Six years after the relocation agenda was launched, more than 20,000 civil servants have left the Greater South-East for the North or West. Giles Barrie discovers that their colleagues are unlikely to follow them any time soon.
For years, senior civil servants have worked to shift government jobs and activity out of the Greater South-East. Pursuing the agenda set out in a 2004 report for government by Sir Michael Lyons, agencies – and even some departmental functions – have gone out to the North and West in an attempt to boost regional economies and take the pressure off Greater London’s creaking infrastructure. But the relocation agenda has shifted under the new government, whose leaders have expressed support for the previous policy only in the broadest of terms. The question now seems to be not where government operations should move to, but whether they should move out of London at all.
Until the election, cost was only one of the considerations driving relocation: the dispersal of central government could deliver a less London-centric state, it was argued, contributing to devolution. The arrival of public service jobs in smart new offices would anchor regeneration schemes in areas where the private sector was still resisting investment. In the context of a policy of investing in regeneration – and then one of a Keynesian boost to spending to tackle the recession – no-one batted an eyelid at the expense of the relocation process.
New government, new agenda – though perhaps the agenda was already shifting under Labour, the turning point being the creation of the Shareholder Executive’s property unit under John McCready. The language used now to discuss reform of the public sector estate revolves almost entirely around cost savings. Yes, decentralisation is important to this government; but it wants to see a smaller state, not just a more dispersed one. And the regeneration argument has much less force when, for many deprived areas, the most acute worry now is public sector redundancies.
With cost savings placed at the heart of decision-making, relocating to another city starts to look much less attractive. Aside from the cost of fitting out new offices and physically moving files and equipment, there are the personnel costs: the relocation packages for those who follow their jobs, and the redundancy packages for those who don’t. We no longer have generous regional development agencies, laden with grants to ‘facilitate’ a move. In the light of this, we have to ask whether it is still viable for central government functions to leave London.
At the time of writing, we are yet to see the Shareholder Executive’s strategy for reforming the public property estate. Announcements on an overall strategy, and of flagship Whitehall projects, are imminent and, at the latest, we will start to get a clear sense of the approach when John McCready addresses the sector at the start of November. In the meantime, the clearest signals on the government’s current direction lie within Sir Philip Green’s efficiency review for the Cabinet Office. We must assume that Cabinet Office minister Francis Maude would not allow the efficiency review and the Shareholder Executive’s property unit, which also reports to him, to head off in different directions – and, given that, Green’s recommendations appear to indicate a change of direction on relocation.
Green’s ‘Key Findings and Recommendations’, released on 11 October, contain no recommendations on relocation. On the contrary, they pillory two departments that failed to move within London when opportunities arose, and criticise an agency that moved to the Midlands without enough flexibility. They also flag up the public sector’s huge bill for London hotels – presumably used largely by those visiting from elsewhere in the country.
If this is the new policy direction, then we must ask a new set of questions. Might moving Whitehall functions to locations in or close to London produce greater savings than moving further afield? And what, if anything, can locations outside the South-East do to entice departments and alleviate the costs of moving?
“What would I look for in a location?” asks James Grierson, head of the public sector team at property consultancy DTZ. “I would want lower property costs; plenty of suitable stock; and established civil service employers. I would be looking over a short radius from the current location, so as not to trigger standard redundancy clauses in employment contracts; even if that clause says 20 miles, then options are limited. And I would expect pressure to use surplus space in freehold government buildings.”
The government and infrastructure team of rival property consultancy CBRE backs the idea of moving out of central London. “Significant savings can definitely be achieved by moving government departments out of very expensive central London space,” says senior director Rob Oldham, “but it has to be done as part of an end-to-end solution. That is, it is no good relocating departments, while still retaining the original space and hoping to sub-let it.
“The key issue is to relocate out of central London,” he continues, adding that occupation costs are broadly similar whether organisations move to the South-East or the North-East. “Given that, it makes more sense to relocate within the South-East, because of its proximity to the heart of government in Westminster, and to reduce the potential relocation costs. Where it is an option, government should still take the opportunity to support other policy aims, such as regeneration, through their choice of location.”
Simon Sokel, director at public sector development partnership Helical Governetz, shares some of Oldham’s scepticism over the prospects for long-range relocations. “It’s fair to say that we’re not going to see many relocations from central London to outside the South-East, although moves to East London are very likely,” he says. “That said, not all those departments and functions based outside the South-East are operating efficiently. There are real savings to be made in relocating some of those. They need not be committed to single, large buildings. They can achieve long-term flexibility by choosing campus-style developments with a good range of units and occupying as many of those as they need at any one time.” Ideally, says Sokel, public agencies should “share facilities in a hub of public sector bodies”.
For agencies looking for cheaper properties within striking distance of central London, East London and the Thames Gateway are the obvious choices. But there’s plenty of competition: Basingstoke, for example, is actively pursuing government relocations. And cities outside the South-East are still chasing civil service jobs: Manchester City Council’s chief executive, Sir Howard Bernstein, notes that “Partnership arrangements have been agreed to ensure this process of [relocations] can continue at a pace which is consistent with the outcomes of the wider government review of its property costs over the coming months.” Manchester’s planned civil service hub at the former Mayfield station, however, will require public investment if it’s to get off the ground.
The suspicion must be that a process that took off with the Lyons report in 2004 will now finally hit the buffers. “Resistance to long-distance relocation is mainly a matter of costs,” says Grierson. “There’s little to be gained from cheaper labour markets, because of national pay agreements. You might halve your accommodation costs to as low as £4,000 per head per year, but that’s never going to cover the costs of resettlements and redundancies – and that remains true even if the government succeeds in halving public sector redundancy packages. The other perceived problem is that senior managers become split between two or more sets of responsibilities, hundreds of miles apart.”
“Is there any help available with those costs? Some developers are offering extraordinarily generous terms to potential occupiers to move to areas where demand is weak,” he adds. “Some local authorities might hint at political support for new developments. In practice, though, few departments are going to find themselves in shiny new buildings.”
“If we’re honest,” Grierson concludes, “relocation is a sideshow compared to the big, boring job of using existing space more efficiently.”