‘Stop’ is working, but what about the ‘Go’?

Capita Symonds was sponsor of Movers & Shakers’ Public Property breakfast event at The Dorchester, London on 21 October.

Over 400 attendees sat in The Dorchester’s Ballroom to listen to a keynote opening address by Francis Maude – Minister for the Cabinet Office and Paymaster General, followed by a debate chaired by Giles Barrie – Editor, Property Week and featuring Neil Warsop – Chief Operating Officer, Government Property Unit, Shareholder Executive; Cllr Sir Merrick Cockell – Chairman, Local Government Association; Francis Salway – Group Chief Executive, Land Securities; and Jonathan Goring – Managing Director, Capita Symonds.

Francis Maude gave his thoughts on central government property, and how its estate can contribute to the twofold challenges of dealing with the deficit, and at the same time promoting growth.

The public sector estate is, he conceded, too dispersed, in the wrong location, of poor grade and badly occupied in terms of utilisation of space. There is also currently too much of its estate under lease rather than freehold occupation.

The solutions to these issues, he outlined, are relocation, co-location and the better use of space – freeing up surplus property for redevelopment. A moratorium on the renewal of any new leases (the so-called ‘Stop’ element of the government’s current strategy) is also focussed on increasing the amount of freehold property being utilised.

Maude also emphasised that the government approach was not only about saving money, and that ‘thinking differently about how we use property’ was also paramount – including the encouraging of hot-desking and more flexible working practices across departments.

Housebuilding was also a priority, he said, to meet current demand. Central government departments are looking at ways to make available surplus land for development - with the Ministries of Defence, Health, Transport and DEFRA already publishing their plans to make available land for a further 50,000 homes - and an extension to the ‘Build Now, Pay Later’ scheme.

In the debate that followed, Property Week Editor Giles Barrie questioned the panel on the government’s property challenge – and how the Government Property Unit (GPU) was faring so far.

Francis Salway (Land Securities) felt that by not renewing leases, the GPU was “doing what its said it would do”, however he conceded that this does present problems for property owners in the private sector. He pointed out however that many of these vacated buildings are now ripe for a change of use, with many being redeveloped for residential use.

Jonathan Goring (Capita Symonds) urged the need for central government to ‘know what it owns’ and the need for a more comprehensive database of its assets so that the opportunities for co-location, alignment to departments and leakage are fully addressed; Neil Warsop (GPU) admitted that the GPU still had some work to do in gathering this information across its estate.

Goring also challenged the private sector to “prove it can be responsible” in supporting the public sector with its property challenges, and pointed to the good examples of best practice that already exist.

While the ‘Stop’ agenda was clearly working, and generating savings, Warsop conceded that the ‘Go’ agenda – of closer working across government departments, the better utilisation of space, and the availability of surplus land for redevelopment – was still ‘a challenge’, and one that he encouraged the private sector to engage with the GPU to help address.

Giving the audience an insight into how local government was addressing its own public sector property challenges, Sir Merrick Cockell (LGA) outlined how Councils needed to be more commercial in the use of their property and how many of their challenges – in regions across the UK – were not currently a focus for central government, which is focussed on getting its own house in order.

The event was an engaging and well-informed discussion on the ongoing property challenge from a panel representing all parties that have a role to play if the rationalisation of the public estate is to play a key role in the Government’s deficit programme. As chair Giles Barrie concluded, the scale of the challenge is such that ‘there are opportunities for everyone’ to benefit from getting it right.

Capita Symonds is lead sponsor of UBM’s Public Property Summit on 02 November 2011 at the Business Design Centre, London.

Property efficiency? This time it's for real

Mark Norris, Executive Director, Capita Symonds comments on the Local Government Chronicle (LGC) / Capita Symonds survey on public sector estates rationalisation.

"The results of today’s LGC/Capita Symonds survey are fascinating. Although the progress is limited, there is clearly a serious drive from local authority chief executives to unlock the savings available from their property estates and services. More importantly, there is also a greater willingness to work with the private sector in developing new property solutions in innovative partnerships.

Our survey shows that the top three issues in terms of property are serious ones: that buildings are not suited to modern service delivery, they are costly to maintain and cannot meet sustainability targets.

Surprisingly, given the unprecedented level of public sector debt, more than half of respondents indicated that their estate remained largely unchanged from that analysed in the most recent Audit Commission report on local authority property in 2009.

There also appears to be a mismatch in the available resources for the rationalisation of property portfolios (approximately 70% of chiefs indicated that the required strategies, finance, and expertise exist in-house) and the progress made to date.

Nevertheless, the tightening of central government funding has undoubtedly brought the capital that is tied up in local authority assets into sharp relief. For example, 84% of respondents said estate rationalisation was vital, and all respondents were looking to find ways of reducing the operational cost of the estate.
But how can efficiencies be realised? Most chiefs indicated that the key lies in relocating out of redundant space and consolidating into modern and efficient property while introducing new ways of working (with potential savings of up to 40%). As a result, a willingness to ‘de-silo-ise’ historically separate organisations is increasing – 73% of local authority respondents indicated that public service convergence and co-location was on their immediate agenda.

The survey also reiterates that effective estates rationalisation using new delivery models is key – stand-alone sale and leaseback of assets by local authorities is not considered a viable solution under the current local government funding regime, whereas the release and sale of surplus nonoperational assets in combination with property services outsourcing certainly is.
Overall, it looks as though, after umpteen reports on public sector property efficiency, this time it’s for real."
This survey was carried out by LGC and was commissioned and sponsored by Capita Symonds. The report on the results was independently written by LGC and published on 08 July 2010. Visit the LGC website here.