Examination of Witnesses (Questions 20-39)
DEPARTMENT FOR
CHILDREN, SCHOOLS
AND FAMILIES,
OFFICE OF
GOVERNMENT COMMERCE
& HM TREASURY
14 JANUARY 2008
Q20 Dr Pugh: May I start with the
target you set yourselves; clearly fairly ambitious? When these
targets were taken forward and numbers were put on the potential
savings, did you have any clear idea of how you would make these
savings and what you needed to do?
Mr Burt: The savings that we have
put forward have actually come from fairly extensive research
by both Sir Michael Lyons when he was doing his Report in 2004
and by an OGC commissioned report from Leeds University.
Q21 Dr Pugh: You had a very clear
idea of what you wanted to do.
Mr Burt: A clear idea and it is
really falling into three main areas. The biggest area of saving
is in improved workspace utilisation.
Q22 Dr Pugh: It should be relatively
easy to implement and fairly swift to implement, should it not,
given that you knew in advance? It would have been difficult had
you not known what you were expected to do, but since you have
clearly acknowledged that you knew more or less what you wanted
to do, you could get on with the process with some clarity, could
you not?
Mr Burt: Yes, and we are certainly
not sitting on our hands; we are actually moving rapidly in terms
of the property benchmarking which will be mandated to all government
organisations from 1 April this year.
Q23 Dr Pugh: Has your life been made
a little more complicated by, simultaneously with these savings
being specified, also huge savings being specified by the Chancellor
in what are referred to as back-office staff but at that stage
we did not quite know which back-office staff we were not going
to need or for that matter what they were doing in the back office?
Has the fact that departments are reconfiguring themselves and
shedding staff complicated things?
Mr Burt: It certainly has not
helped and indeed in the context of relocation the headcount reductions
that were part of the efficiency programme were also an awkwardness
for us. What we needed to be sure about was that we were not double-counting
on savings that were being achieved. The methodology that we are
going to be developing over the next few months in terms of measuring
the savings will attempt to ensure that we do not have double-counting.
Yes, it has been a complication.
Q24 Dr Pugh: In terms of methodology,
there are figures here for square meterage. Presumably that is
the total cost of the building, the number of employees, say,
divided by the size of the building and some figure comes out
the other end. Are you able to tease out the distinction between
a building that is expensive because there is a lot of space,
huge desks, people rolling around inside it and buildings which
may be hard to heat and expensive but actually quite full of people?
Mr Burt: Yes, the benchmarking
service that we are putting in place is looking at both efficiency
and effectiveness.
Q25 Dr Pugh: So you can tell what
the carbon footprint is of most buildings now?
Mr Burt: We will be able to do
that, because it is looking at a building-by-building basis.
Q26 Dr Pugh: In terms of what you
have achieved so far, where actually have you been able to make
savings both geographically and in terms of what you have made
the savings on, leases or selling buildings or whatever?
Mr Burt: In terms of geographical
location, the relocation initiative itself has actually led to
about 136 thousand square metres plus of space being released.
Q27 Dr Pugh: Is the bulk of the savings
on leases in London?
Mr Burt: When the opportunity
arises, usually around when a lease break is happening on a property,
that is the opportunity to look at whether an organisation should
be in the property and what savings can be achieved.
Q28 Dr Pugh: Is it possible you could
provide us with a note of how you have actually made your savings?
We have lots of figures about the potential, lots of figures about
current stats on what you have already got. What I would really
like to know is where you have actually made the savings currently?
A snapshot of where we are now.
Mr Burt: Indeed; I am happy to
provide a note.[1]
Q29 Dr Pugh: I looked particularly at
the north-west figures. The north-west represents 12% of your
estate. It is a surprise to find that the cost per person in the
north-west is higher than the south-east which has very much more
expensive property values. The cost per square metre is higher
than the south-east. I have been trying to figure this out. I
looked at what actually is done in the north-west in the way of
government activity. The principal departments appear to be the
Inland Revenue and the Department for Work and Pensions and when
I looked at them, they actually had a low cost per square metre
compared with other departments and quite congested office space,
if I might put it like that; there was not a lot of space per
person. So the departments that seem to be in the north-west appear
to be fairly economical departments but costs in the north-west
for the buildings appeared to be much higher than I would have
expected and higher than the south-east.
Mr Burt: That is probably a reflection
of the market forces that are happening in the north-west and
you could actually apply the same to Yorkshire and Humberside.
Q30 Dr Pugh: Market forces apply
in the south-east as well as the north-west.
Mr Burt: Indeed. What I am saying
is that the way that market rents are moving in the north-west
and indeed in Yorkshire and Humberside are a reflection both of
demand in that area and also the fact that there is not a great
deal of new accommodation arising in that area.
Q31 Dr Pugh: It is nothing to do
with the fact that the bulk of the estate is provided under PFI
contracts or anything like that?
Mr Burt: That is certainly an
element of it.
Q32 Dr Pugh: That is an element of
it?
Mr Burt: It is an element of it.
Q33 Dr Pugh: Will the fact that the
bulk of the estate is provided in the PFI contracts make it really
rather difficult for you to do much with that estate in terms
of rationalisation and disposal?
Mr Burt: It makes it slightly
more difficult but certainly the two departments that have outsourced
their estates, DWP and HMRC, are already achieving quite significant
savings on their estate.
Q34 Dr Pugh: What period is their
PFI contract for?
Mr Burt: It is a 20-year contract,
so over that period of time you cannot do an awful lot.
Mr Smith: It is fair to say though
that you can when you are entering these contracts. By the way,
in terms of the total estate we have about 28% which are under
PFI but when you actually enter those PFIs, for new PFIs you can
build flexibility in and that is one of the issues. Whether you
are "PFIing" something or whether you are just doing
an outsource building in flexibility for change is one of the
key issues because property in particular, probably more so than
any other asset, has a very, very long lifecycle. You can lock
yourself in and that is not just in on cost but also on sustainability
issues as well.
Q35 Dr Pugh: I do not want to put
words into Mr Burt's mouth, but what he is saying, because freehold
is mentioned in the Report itself, is that were he dealing with
a set of freehold buildings that the Government owned outright
it is fair to say his job would be a lot simpler, would it not?
Mr Burt: Probably.
Q36 Dr Pugh: Probably; and PFI in
this case is a complication. Last point, what is suggested on
page 10 in the summary section is rather surreal. It talks about
reducing the ratio per person to 0.7 desks and having things like
hot-desking, remote working and so on as some sort of solution.
That is no part of the equation really, is it? That does not go
on much, does it?
Mr Burt: It is certainly a fairly
significant part of the overall savings that can be achieved through
the way you use the space.
Q37 Dr Pugh: How many people have
you assessed are remote-working in departments?
Mr Burt: We do not have a figure
for the number of people who are working remotely.
Q38 Dr Pugh: You do not know. It
is a bit like tele-medicine; it is something people talk about
all the time but it never really happens much.
Mr Burt: We do not have the actual
figures, but we do know the departments are actually moving quite
fast to reduce the ratio.
Q39 Dr Pugh: How do you know, if
you do not have the figures?
Mr Burt: Because we are talking
to departments about the way that they are doing it, although
we do not have the actual figures.
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