Examination of Witnesses (Questions 60-79)
DEPARTMENT FOR
CHILDREN, SCHOOLS
AND FAMILIES,
OFFICE OF
GOVERNMENT COMMERCE
& HM TREASURY
14 JANUARY 2008
Q60 Chairman: So is the Treasury
going to be appointing a champion?
Ms Tulett: I am the Treasury champion.
Chairman: We want a vigorous performance
from you this afternoon then.
Q61 Mr Dunne: It is interesting to
hear that this is the first time that this issue has been addressed
across Government and I am sure you found this exercise from the
NAO extremely valuable. Are you surprised, having come into Government
recently, that there has been no exercise to look at space allocation
or utilisation across Government before?
Mr Smith: I was surprised about
the history actually; looking at the history, Government have
tried every different type of governance mechanism in the past
from central property agencies, which were complete Stalinist
sort of directive agencies, through to complete decentralisation.
What we have ended up with here is actually probably the best
situation where you have managed decentralisation. In that sense,
I am surprised that they have not done it but they now have a
structure whereby they can actually do it. I have to say that
I do now speak with permanent secretaries who do know about this
agenda; I am told that was not the case in the past. It is now
part of their business strategy. It is talked about at the board
of each of the departments. There is an enormous way to go but,
as with many of the things I have seen so far, the level of data
really is the key. We have to get the data quality and coverage
up to allow good decisions to be made.
Q62 Mr Dunne: I will come onto that
in a second because that is a clear finding of this Report. Do
you have a role within the OGC, or perhaps it is Mr Burt who should
answer this question, to oversee allocation between departments
or is this really decentralised down to the department and if
they make their decision about space, a building might become
available and then you are told about it or is the department
responsible entirely for its own operations and disposals? If
a new department is being established, for example, and a building
is vacant in another department, how is that coordinated? Who
knows about it?
Mr Burt: Since 1996, when the
decision was taken to devolve accountability to departments for
managing their estates, the OGC's predecessor Property Advisers
to the Civil Estate had a role of coordinating the civil estate
and that has been taken on by the OGC as its successor. What that
means is that we have, through our property database which has
all of the government holdings on it, an opportunity to see what
is happening across the whole of the estate. Clearly it is for
departments to decide for themselves how best to operate a lease
or to operate a building, but we do have an oversight through
that property database and an increasingly strong oversight through
benchmarking on what is happening on a building-by-building basis.
Q63 Mr Dunne: By "oversight"
do you mean you are now informed about it? You presumably do not
have any power to direct departments to take on a property or
to dispose of a property?
Mr Burt: Transforming Government
Procurement, which was launched in January last year, does
actually give the OGC powers to set standards and to challenge
and to intervene. We are likely to want to use our benchmarking
activity to at least establish what is happening on a building
by building basis and if departments are not achieving the kind
of efficiencies that we would expect, we would be able to intervene.
I would hope it would not come to that, because the experience
we are having is that departments are actually working very well
to achieve high performing property without our intervention,
but nevertheless those powers are there.
Q64 Mr Dunne: Do you have sufficient
skills within the OGC to be able to provide this sort of advice
to departments?
Mr Burt: My team has a number
of very skilled estate surveyors. We have a number of very skilled
staff involved in workplace design and workplace productivity.
We also buy in skills to help us do our role.
Q65 Mr Dunne: You were touching on
the proportion of the estate that was freehold and leasehold and
I have not picked that up; it may be covered in the Report. Can
you point us to where that is or tell us what it is?
Mr Burt: Yes; 43% of the estate
is freehold but that covers a whole range of different activities.
Twenty eight per cent of the estate is leasehold, 28% of the estate
is operated under PFI arrangements and 1% of the estate is done
through serviced offices, the likes of Regus and MWB.
Q66 Mr Dunne: The reason I ask the
question is that within an agency in my area, West Mercia Police,
whom I was pleased to spend a bit of time with on the parliamentary
scheme, it became apparent that one of the biggest surprises to
me from that experience was that they generate a profit from their
estates department because they bought in the right quality people
with commercial property skills actively to manage their estate.
I just wonder whether that is an experience that you have found
is widespread across departments or whether it is particularly
effective in Mr Thompson's department but does not exist in others?
Mr Burt: Probably the best way
to describe the picture is that it is patchy. There are some very
good estate directors with very good commercial experience. A
number of estate directors have been brought in from the private
sector. One of the areas of work that we are doing on high performing
property is to look at the whole of the skills and capability
agenda and to improve that across Government through the introduction
of training schemes, qualification routes and looking at the kind
of people who are in place.
Q67 Mr Dunne: I commend West Mercia
Police to you. If you have not spoken to their estate team, it
might be worthwhile.
Mr Burt: I will take that up.
Q68 Mr Dunne: Can we pick up Mr Smith's
point about data? On page 9, paragraph 11 under the initial findings
there is the pretty astonishing statement from the NAO that in
most departments they do not have strategic property asset management
plans and most departments often struggle to engage effectively
with their arm's-length bodies over this. Would you like to comment
a bit further on what you are doing to correct this basic database
problem?
Mr Smith: To some extent, times
have moved on. In the previous question I was just responding
on where we are in terms of the government structure. We do have
property champions. We do have property boards. We do have a strategy
plan for every department. What we do not have is an asset management
plan for every department, but we are determined that we will
get one at the latest by September of this year. The answer to
that is that this was absolutely correct at the time of writing
and certainly a lot of the data is obviously 2005-06 data rather
than 2007-08 data.
