Spending Review 2015: DWP to cut estate by 20% as government eyes £4.5bn savings

Department for Work and Pensions joins HMRC in bid to significantly cut its estate by the end of the decade

By matt.foster

25 Nov 2015

The Department for Work and Pensions' estate is to shrink by 20% over the next five years, the Treasury has announced, as part of a wider push to find fresh savings through the sell-off of government land.

Chancellor George Osborne's Spending Review confirmed that departments had agreed to sell £4.5bn of surplus land and property by the end of the decade, with the DWP asked to cut its estate by a fifth, including by seeking "greater co-operation with local authorities" and co-locating Jobcentres.

The DWP currently accounts for around 15% of the overall government estate, the largest footprint of any government department. The size of the department's estate was already reduced by 17% over the last parliament.

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The move follows the announcement of a major programme of office closures at HM Revenue and Customs, with the tax authority planning to cut its network of 170 offices to just 13 regional centres. Part of HMRC's plans include sharing office space with the DWP.

As well as the contributions from DWP and HMRC, the Spending Review says the Department of Health will sell off some £1.95bn in land and property assets, with the Ministry of Defence contributing £1bn-worth, and £640m coming from the Ministry of Justice, which aims to sell off "ageing, inefficient prisons on prime real estate".

A further £410m in sales will come from the Department for Communities and Local Government, there will be a £200m contribution from the Department for Energy and Climate Change, and the the Department for Business, Innovation and Skills will sell off £120m worth of land and property assets.

The government has already said it will use land released by government departments for the construction of new homes, although a recent Public Accounts Committee report on earlier attempts at disposing of public land for house building raised questions over the actual number of homes that had been delivered. The Spending Review estimates that the latest public land sales will free up capacity for 161,000 homes by 2020. 

The Treasury has also added detail to its plan for further overhaul of the way the government manages its property and land assets. A centralised Government Property Unit was set up within the Cabinet Office during the last parliament, aiming to help departments use their estate more efficiently. 

The Spending Review goes a step further, confirming that ownership of the government estate will be now centralised, with departments charged market-level rents on the freehold assets they currently own in a bid to incentivise better use of land and buildings. The plans were previously sketched out in the March 2015 Budget.

The document states: "The new model will be operational by March 2017, subject to legislative requirements, and all relevant central government land and property will transfer to the new central body by the end of this parliament.

"The Spending Review announces that [former British Property Federation chief executive] Liz Peace has been appointed as shadow chair to lead the implementation of the new body. The first assets transferred into the body will include freehold office, warehouse, storage and depot properties (and leaseholds where appropriate). Similar charging regimes will be introduced to the same timescale for the MoD and the FCO overseas estate."

More on the Spending Review
Spending Review: 100,000 public sector jobs will go by 2020, OBR predicts
Spending Review 2015: George Osborne unveils surprise boost for Government Digital Service
Spending Review 2015: The departmental settlements
Spending Review 2015: Key workforce, estate and financial management reforms – and the assets in line for privatisation

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