Government urged to sell properties

Up to £800 million a year could be slashed from the running costs of government buildings, but only if departments surrender control of their buildings to a central system, a group of MPs has said.

The Public Administration Committee (PAC) warned departments operated like "financial silos", unwilling to dispose of unused property on their books even where it could benefit the wider public finances.

Government offices cover more than five million m2 of space but despite improvements in the way desks are used, through open plan developments and "hot-desking", the private sector still had lessons to teach, the PAC concluded.

The current budget of £1.8 billion a year could be slashed by £800 million by 2020 if the proper measures were taken, it said.

Committee chairwoman Margaret Hodge stressed the key was central control of property owned by the taxpayer.

Launching the report, she said: "The Government Property Unit needs greater clout to mandate action across Whitehall.

"The unit should lead from the front, ensuring government plans are centralised and making use of the government's buying power to negotiate better terms with major landlords on a standardised basis, rather than departments doing it building by building.

"Savings up to now have largely been achieved by departments working alone.

"If savings are to be maximised in future, departments will need financial incentives to work together to share space and sell excess property.

"Until property is seen by departments as a cost as well as an asset, the vast potential savings will not be realised."

Measures recommended by the committee include space sharing with other public bodies such as the NHS or local government, and making unused property either available to small business or for sale.

Mrs Hodge added: "(The unit) should also get on with selling buildings, rather than holding on in the hope of a future rise in property prices."

The Government Property Unit was first established in 2010 with the aim of improving the use of Government-owned buildings.

But the PAC research found it had merely fallen back on co-ordinating actions by individual departments.

The report made three main recommendations - to ensure local and central Government worked more collaboratively, to centralise ownership and negotiate with major landlords on a more standardised basis, and to consolidate the estate by either renting or selling unused space.

A Cabinet Office spokeswoman said: "One of the first things this Government did was introduce strict property controls across departments and we are pleased that the PAC has recognised the savings we have made so far. In less than two years Government sold over 250 freeholds, generating more than £640 million - meanwhile the cost of running government property was slashed by £200 million in 2011/12.

"But we want to go further to find savings and to make more innovative, strategic use of public property. We are working with Bristol City Council and Preston Council on pilot property projects across the wider public sector. We have also identified empty office spaces which will be offered to SMEs and are exploring how others could be used for free schools.

"Taxpayers should not foot the bill for unnecessary property. There is more to do to drive out inefficiency and we will consider all of the PAC's recommendations carefully."

PA