Q69 Mr Dunne: On page 14, paragraph
2.1, the NAO Report refers to the ePIMS (Electronic Property Information
Mapping Service) system and describes it as being a mandatory
system but with little evidence of it being used in many departments.
Has that changed since this Report was prepared? Is the use of
that now widespread and are you able to enforce, as the OGC, or
do you not have powers of enforcement of this system?
Mr Smith: Yes, it is mandatory.
Q70 Mr Dunne: It was mandatory but
it was not being used.
Mr Burt: Part of the answer to
that is that a number of departments actually had systems in place
running in parallel with ePIMS and the question there was not
about throwing those systems away as departments had invested
in them, but ensuring that those systems talked to ePIMS. There
has been a bit of a time lag in terms of getting those up and
running. As of today we certainly have around 90% of the estate
onto ePIMS. We certainly have departments ensuring that their
data is accurate and robust and virtually all departments are
now actually using ePIMS as their main source of data.
Q71 Mr Dunne: Finally, picking up
on one of the questions which the Chairman asked, the Government
are continuously lecturing the private sector and the public sector
about the importance of increasing energy efficiency and yet sustainability
and even basic data on the energy efficiency of its own buildings
seems to be woefully inadequate. The Chairman mentioned one or
two statistics coming out of page 23 and paragraph 2.17. The one
that struck me was that for 544 buildings out of 877, the department
could not say whether or not they were running a recycling scheme.
Could you update those statistics for us and tell us what you
are doing to improve compliance with the Government's own target?
Mr Burt: I do not have the latest
figures on how many departments have a recycling scheme. What
we are doing about it is including that in our efficiency effectiveness
element of the benchmarking activity.
Q72 Mr Dunne: We will be able to
see on a building-by-building basis exactly who has and who has
not got recycling schemes in place.
Mr Burt: Yes.
Q73 Mr Dunne: May I suggest some
form of naming and shaming? Nothing would have more impact on
government departments than being highlighted in a rogues' league
table on an area which is as emotive and high profile as this.
Mr Smith: That is already in existence
in the sense that the SDC report on a yearly basis against the
performance on the SOGE targets, as they are known, which are
the principal outcome targets that Government have for sustainability
or environmental sustainability, one of which is recycling. However,
the recycling target is of course across all of the estate, not
just the central government office estate. There are three SOGE
targets that relate solely to offices. One is carbon neutrality,
on which I have to say I am not sure there is an agreed definition.
The most important one is carbon emissions and there is an agreed
definition there for the office estate; a target of 12.5% by 2010.
Government have a way to go if they are going to meet that target.
The last one is on per person water usage for new builds, but
generally speaking it is right across the estate. On recycling
across the estate, the SDC will be reporting on that; their next
annual report is due out next month. From recollection, against
the target of 40% recycling by 2010, the cross-government departments
are achieving something like 30% or 35%; so one of the targets
they have actually made some progress on. I take your point that
if you look at just the offices and whether we have granular data
building by building, then the answer is no, but we will have
it through the benchmarking service.
Q74 Mr Mitchell: Would it not be
better if we had a government property agency to handle the lot
and shove departments in that?
Mr Smith: No, I think not.
Q75 Mr Mitchell: Why?
Mr Smith: The reason I think not
is really the point being that property strategy must be driven
from business strategy. The idea that a property agency would
have complete and utter directive powers to determine where people
have their offices, in what configuration, is probably wrong.
A completely directive approach is wrong. It goes against the
style of management in a lot of government areas for more decentralisation.
Q76 Mr Mitchell: Handling property
is a professional skill and most departments do not seem to have
it. If you had a property agency, you could build up a body of
expertise that could best tell what goes where.
Mr Smith: There is one point of
actually directing what the strategy should be; the second is
actually implementing it and I take your point. In terms of whether
we have the right skills which understand the options on lease,
PFI, whatever it happens to be—
Q77 Mr Mitchell: You cannot expect
the departments to have them.
Mr Smith: You can. The statistics
say, although there are 17 departments, 85% of all of the office
property is in five departments. This is not unusual in Government;
that statistic happens all over the place. If you do have a large
property estate, then you should have property professionals in
your department.
Q78 Mr Mitchell: The Report says
they do not have the skills. Paragraph 2.2: "We found that
often departments did not know key management data on their buildings.
Out of 896 buildings in 665 cases departments could not provide
details on the proportion of building space that is cellular and
open plan and in 58 cases were unable to provide a detailed breakdown
of operating costs. In 60 cases departments did not know how many
people were based in the building and so could not calculate an
accurate occupation density". This is pretty terrible.
Mr Smith: I agree. I have said
that the data at the basis of the strategy is poor. Having said
that, I can see a route map where we are going to get some data.
The issue though on professionalism, in terms of whether we have
the right skills in terms of professional property managers in
those departments, I would have to say from talking with Mike
and being around the departments, we have some gaps. That is not
to say that we should then centralise everything.
Q79 Mr Mitchell: You said direction
would not be acceptable and that is probably true. I cannot imagine
the Foreign Office being ordered about, except by Europe, but
you could handle the professional side of it as an adviser to
all departments rather than leaving it to them.
Mr Smith: Well that is precisely
what we are here to do. We are an adviser. What has not come out
in the hearing so far is actually what sort of things OGC gets
involved with in terms of the day-to-day uses of property. The
idea that each department has its own office estate is also incorrect
and that is also a feeling I have got when I get asked the question
by a number of people. There are over 500 buildings out of the
10,000 buildings in the government property estate which have
multiple occupancy; already many departments share offices. When
offices come up, when lease breaks come up, what OGC gets involved
with very often now is getting with the departments and acting
as a marriage broker, talking about what the options are, under
the lease break.
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