Fixed assets: the government estate

One characteristic of property, both from a landlord's and an occupier's point of view, is that manoeuvring with it is like turning a supertanker: you have to have made the decision to change course a long time before you hit the rocks. Leases can be long, commonly up to 25 years, and disposing of property, whether it is owned or rented, is not a fast process. And, as has been made painfully obvious by the recent economic downturn, timing is everything if the most is to be made of a property's value, whether realising profits or cutting costs. Headline grabbing savings Perhaps that is why the assortment of public-sector-cost-cutting promises contained within the three main political parties' manifestos have largely been unspecific about the property occupied by the public sector, despite its estimated £280bn worth (Source: Kable , Public Sector Property to 2013), the £25bn annual running cost of the central government estate alone and the apparent potential for headline grabbing cost-saving statements. The Conservatives have indicated that making reductions in public sector property costs could contribute to their plans to cut departmental spending by an additional £12bn over savings already planned by Labour. Property will perhaps form part of the "wholesale review of value for money in the public sector" that the Liberal Democrats have promised will be based on the findings of the National Audit Office and the House of Commons public accounts committee. Labour has reasserted that if re-elected it would cut back office and property running costs. It's not overtly stated but property is perhaps part of the efficiency savings of £15bn in 2010 and 2011 and the "operational efficiencies" that the Labour manifesto says will cut government overheads by an additional £11bn by 2012-13. And, to be fair, the present government had already started to look at cutting property costs, the potential of which was identified by Lord Carter of Coles in his part of the Operational Efficiency Programme (OEP), published with the April 2009 Budget. Office accommodation Among the findings of this independently authored report was the conclusion that using central government's offices more intensively could reduce its need for office accommodation by 30%, with this single measure saving £1bn a year. Slimming down the remainder of the estate by 20% over 10 years would save running costs of £2bn to £4bn a year while collaborative procurement of facilities management (FM) would save £0.5bn. Lord Carter reckoned that £20bn could be realised from the whole of the public sector's freehold estate. However, it's no quick fix and will take 10 years – or two parliaments – to realise. The validity of the OEP won't end on 6 May, whoever wins, and maybe when overlaid with plans to cut quangos, do away with or reform regional development agencies, devolve decision making etc, the scope for property savings will be even larger. Perhaps it's just as well that John McCready, the head of the Shareholder Executive's recently created Property Unit, has had a few months to get his feet under the table. Alongside the Office of Government Commerce he's likely to be the person piloting the property supertanker through the next parliament, and possibly the one after that, assuming that successive governments value the advice of someone with actual property knowledge when making property decisions.