NAO calls for 'stock take' of government property plans

Spending watchdog finds departments are getting better value for money from their estates, but warns plans to share and centrally manage property are not making headway

By Suzannah.Brecknell

26 Apr 2017

Government departments now pay less for their office accommodation than private sector counterparts, according to a report from the National Audit Office, but the watchdog is concerned that plans to further streamline government property are not making progress.

A report examining progress against the government’s estate strategy found that departments have made “good progress” on reducing the overall size of the central estate since 2012, supported by the Cabinet Office’s Government Property Unit (GPU).

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However, the report also warns that the GPU is “significantly understaffed”, and has not made a sufficiently strong case either for its strategic hubs programme or for plans to centralise property management through the New Property Model.

The hubs programme aims to move most civil servants into between 18 and 22 shared property hubs across the country by 2023. It is hoped this will save £640m over ten years.

Initially, the hubs were expected to be a single large building in which departments would co-locate, but the NAO found the GPU is now planning to follow a “campus approach”, using several buildings at each site, so that there is more flexibility over timings of office moves.

The programme could well be set for delays, the report suggested, with one hub already expected to be completed after 2023. Only seven business cases have been prepared, with the other 11 to 15 hubs still at “an early stage of planning”.

The New Property Model will see most government property centrally owned and managed by a soon-to-be launched Government Property Agency which will charge departments market rates for using the property, but refund them if they meet key targets.

Amyas Morse, head of the National Audit Office, said: “Departments have continued to reduce their estates, and government is now getting better value for money. The Government Property Unit, however, still needs to make more headway to achieve a shared, flexible and integrated estate.

“It’s not going to be plain sailing. The GPU should take stock and, if necessary, delay, redesign or consider phasing its programmes over a longer timescale.”

Government estates covered 8 million square metres in March 2016 – 17% smaller than in March 2012, and running costs fell by 23% over the same period.

The watchdog found that government departments now pay less per square metre and per head than private sector comparators, and it attributed this progress in part to the work of the GPU.

The unit “created the right environment through setting targets, facilitating deals between departments and operating central spending controls on new or renewed leases”, the report said.

However, the NAO also raised concerns about capability in the GPU, and highlighted it is using consultants and fast-streamers to fill gaps. However, this “risks its ability to deliver the major programmes.”

Although all 15 departments interviewed by the NAO said they agreed with the GPU’s vision, eight did not think the unit had sufficient commercial or estates management expertise.

The report also criticised the business cases for both of the GPU’s cross-government programmes.

Having looked at the business cases for seven individual hubs, the NAO concludes there is “much uncertainty about whether the expected savings in the GPU’s outline business case will be achieved in full.”

It added that the “business case for centralizing management and ownership of the non-hub estate is not yet convincing, and most of the claimed benefits could be secured by other means".

The report also noted similarities between the plans to centralise property management and other recent attempts to build shared services, which “failed because too many stakeholders saw it as against their interests to make them work”.

Although some departments have formed clusters to share estates management teams, only five departments have formally committed to the hubs plan. Six told the NAO that the hubs timetable “was not well aligned with their needs” – for example in cases where the lease would run out on a department building before the new hub was ready to be occupied.

The NAO gave the GPU a red rating in four of seven areas that it believes are required to implement shared services – a solid business case, clear operational plan, good collaboration and strong benefits management plan.

The GPU should therefore consider adopting “a more gradual approach to centralised management”, the report concludes, taking over control of hubs and mini-hubs as they are set up. It should also work to improve engagement with departments, fill skills gaps with staff loaned from departments where necessary, and work with departments to improve the quality of data about estates. 

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