estates costs, despite their complaints: “A lot of them are saying: ‘What about incentivisation to give up property?’ The answer [to the bodies] is they’re reducing their carbon footprint and can score against those targets, but they can’t have the money back.”

However, Simon Roberts later argued that we do need to introduce “real incentives” for organisations to achieve property efficiency savings. He said that savings of 15 or 20 per cent have in the past been followed by demands that bodies make the same levels of savings all over again. “What’s the incentive for best practice?” he asked. “Until there’s better data, better understanding and targeting and real incentives, why would you be a leader [in this field]? You get penalised.” Burt commented that the biggest incentive should be the tough financial climate being faced by government, but added that there is a debate to be had on whether departments should be allowed to force arms-length bodies to return savings to a central pot, thereby removing an obvious carrot for better performance.

Market blues

The current financial climate will also stymie government’s ability to sell off property simply because, as Roberts put it, for much of the estate “there is no market”. The report states it may take a decade before significant sums can be generated through asset disposal, he noted: “You need good data, you need some property strategies so that you release the right assets – be they leasehold or freehold – and so realistically it will be four years with a good wind behind you; so five to ten seemed like a good punt.”

The depressed market doesn’t just mean a lack of sales, Holdsworth pointed out; it also means less leasing and revenue from property generally, meaning less capital is available to departments to invest in more efficient buildings – be they refurbished or new. “With property values going down – commercial property down probably 40 per cent, land values probably halved from their peak – it’s difficult to recycle capital,” Holdsworth said. “That’s something we can’t do anything about.”

While those who work in government estates wait to see if the market picks up, they also wait to see exactly how the operational efficiency programme is implemented – and particularly whether and how the central property function mooted in Carter’s report will emerge. “People are waiting to see which department it’s going to be placed in; who’s going to lead it; what its remit is going to be,” said Holdsworth. Burt said that OGC will continue its work on encouraging efficiency in the central government estate, but will want to see clarity on the exact role of the new unit and how that would “interact” with his own team. Crucial to the success of these efforts, Roberts suggested, will be whether the Treasury – which he said has failed in the past to understand property – is fully committed to incentivising organisations, possibly by allowing them to keep savings made. “There has to be buy-in from them to allow a lot of this to happen; they need to be willing to change the goalposts a bit,” agreed Kay Wood, head of finance and programme governance at the National Offender Management System.

The Carter report is likely to push property management up the corporate agenda. But, speaking from experience, Mike Burt said that getting departmental board members to take property seriously is difficult; bosses need to see it as a fundamental part of service delivery, he argued. Birmingham’s Peter Jones agreed, and pointed out that large estates do not necessarily help public organisations to help their citizens. “I like the notion of property being a means to an end – in our case, delivering a service to the citizens of Birmingham,” he said. “Holding property, while it keeps us all in a job, should not be the end result."


Property priorities: wishes and challenges

Mike Burt, director, government estate transformation, Office of Government Commerce: “I think the biggest challenge for me is the emerging stronger role of the centre against departmental delegation. There are some really interesting creative tensions there.”

Nerys Evans, head of facilities and office services, National Assembly for Wales: “Achieving efficiencies while also maintaining services and the value of our assets in the longer term.”

Andy Holdsworth, head of central government services, DVS, Valuation Office Agency: “I think the big challenge is the sheer complexity currently in the public sector. For example, in London alone we’ve got 70 NHS bodies, about 30 councils – trying to grapple with that is the single biggest problem.”

Richard Jenden, interim director of Defra estates, Department for the Environment, Food & Rural Affairs: “We should get full recognition of what has been achieved. Probably one of the biggest disincentives for me is that having delivered X already, we are asked to deliver Y and then A, B and C on top without any recognition [of what] has been achieved already.”

Sean Lewis, defence estates south west,Ministry of Defence: “Having had fragmentation, a move towards some sort of centre of excellence that can guide everybody would be a really good step forward.”

Neil McLocklin, director, business transformation and innovation, Capita Symonds: “Property has a really significant role to play and if we could get that recognition at the highest level in government, that would be fantastic.”

Murray Quinney, head of estates, Department for Communities & Local Government: “I welcome the increasing role of the centre, but I hope we don’t throw the baby out with the bathwater. Government office accommodation has improved in quality, and that in part has been driven by giving organisations the freedom to select the right property and attract the right staff to service their customers in the right way.”

Simon Roberts, consultant, Operational Efficiency Programme: “We need some decent data, so that one can split financing between things that should be done on a three-year cycle – frontline service spending – and back office costs. You can’t make property efficient on a three-year [spending] cycle.”

Kay Wood, head of finance and programme governance, National Offender Management System: “Having a bit more of a concrete plan, so we can work out a strategy going forward.”

Also at the roundtable:
Peter Jones, assistant director, property disposal and acquisitions, Birmingham City Council
Patrick Smith, market director, Capita