Public Sector Property

19.08.15

Local government land: councils urged to let go

Source: PSE Aug/Sep 15

A slimmed-down, more efficient local government property estate will be a good vantage point from which to judge the effectiveness of the government’s drive to transform the public sector, argues Kristian Scholfield, senior associate solicitor within Geldards’ specialist public services team.

Described as a “bloated property portfolio”, the entire public estate is estimated to be worth over £350bn, with annual running costs for local government alone of over £5bn. 

The government launched the One Public Estate initiative (OPE) in 2013, funded by the Cabinet Office’s Government Property Unit and delivered by the Local Government Association, while also working to reduce the size of departmental property holdings. 

The OPE programme aims to: reduce operating costs, yielding savings for the taxpayer; generate capital receipts; deliver more integrated and customer-focused services; and create economic growth. There is a clear link with housing policy, as released land can be developed and used to ease housing shortages. It is thought the state holds enough land to build up to two million new homes. 

Projections for initial pilot projects suggest sales with a value of £88m and efficiency gains of £21m can be achieved. Over five years, 5,500 new jobs and 7,500 new homes are forecast, with the total benefit to local economies estimated at £40m. In 2014, the OPE initiative was extended to 20 more councils. Further phases are planned. The numbers appear increasingly impressive. Local government is forecast to see asset sales of over £13bn between 2015 and 2018. 

Tackling the apparent silo culture still found in parts of the public sector has been a challenge, representing a resilient barrier to change and reform. Organisations that operate in isolation are asked to consider alternative ways of working and delivering services. Those that genuinely engage with their partners, that embrace collaborative and creative ways of using their property assets, will see the best rewards. Innovative councils will be most open to embracing shared use and co-location as ways of ensuring the right spaces are in the right places. 

Successful project delivery requires councils to develop projects that use assets to facilitate change; offer genuine engagement between public sector organisations with strong partnership working and joint solutions; where collaboration is based on a shared vision; and where form follows function when it comes to delivery mechanisms and governance. Underpinning this there needs to be strong leadership and broad-based buy-in. Are councils embracing this brave new world? Several successful OPE projects are emerging indicating that change is happening, including: 

  • An innovative commercial property vehicle in Worcestershire, the first collaboration of its kind in the UK. The project involves a single asset management company, formed by several core partners to deliver transformational change with projected revenue savings and capital receipts of tens of millions over 10 years. 
  • A purpose-built public services hub as part of the regeneration of Ellesmere Port’s town centre, now at full business case stage. It is hoped many benefits will result by bringing diverse public sector organisations together under one roof, including service integration/transformation, saving taxpayer money through capital receipts and more efficient services, and creating hundreds of new homes on land released for development. 
  • Proposed co-location of education, council offices, health, library, police, fire, sport, leisure and voluntary sector facilities by Norfolk and Suffolk councils to release redundant buildings and generate capital receipts. Key elements are mapping the collective asset base, creating multi-agency hubs and combining emergency service facilities. 

By looking afresh at their property estates, councils can identify under-utilisation quickly. It is no council’s interests to retain assets that are really liabilities. The choice is either to offload the asset (thereby generating much-needed income or capital, reducing operating costs and potentially releasing land for new housing) or develop plans to maximise use (often by sharing facilities with other public, voluntary or community organisations). 

The Conservative manifesto contained a commitment to continue “to sell unneeded government property and to co-locate services wherever possible”. The government will look to pioneering councils to re-think service delivery, focusing in particular on the important role managing, rationalising and consolidating their estates can play. Pressure on local government is expected to intensify over the next five years. 

A new Housing Implementation Taskforce, made up of 10 senior ministers, has been created to encourage councils to release surplus land – particularly brownfield sites – for new housing developments. The Housing Bill is expected to oblige councils to maintain a register of brownfield land capable of redevelopment for housing. The London Land Commission has also been created to identify and release all surplus public sector-owned brownfield land to boost housing supply. 

Significant progress will be made when councils adopt joint working strategies and collaborate with partners in the NHS, central government, schools and ‘blue light’ services. This is already starting to happen.

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