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Some departments are on their way towards having a structured and strategic approach to property asset management. But central government departments are still a long way from achieving full value for money from their office accommodation, according to the National Audit Office.

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In a report out today, the government’s spending watchdog found that departments could reduce gross annual expenditure on offices by around £330 million by bringing the cost performance of individual buildings in line with private sector benchmark buildings.

Government’s civil property estate costs the taxpayer around £6 billion a year. Almost £1 billion of this is spent by central government departments on office property alone. Today’s report looked at whether departments are effectively managing and achieving value for money from their own office space.

The report found wide variations in the amount departments pay per square metre for office space. Median costs in 2005-06 (the latest year for which data was available when the National Audit Office carried out its work) ranged from £123 per square metre paid by the (then) Department for Education and Skills to £636 paid by the Department for Culture, Media and Sport, although since 2005 06 the Department for Culture, Media and Sport has rationalised its estate by vacating buildings and providing more open plan office accommodation. The Department for Culture Media and Sport estimates that once this rationalisation exercise is complete, its accommodation costs per square metre will reduce from £636 to £469.

Departmental buildings in London had the highest accommodation cost per square metre at £507 and the North East the lowest at £133 per square metre.

Departments vary in the amount of building space allocated per person. This ranged from 13.3 square metres at the (then) Department of Constitutional Affairs to 21.9 square metres at the Treasury. The Office of Government Commerce (OGC) is currently consulting departments on the introduction of a space ‘standard’ of 12 square metres per person which will encourage departments to work towards improving their occupation density.

Variations were also reported in accommodation costs per person, in part accounted for by the nature and type of building occupied. The highest reported cost in 2005-06 was from the Treasury at £12,041 per person while the (then) Department for Education and Skills was operating at £2,592. The Treasury is aware of the potential for better space utilisation and improved cost per person and has since accommodated the staff from the Office of Government Commerce into the main Treasury building and disposed of, or re-assigned the leases for, two vacated buildings.

The report also found that departments are not yet on top of sustainability issues. Departments were not able to supply information on the amount of energy consumed in 2005-06 for 265 out of 877 buildings reviewed; the proportion of energy from renewable sources for 300 buildings; or the presence of a recycling scheme for 544 buildings.

The Office of Government Commerce (OGC) is looking to improve efficiency from government’s civil property estate and achieve £1.5 billion of annual efficiency savings by 2013. The report concludes that OGC and departments have made good progress in the early stages of implementing OGC’s High Performing Property initiative to make further gains on efficiencies. Both OGC and departments have met the early milestiones: departments have nominated property champions, property asset management boards are being put in place and benchmarking of all buildings has recently become mandatory.

The NAO recommends that departments improve their understanding of the factors that feature in improving building efficiency. Specifically, they need an accurate and up-to-date understanding of the number of people, the occupation level, the number of work stations, accommodation costs and the environmental performance of the building.

Other recommendations include that departments actively engage with the OGC’s High Performing Property benchmarking project, improve space utilisation and address existing office property costs by fully exploring options for locating to cheaper regions while still meeting departments’ business needs.

“Government departments have a challenging time ahead in addressing the efficiency of their office accommodation. There are positive signs of departments beginning to engage with the issue, but there is still a vast amount of change required. Government is still a long way from achieving full value from its office estate.”

Sir John Bourn


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