New civil service offices will be 25% smaller than originally planned in the next waves of the government’s hubs programme because of lower occupancy rates following the coronavirus pandemic, MPs have been told.
Government Property Agency chief executive Steven Boyd said the first phase of the hubs programme – led by HM Revenue and Customs – had been based on two-thirds of staff being present at their assigned workplace on any given work day.
But at a Public Accounts Committee session probing the government’s handling of its property portfolio this morning, Boyd said benchmark occupancy levels were now 50% and may well be reduced further.
“An awful lot of research was taken in deciding how to build and design those buildings with soundings taken across the private sector to get good solutions, particularly focusing on inclusive environments and productive space for all the civil servants using those environments,” Boyd said of the first phase of the hubs programme.
“Many of those things have turned out to be very well delivered and effective. But the change in working patterns following the Covid pandemic has meant there are less people regularly working from the office than there were before and so we now know that those buildings are rather larger than they originally needed to be.
“In respect of phase two, we’ve changed our plans. We’re assuming that hubs delivered in phase two will be 25% smaller than they would have been if we were making the plan pre-Covid to take account of those changed working patterns.”
Boyd acknowledged that there is space in the phase-one hubs that is not required by HMRC that is now being made available to other departments. He cited Queen Elizabeth House in Edinburgh as one example, where staff from 16 departments are now based.
He said the pre-Covid assumption that two-thirds of staff would need to be accommodated at their principal workplace was in line with private-sector levels.
“We’ve seen a change in working patterns,” he said. “The private sector is also seeing a change in working patterns. I don’t think we have yet got to a point where that has settled out. But it’s clearer than it was before.
“We’ve now made an assumption that there will now be half, rather than two-thirds, on any given day, and that’s a reduction of 16 percentage points.”
Boyd said it is the role of departments, rather than the GPA, to determine what the right level of office attendance is.
“Currently 50% seems to be right in some places, and in other places it seems to be possibly too high,” he said. “If that was a trend that continued for a while, we’d have to make some changes there.”
Boyd added that offices in Whitehall seem to have a higher level of attendance than in the regions.
Boyd told MPs that the GPA has rolled out a monitoring system related to GovPass security passes that is providing it with real-time data on office occupancy in 24 government buildings, in conjunction with wi-fi monitoring.
He said the system is expected to cover 60 government buildings by the end of the current financial year.
Boyd faced repeated questioning from MPs over the nature of the leases agreed for the hubs programme so far, and particularly how many of them were 25-year-agreements with no break clause.
PAC member Sir Geoffrey Clifton-Brown said he is aware of at least one such lease agreement, but asked how many more unbreakable long-term leases there are. He suggested pre-Covid deals will have been made at less competitive rates than are currently available.
Government chief property officer Mark Chivers told MPs he expects the Cabinet Office and Treasury to explore the potential for capitalising on a downturn in the commercial property sector by looking to acquire the freehold to more office buildings.
Chivers said he believed there would be increased opportunities for the government to take advantage of falling property prices to buy new office space instead of leasing it, aided in part by the knock-on effects of the recent turmoil in the market for government bonds.
“Capital values are already coming down. There have been a number of people that have pulled out of deals,” he said of the commercial property market.
“We’re going to go into a period of some people trying to sell, there not necessarily being the appetite in the market for acquisitions – albeit at some point some people will come in and ‘bottom fish’.
“We’re entering a period of illiquidity, which is really difficult for the property market.”