Improving the efficiency of central government's use of office property
Publication of the Committee's 22nd Report, Session 2007-08
Edward Leigh MP, Chairman of the Committee of Public Accounts, today said:
"Government departments are under pressure to increase the value for money of their office property - by reducing accommodation costs and improving the efficiency with which they use their space. There is big room for improvement, given the markedly poor performance of government buildings in these respects compared with the private sector, with a potential £326 million to be saved each year.
"Not unexpectedly, there are marked variations between departments, showing that substantial savings are indeed possible. The Department for Children, Schools and Families is one of the better performers, with in 2005-06 an accommodation cost per square metre of £123 and a cost per person of £2,592. Compare that with the Treasury, the worst performer, with a cost per square metre of £529 and a cost per person of £12,041. The Treasury should be setting an example to the other government departments, not bumping along in bottom place.
"The relocation of staff to cheaper areas outside London, while it can give rise to costs, can save money. The assumption that staff have to be in London should always be challenged."
Mr Leigh was speaking as the Committee published its 22nd Report of this Session which, on the basis of evidence from the Office of Government Commerce, examined the performance of the government estate and individual departments' office property, the lack of good performance data, and its own role in improving government property performance.
In 2005-06, the public sector spent approximately £6 billion on the running costs of the non-military estate, with central government's office property estimated to cost around £1 billion. Compared to private sector benchmarks, departments' office property is between 14 and 50% less efficient, and there is the potential for savings of £326 million.
Departmental performance varies significantly. In 2005-06, costs per square metre ranged from £123 to £636, accommodation costs per person ranged from £2,000 to over £12,000 and allocation of space per person ranged from 13.3 square metres to 21.9 square metres. Regional accommodation costs also vary widely. The highest costs are in London and the lowest are in the North East. Despite the high costs, a quarter of central government's office staff are located in London.
The main efficiency drivers in the use of office accommodation are the location of the property, its age and general state of repair, its configuration and the way that the space is used. All organisations face these problems but the public sector, with its legacy of listed buildings, and poor record on building maintenance, is not well placed to improve value for money. Departments need to improve the quality of their management information to understand how their buildings are performing and implement action to improve efficiency. Many departments do not have basic information to enable them to assess building performance such as the number of people that use them and whether buildings are open plan or cellular. Most departments know very little about the environmental performance of individual buildings such as whether buildings have recycling schemes and the amount of energy each building consumes.
The Office of Government Commerce's (OGC) objective is to deliver annual efficiency savings of £1 billion to £1.5 billion from the whole government civil property estate by 2013. While OGC's benchmarking service should help to improve the quality of management information on office property, much relies on the success of other aspects of its High Performing Property programme in joining up departmental strategic thinking and co-ordinating efficient use of property resources across government. Two key milestones have already been missed, which raises questions about the likely success of this programme.