Management of public sector estates is undergoing a thorough review as cuts bite, writes James Dean
Strolling southwards from Nelson’s Column, the city rambler passes a hotchpotch of buildings forged by more than three centuries of history. In five minutes, the walker has split the heart of British government, passing the Ministry of Defence, the Foreign Office and HM Revenue & Customs, before reaching Parliament Square.
These grand old shrines to bureaucracy have not been insulated from modern problems. As a dearth of property continued to force up the cost of living and working space in Britain, and as the economy stuttered after the financial crisis, the cuts came.
In his 2010 Spending Review, Chancellor George Osborne told government departments to reduce their running costs by at least 33 per cent, to bring savings of £6 billion. “The cuts present major risks and challenges for Whitehall,” the Institute for Government, the influential think tank, says in a report, “but also an opportunity to address deep-rooted weaknesses and, potentially, to emerge more capable and effective in future.” These cuts are helping to reshape the way the public sector manages its estates.
The Government Property Unit (GPU) was set up in 2010 with the vision of creating “an efficient, fit-for-purpose and sustainable estate that delivers value for money, and facilitates flexible working”. The unit must put into action the Chancellor’s national property controls, which include a moratorium on new leases. The National Audit Office estimates that through the GPU, the government saved £212 million over the 20 months to December 2012. A further £830 million of savings are being touted.
Two years after the spending cuts were announced, consultants Deloitte interviewed senior figures in government estates management and private sector contractors. Based on these interviews, Deloitte recommended five changes that would bring better public sector estates management: building a respected asset management profession within an organisation; joining up estate management with other corporate services; effectively interacting with private sector providers; collecting a better standard of data in order to enable the effective use of analytics tools; and building a collaborative strategy between the top tiers of public bodies.
The BBC appears to be going down this route, as does the National Health Service. Like the GPU, the NHS has centralised the management of its estates to a new unit, NHS Property Services, which is charged with cataloguing the health estate and rationalising it. In April, Primary Care Trusts were abolished and NHS Property Services took over all their property. This created one of the largest centrally-managed property portfolios in Europe, with 4,000 assets from hospitals to countryside GP practices, valued collectively at around £3 billion.
The unit has already warned GPs that the rents on their surgeries will be raised to bring them into line with the rest of the market. But Greg Stringer, head of communications, north, for NHS Property Services, points out: “While it is true that some GPs have not been paying the market rate for rent and services, they will be billed this year on the same basis they were last year. In other words, there will be no immediate, dramatic increase in bills.”
Last month NHS Property Services instructed Assura, a private healthcare property company, to build a £10-million community health centre in Sudbury, Suffolk, to replace two local hospitals.
“The single biggest challenge for individual bodies will be to get the best from private sector partners,” Deloitte suggests. “Both sides may need to accept that in future the ‘pain’ and the ‘gain’ sides of complex deals may have to be shared more evenly.”
Regardless of future challenges, it appears that the active, centralised management of public sector estates, favouring greater interaction with the private sector, is becoming the norm.