The government is preparing a £1bn-plus outsourcing deal covering its entire £260m Northern Ireland estate.
The secretary of state for Northern Ireland has been instructed to push ahead with plans to transfer all its ownership and lease liabilities to a private-sector partner as part of
chancellor Gordon Brown’s drive to raise more cash from public-sector land and property assets.
The estate totals well over 3m sq ft (278,700 sq m) of Northern Ireland Civil Service (NICS) accommodation and includes the famous Stormont estate, outside Belfast.
Northern Ireland’s Department of Finance and Personnel, which is responsible for the project, has asked financial advisers to pitch for a role in finalising a PPP strategy for the NICS estate.
Interviews will take place in April and the preferred bidder will be instructed to draw up a strategy for the outsourcing project.
An invitation to tender for the contract will then be placed in the official journal of the EU.
Specialists Mapeley and Land Securities Trillium are likely to head the interested parties.
The strategy is likely to follow the pattern of the large outsourcing projects already in operation in Britain, such as the Department for Work and Pensions’ outsourcing to Land Securities Trillium and the sale of the Inland Revenue and Customs & Excise’s property to Mapeley STEPS.
Current plans to outsource the Driver & Vehicle Licensing Agency’s estate also include around 60,000 sq ft (5,574 sq m) of office space in Northern Ireland.
The NICS move comes two years after Chesterton and Deloitte carried out a review of civil service accommodation in Northern Ireland, commissioned by the government.
This found that “the estate has been underfunded for a considerable time and a number of buildings are presently recorded as of extremely poor quality”.
The NICS owns £260m worth of property assets. The 2002 report said the government was paying £11m pa in rent on its leasehold portfolio.
A PFI/PPP partner would be expected to take on the rent payments, as well as freeholds.
It is also likely that it would be required to meet strict performance targets, aimed at reducing costs from facilities and building management.
Maintenance and running costs for the Northern Ireland estate total around £30m pa, according to the Deloitte/Chesterton report.
The partner would be taking on a vast task.
The estate is scattered across Stormont, central and greater Belfast and the regions, totals 3.4m sq ft, and houses 18,727 civil servants.
In return, it is estimated that a 20-year total property outsourcing would be worth around £60m pa to the contract holder, a total of £1.2bn.
However, experts suggested that the Secretary of State for Northern Ireland might favour a piecemeal sale of smaller packages of property.
Pressure to release cash
The renewed urgency to take action on the NICS property review comes on the back of government pressure to release cash for frontline services.
This has been stepped up by the Whitehall efficiency review led by Peter Gershon, head of the Office of Government Commerce, and Sir Michael Lyons’ recommendations for the relocation of civil servants.
The government hopes to sell £10bn of land and property over the next two years.
In his Budget speech last week, Gordon Brown said: “In the past seven years we have raised over £4bn a year through the sale of surplus assets and land – and I can announce that, for the years until 2006, we now expect the sale of surplus assets to raise over £5bn a year for new investment.”
Property is likely to come on to the market from further outsourcing deals, as well as the disposal of vacant freeholds and surplus land.
Local authorities, such as Bradford and Kent, are currently preparing major property sales.
References: EGi News 29/03/04
