New year, new broom

While the dawning of 2010 seems guaranteed to herald a period of public sector austerity, it also flags up a renewed enthusiasm for "sweating" publicly owned assets and, where possible, selling off any surplus. Public sector property is in the firing line and this week a former Ernst & Young senior partner, John McCready, starts work as the head of the government's newly created Property Unit , part of the Shareholder Executive formed in 2003 to help government owned businesses perform better. The new unit has been tasked with helping public bodies to maximise value from the state's £370bn property portfolio. In looking for a leader the government could have turned to any number of large property companies or consultancies, so it surprised some by choosing figure from a management consultancy; but prior to Ernst & Young, 53 year-old McCready had worked for Blue Circle Industries, where he was chairman of the disposals group during the takeover by Lafarge, and prior to that had been chief executive of Whitehall Properties and Bluewater Park. He says the government was looking for someone who knew how to rationalise a complex property portfolio with all sorts of facets. McCready, who trained as an accountant and holds an MBA from INSEAD business school, says the deciding factors in his appointment included a combination of commercial acumen, being steeped in the property market, and understanding the financial markets and how government works. At first glance, the role of the new property unit, which will be based in Whitehall in the Department for Business Innovation and Skills with the Shareholder Executive, is not dissimilar to the estates function of the Office of Government Commerce. But McCready does not think there is an overlap. "The size of the estate is so great that everybody's skills will be required," he comments. "OGC is exceptionally good because they understand the estate and they understand the way that government and local government work and they have worked closely with them. "I think where the property unit comes in is taking that strategic view and saying 'OK, where can value really be created?'." The aim, he says, is to work with OGC and with the user of the property to say what is needed to deliver value out of operational improvement or capital value. Most of the staff in the new unit will come from banks or other commercial organisations. McCready says this will help the government to understand how the markets will look at the property portfolio and what sort of deals the market will look for. "It's a meeting of the two strains to deliver, hopefully, a beneficial outcome for the taxpayer," he says. Part of his role is what he describes as providing a "challenge function" to government. "It's not challenging people in an aggressive way, it's just saying lets just make sure that government is as smart and as effective and as best in its class as it can be," he says. "The private sector learns a lot from government and government can learn a lot from the private sector. I will be bringing private sector expertise and saying to the government 'Maybe there's another way of doing it'." Risk allocation is one area at which he will be looking closely. "A lot of value is either created or destroyed because the risk allocation between private and public sector becomes misallocated. In my experience the key is in understanding where the real risk lies," he says. "There are financial risks, political risks, construction risks; there are all sorts of risks and it is always allocating to that person who understands how to best to take that risk that you minimise the cost." But maximising value in a depressed property market will be among McCready's major challenges. "There is a degree of uncertainty and buyers don't always wish to pay that which vendors wish to receive, but I think that is beginning to change. We are starting to see quite a few deals come through in the market now." McCready will have barely started his new job when the general election is called, but he is unperturbed. "There is a very necessary role here and I would hope that it is generally recognised throughout the political spectrum that making the assets work harder and being efficient with assets is good for the public purse," he says.