1. AUTUMN STATEMENT 2016 REPRESENTATION
Public Sector Property – The Challenge for the New Administration
So why is it that in the second half of the second decade of the 21st Century a major
opportunity for a significant reduction in the size of the national budget deficit,
streamline public services and make a major contribution to the national housing
shortage is still not being exploited? So much more can be achieved by changing to
a consolidated approach enabling an integrated business plan for the entire portfolio
to be prepared and implemented. The current arrangements are a legacy of the past
and a barrier to fully optimising the use of public sector property assets.
DCLG have in the past stated that the combined value of property assets held by the
public sector is circa £400 billion with annual running costs of £7 billion. Whilst these
are all very broad brush estimates the reality is that with a significant proportion of
the assets having been valued on an existing use rather than open market basis this
figure is a major understatement of the true position. Various studies undertaken
over the last few years (e.g. Total Place, Westminster Sustainable Business Forum,
Cash in the Attic etc) have demonstrated that the actual accommodation floor space
needed to support 21st Century public service delivery is significantly less than
currently being used. Successful roll out of a multi-agency approach to service
delivery harnessing available technology could enable a significant release of land
and buildings.
Whilst the last Parliament saw a significant increase in public sector productivity
much remains to be done and property assets have significant potential to play a
major part in this. Early decisions taken by the new Administration will be crucial in
setting the tone and direction for the term of the current Parliament ultimately
determining success or failure in the implementation of policies. As part of this
process, priority needs to be given to putting in place structural measures that will in
themselves ensure that public property assets act as a catalyst for change and
enhancing productivity. These need to ensure that a cross-cutting approach across
the entire public sector is adopted rather than the current somewhat vertical and
fragmented approach driven by the current structures for delivering public services.
In the recently published Public Wealth of Nations the author Dag Detter has
highlighted the potential economic benefits of consolidating all public property assets
into a single vehicle thereby enabling an integrated business plan for the entire
portfolio to be drawn up and implemented. Whilst appointment of a chair and board
to drive a more commercial approach to management of the Central Government
Estate and additional funding for the One Public Estate programme to rationalise
local authority accommodation are important steps forward they simply do not go far
enough as the approach is still fragmented.

2. Putting in place a chair and board to oversee and drive a fully integrated approach in
respect of all public sector property assets would enable a balanced approach to the
following:-
(i) Significant reductions in the amount of property used to support service
delivery thereby reducing operating costs.
(ii) The land and buildings released to be recycled housing and wider
regeneration.
(iii) The capital released through the disposal of land and buildings to be
reinvested in a property investment fund to produce rental income that can
be used to fund the delivery of public services.
The approach proposed would be more effective and secure far greater value for
money than the current arrangements. Over time this approach could have
increasingly positive financial implications for the Exchequer by increasing efficiency
in the use of resources which are then reinvested to support housing development
and generate rental income to offset the cost of public services. I would be happy to
discuss further the approach proposed in this representation.
David Lewis
Director
Reducing the Deficit Ltd
7th October 2016