Select Committee on Public Accounts Twenty-Second Report

Conclusions and Recommendations

1.  Government departments are a long way from achieving full value for money from their office estate. To achieve better value for money, departments need to achieve greater consistency in meeting accepted space standards, improving space utilisation through desk sharing and remote working, realising opportunities for co-location and relocation, and tackling and ultimately disposing of inefficient buildings.

2.  Departments' buildings are, as a whole, performing at almost 40% worse than the private sector benchmark average. Cost and space utilisation is between 14% to 50% worse than equivalent buildings in the private sector. If departments brought their performance into line with private sector averages they would achieve gross savings of around £320 million.

3.  Departments lack key information to manage their office property effectively. Accurate data on building location, costs, occupation density and day to day occupation level are necessary for the proper understanding of performance. Departmental property asset management boards should routinely collect, validate and use such information to benchmark performance and tackle underperformance.

4.  Only five out of sixteen departments had developed asset management plans as required by December 2007. Without strategic leadership and proper accountability, progress in achieving better value for money will be limited. Property performance should be a standard item for consideration at departmental board meetings. Departments' annual reports should set out progress in meeting property standards and realising efficiency improvements, together with clear explanations where significant variances remain.

5.  Departments do not have data on the level of energy consumed for three out of ten government buildings. Metrics covering energy consumption, the proportion of energy from renewable resources, recycling and the quantity of water consumed are important for identifying opportunities to improve both value for money and sustainability. Departments need to seek assurance, drawing on expert opinion, that their building performance metrics, including sustainability, are sufficiently comprehensive and fit for purpose. Departments must also be confident that responsibility for taking action where metrics highlight potential for improvement is clearly defined and understood.

6.  Departmental buildings in London have the highest accommodation cost at £507 per square metre and the North East the lowest at £133 per square metre. While relocation can incur implementation costs such as redundancy payments and dilapidations on surrendered leases, departments can achieve cost savings by locating in less expensive regions. Departments' asset management plans should explicitly consider the business case for relocation and challenge preconceptions that staff have to be based in London.

7.  The High Performing Property initiative has potential to improve value for money but requires more active participation from departments. Launched by the OGC in November 2006, the initiative encompasses a range of actions to improve the cost effectiveness of government buildings. Its success will depend, however, on the full commitment of departments. It will also depend on OGC making greater use of its remit to set standards, as well as monitoring and challenging departments on key performance metrics such as the application of space standards.

8.  The OGC needs to be clearer as to how the £1 billion to £1.5 billion efficiency savings will be achieved. The success of High Performing Property depends on achieving significant efficiency improvements. There is, however, little detail on the specific source of expected savings. OGC needs to develop a more detailed assessment of the make up of the efficiency improvements, together with a robust approach for measuring and reporting them.

9.  The Treasury was the worst performer in 2005-06. The Treasury had the highest accommodation cost per person at £12,041, the highest space allocated per person at 21.9 square metres per person and the third highest cost per person at £529. The Treasury has taken some steps since to improve performance but still has excess capacity in its main building and needs to set a better example to the rest of government. The Treasury should further improve space utilisation by accommodating more staff to fully utilise existing buildings at optimum levels, and implement flexible working policies and practice to further improve space efficiency.

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Prepared 22 May 2008