What are the factors influencing the approach of local government to estate management?
There are various levels of property-owning authority in local government; metropolitan and London boroughs, who are responsible for all or most local government functions within their area; district and borough councils, responsible for housing and a limited range of other services; and county councils, responsible for highways, education, social services, police and several other services. It has often been quoted that many local authorities have property assets equivalent to a significant-sized property company but the distinction must be made that authorities do not hold their assets for trading or investment, nor do they regularly review the capital value of their property assets. It should also be noted that the statement is usually based on insurance valuations rather than open market values.
In order to undertake its responsibilities, each authority will be required to buy, sell, manage and allocate property resources. Some, particularly those in the older cities, have long-established policies for the active acquisition and management of property, often held as a town or corporate estate. That is land held as an investment rather than for the provision of a specific service. In general, however, authorities who have acquired property only in response to some specific service needs have seldom actively managed it as a property asset and have subsequently only sought to dispose of it because no valid reason for its retention could be identified.
A number of factors have recently combined to alter this approach. Reducing rate support grants and capital allocations have forced authorities to consider more positively the revenue costs of providing services and, in order to maintain their capital programmes, to consider how the value of assets no longer needed for specific provision of services could be realised. The Audit Commission Report in February 1988 on local authority property specifically addressed the question of active management of property assets, and high-lighted a number of shortfalls in current performance.
However, to appreciate fully the present philosophy of local authority estate management and to understand how property departments function, it is necessary to consider the recent history of this rapidly changing aspect of the public sector.
The early post-war years
Prior to the development boom of the late 1950s and early 1960s, local authorities had often acted on a purely ad hoc basis with regard to property. However, as the need for comprehensive planning and redevelopment and the acceptance of a degree of social direction of investment after the war increased the pressures on local authorities, so departmental structures were developed to accommodate this. Often the response was to add planners, valuers, architects and quantity surveyors to existing departments.
The expansion of local authority services during the late 1950s and early 1960s resulted in many of the larger authorities establishing departments specifically responsible for a particular function so that separate planning, estates’ and architects’ departments often became the norm. For smaller authorities, separate planning departments were generally established but any estate management function was more likely to have been located in the clerk’s department with specific acquisitions and disposals handled by the district valuer. The setting-up of these new departments was the direct response to the need to plan and acquire property for new housing schemes, roads and schools rather than any compehensive approach to medium- and long-term property requirements and management criteria.
The 1960s and 1970s
Within separate departments considerable skills were developed and the estates departments of many single-tier city councils became well known for their redevelopment expertise. This was particularly in evidence in the vogue for town-centre shopping schemes, and authorities rapidly realised the benefits that compulsory powers and marriage value could bring. Many city councils eagerly took up the opportunity to exploit town and corporate estate assets.
The functions of the largest departments were often very precisely divided and might typically have included the following:
- an acquisitions section responsible for all purchases for new roads, housing estates, slum clearance and schools;
- a development section for new industrial estates, redevelopment following road schemes, shopping and town-centre development proposals;
- a section responsible for managing everything except council houses; this would have included the town hall and any other offices occupied by the authority, substantial areas of land let on long ground leases and developed with new offices, shops and factories. This department would also have been responsible for managing property bought in advance of requirements.
These specialities and high levels of activity resulted in the honing of skills and in staff developing high levels of expertise in their particular field.
Estates departments, when initially established, were organised to carry out the specific functions determined by the authority; that was to acquire land, to promote the development of greenfield expansion areas, especially the establishment of new industrial estates well away from residential areas, and to manage and exploit the resources they already had. As there was virtual universal confidence in the direction being taken, effort was concentrated on implementation rather than a consideration of any alternatives. The result was very rapid change in the urban environment with, in the best instances, redevelopment rapidly following clearance with attractive new shopping centres and residential estates with gardens and open space.
In other instances, however, the scale of clearance created its own problems. Redevelopment did not necessarily follow. System-built tower blocks were not so attractive to live in as the plans might have implied. Industry often did not take root on the new estates (divorced by distance from their workers) as well as had been expected.
Local government reorganisation
With the boom of the early 1970s and the impetus of local government reorganisation the opportunity was taken to transfer existing management ideas to county and district level with some of the metropolitan county councils taking responsibility for considerable property holdings.
However, this was combined with a growing recognition of problems which encouraged the questioning of policies and a reconsideration, particularly where it was evident that the decline of industry was structural and that any upturn would not be through its revival.
Estates departments could no longer let or sell everything available; greater attention had to be paid to the needs of the market-place and an understanding of the industrial and commercial base of the area. Such information was vital in the preparation of structure plans and planners recognised the need to consult valuers and estate managers on location and other aspects of the local market.
The introduction of the structure plan idea and the downturn in economic activity forced many local authorities to reconsider their approach to promoting the development of property, especially the needs of local industry and how this might be revived.
The reduction in available resources, the need to radically rethink previous strategies and to coordinate departmental activities forced a corporate approach rather than the utilisation of individual islands of expertise.
Corporate management
Different approaches were adopted: with multi-disciplinary teams, project co-ordination, project assessment and the amalgamation of specialist departments into a larger corporate structure.
District councils often merged planning, engineering and estates functions into a technical services department, while many counties adopted the property department format.
As part of a corporate plan and management system, the estates department (or division) now had a much wider role. Those acquiring land for capital projects and the management of the existing estate remained, but it was now apparent that a greater advisory and productive role was required. Longer-term plans and the preparation of estimates of alternative options were needed to ensure value for money. Miles of road improvement lines were deleted in order to avoid unnecessary blight. Existing proposals were reappraised and, if found wanting, abandoned with property, thus becoming surplus to requirements.
