MPs say the Government Property Unit should be given more clout. Given that its chief executive earns more than the prime minister, an absence of clout should not really be an issue.
Margaret Hodge, one of the original Blairite politicians, and swaggering Arcadia supremo Sir Philip Green may have little else in common, but both share an acute frustration in how the government is managing its sprawling property estate.
Hodge’s criticisms around clout and much else besides emerged this week in a report from the Commons Public Accounts Committee, which she chairs. Sir Philip’s came in his 2010 review of government efficiency. Both are on the same page.
Speaking to Estates Gazette after his review was published, Sir Philip singled out property for special condemnation. “The bottom line is clearly that the dots don’t get joined up,” he said two years ago.
“You’ve got two people sitting in the room; they’ve both got offices within a thousand yards of each other and one’s got a lease break and one’s got a building with a £750m rental bill, and they don’t talk to each other. So they end up renewing something they don’t really need.”
His report was littered with specific examples: The government department that missed an opportunity to exercise a lease break at its offices in central London, costing the taxpayer £20m. The government agency that relocated from London to the Midlands, signing a 20-year lease with no lease break for 15 years. The building was too large, the rent £1.2m pa and the agency abolished after just nine months. Cue an unnecessary rental commitment of £18m. And those were just the headline examples.
This week, Hodge’s Public Accounts Committee weighed in. And the committee was equally withering in its assessment. A for instance: “The Government Property Unit has yet to establish a vision for the estate that all the departments can agree upon. Departments operate in financial silos that do not encourage them to work together in a way that would benefit the Exchequer as a whole.”
In its evidence to the committee, the Department for Business, Innovation and Skills admitted its failings in aspects of delivering the GPU’s work. The Cabinet Office, which inherited responsibility for the unit from BIS, admitted that relying on lease expiries to deliver savings hardly amounted to a strategy. Meanwhile, the Treasury’s lack of proactivity in this area came under fire.
Chief among the PAC’s recommendations is that central and local government work better together. (Hodge can speak from experience here; for 10 years she was leader of the London borough of Islington). It also wants to see the GPU be given greater clout. (And, yes, GPU chief executive John McCready’s salary of £150,000-£154,999 is more than the PM’s £142,500). Those changes will be terrifically difficult to deliver and will require a culture shift in government at least as significant as the one being urged upon the financial services industry.
The committee also recommends centralisation of property ownership. This chimes with Sir Philip’s recommendation that government adopt a more centrist approach to make better use of its covenant.
And it urges government to consolidate its estate. In April, I congratulated the GPU on the progress it had made. In Q1 2011, it announced plans to vacate 500,000 sq ft of central London space. But the next step has not been taken to any meaningful degree. Yes, market conditions are making it difficult to re-let surplus space, but, as the committee says: “It is clearly a waste for buildings to stand empty, so the government needs to accelerate its plans for sales. There is no point in the government simply holding property in the hope of a future rise in property prices.”
Delivering the diagnosis is far easier than delivering the cure. But it simply has to happen.
