Chancellor George Osborne’s Spending Review this week may have been less severe than expected, but the budget deficit still means the public sector must do more with less.
All public bodies are having to sweat their property assets harder and work more efficiently. This week, the government also announced in its strategic defence and security review that the Ministry of Defence would sell off 30% of its assets to create 55,000 homes.
Think tank Centre for Cities, supported by construction and property management consultancy Turner & Townsend, has this week published Delivering Change: making the most of public assets.
The report focuses on what local authorities can do to make better use of their assets and, perhaps more importantly, what central government can do to reduce bureaucracy and encourage councils and other public bodies to be more proactive. In writing the report, Centre for Cities spoke to eight local authorities.
“We found that local authorities would prefer to go down the route of being long-term players and avoid selling assets and shaping an area, especially in areas where the private market isn’t really performing. That is very much tempered by the real finance pressures at a local and national level they are under,” says Andrew Carter, deputy chief executive of Centre for Cities.
The report makes three key recommendations to national policymakers (see below): scrapping stamp duty on asset transfers between departments, giving local areas more control over national body asset strategies in their areas, and taking a stricter view on permitted development rights.
Centre for Cities says that local public bodies are having to battle fragmented ownership, a lack of comprehensive and accessible data, competing incentives between bodies and a lack of influence over how assets are utilised.
Carter is particularly damning of the illogical nature of stamp duty regulations applied to public bodies.
“It is a massive disincentive for departments to do anything and because others become aware of the problem they just don’t bother to start thinking about using assets imaginatively. The Treasury just says to us that this is just the way it is, with no further explanation.”
Centre for Cities is also strongly in support of devolution deals with cities and regions, as have been agreed with the likes of Manchester, Merseyside and the West Midlands, which support more productive and strategic use of public assets, according to the think tank.
“With more budgetary control at local level, there is an increased tendency to intervene in one area that might deliver savings in another,” the report says.
Despite concerns about creating a smaller public sector and the effect that can have, for the property sector in particular, on planning and development, the report found that austerity had been a “catalyst for making use of assets”.
Land and property in public ownership has been an important tool for encouraging speculative development, and shrinking budgets have created extra incentives for making the most of assets.
Perhaps there is a silver lining to the chancellor’s grand scaling back.
Key recommendations
Centre for Cities’ three recommendations for national policymakers to help public bodies reduce wasteful expenditure and deliver more efficient public services through their property portfolios are:
- Improve intra-public sector co-operation by abolishing stamp duty on asset transfers between local bodies and without transfer values adding to or reducing revenue budgets. This acts as a disincentive to places taking more strategic approaches to managing public assets. Policy should encourage local authorities and public sector bodies to bring their assets together across a locality in order to package sites and create more attractive development opportunities.
- Give local areas more control over national-level asset disposal strategies for land and property in their areas. National organisations such as the Homes and Communities Agency, as well as other land-owning bodies and departments, should be required to be members of city-region property boards or land commissions to facilitate the release of sites that are of strategic importance.
- Reform and restrict national permitted development rights/office-to-residential conversions. This will give more flexibility and control to local areas, allowing them to shape the type and balance of development needed to support economic growth.
david.hatcher@estatesgazette.com
