For perhaps the first time in a generation, the UK public sector faces the need to make fundamental cuts in spending that cannot be achieved by making marginal economies and postponing projects. It is increasingly acknowledged that both the extent of public services and the way in which these services are delivered may require radical change.

Understandably, the Chancellor of the Exchequer has identified the public sector’s £100bn property portfolio as an opportunity both to raise cash and to cut spending. The government’s Operational Efficiency Programme (OEP) recently identified early potential cost savings of £1.5bn a year, and estimated that property worth £20bn could be released over the next ten years.

In theory, such dramatic savings are possible. Many excellent examples of property-related innovation and best practice exist in the public sector, with demonstrable successes from previous initiatives. But the scale of the OEP’s ambition requires a whole new level of property efficiency across the full breadth of the public sector. This is likely to be driven by greater levels of occupancy of every building asset, enabled by increasingly flexible ways of working and supported by technologies that will improve flexibility and efficiency.

One legacy of the public sector’s property portfolio is, however, that individual arms of the state typically occupy their own portfolio of properties, with each portfolio having its own inherent degree of inefficiency and under-occupancy. Cross-departmental sharing remains unusual.

The OEP report clearly targets the opportunities that lie in encouraging public bodies to better co-locate, increasing the efficient use and occupancy of properties and releasing surplus space for disposal. However, a rush to cut immediate costs in this way also presents risks. Merely packing more people into fewer buildings is unlikely to provide the cost revolution that circumstances demand. Such an approach would be likely to cause resentment among staff, and would miss the bigger prize that efficient workplaces could bring to the performance of government.

A more radical and ‘enterprise-level’ approach is required, in which we consider public sector operations in the round. Rather than chasing property efficiencies through the ways in which individual public bodies occupy their own portfolios, the OEP challenge will hopefully encourage government – encompassing departments, agencies, local authorities and other providers of public services – to think radically about the more ‘holistic’ delivery of public services through a better integrated property portfolio.

A number of critical drivers will need to be in place in order to achieve this goal.

• Firstly, government bodies need to be incentivised to think and act at an ‘enterprise’ level, potentially including all departments and public bodies, rather than in departmental silos.

• Secondly, they need to start with people and processes, looking at the what, how and by whom processes are being undertaken in their buildings, and not with where these are currently undertaken.

• Next, they need to assess – and then seek to combine – their property requirements, based on the type of processes being undertaken and the geographical presence required for the delivery of these services. This could create a public service-level property requirement that combines similar processes and similar geographic requirements. Think of the ‘shared services’ model increasingly used in the public sector.

• Equally, the value and quality of local public    service delivery can be enhanced by creating cross-departmental regional hubs that are operationally efficient, yet still local to their customer.

• Finally, managers will need to address the two fundamental success criteria of any property transformation: namely, people and IT.

The efficient workplace must accurately support the valued human resources that deliver a service, with both an appropriate physical built environment and the technology and systems required for them to best fulfil that role. Crucially, building decisions need to first and foremost consider the human element, as it is these occupants who will drive the success of the enterprise. And modern networked IT solutions and telephony are making the physical building just one component of the modern workplace.

The best practice examples in both the private and public sectors invest in property and IT in a holistic way, considering both to be equally important in delivering the optimal ‘workplace’. They strip out cost inefficiencies and, more importantly, enhance the effectiveness of staff, including those marginalised by legacy working practices.

For the public sector, the attractions of working this way are obvious – starting with the basic business case for only paying for accommodation for the actual number of staff on site at any given time. And this is before taking into account the synergies of using this consolidation of processes to drive other efficiencies and benefits.

A future landscape starts to appear in which public services are delivered through concentrated “hub and spoke” estate models, with common processes concentrated into highly efficient and tailored locations and facilities, and any additional geographic presence similarly tailored.

Combined with a flexible working strategy that locates, equips and supports public workers to most effectively do their work where those services are best delivered, these new workplace models can be empowering, perhaps reducing the cultural differences that may exist today between field- and office-based workers and between full- and part-timers. This approach can prove especially beneficial for those whose working practices are shaped by family responsibilities or illness and disability, because they require flexibility at short notice and the ability to work any time, anywhere. Decoupling public sector staff from their desks can also improve the quality and accessibility of public services.

Security is often cited as a reason to limit the sharing of office space, yet mobile and flexible working need not compromise security – quite the opposite. The way we work currently involves sensitive information being placed on multiple mobile devices, but technology also provides the means to secure data.

Technology-enabled workplace innovation must be planned from the outset with people, IT and property equally in mind. This level of change – not to mention the necessary capital investment to transform a legacy public sector portfolio – will appear daunting. However, it is the unavoidable first step to making the ambitious transformation that the OEP efficiency targets require.

The government should recognise that it is looking at a long-term process. Wholesale workplace transformation can take many years to realise its full benefits; against this measure, the timeframe in the OEP is challenging. And there will always be ample reasons to postpone action, not least the fear of political backlash over building closures. However, the gauntlet has been thrown down by the OEP. Managers will need a steady nerve and the freedom to look beyond the immediate financial cycle to rise to the challenge. Property savings may need to be recycled into investment in new properties and workplace technology, which in turn will realise more property savings. The disappointing alternative is to remain with a large, inefficient and expensive property cost base that fails to provide the public sector with the opportunities and freedoms that new working practices in a fully technology-enabled workplace can potentially provide.

Martin Laws is lead consulting partner in Deloitte’s real estate solutions practice