MPs criticise Government strategy to invest in office space despite rise of homeworking
An influential committee of MPs has criticised the Government’s management of its £158 billion property portfolio in a report that questioned plans to invest in office space and described a strategy to reduce the operating costs of the estate as "not sufficiently ambitious".
In the report published by the Public Accounts Committee last month, MPs also criticised poor data collection, noting that incomplete databases could lead the Government to sign leases which are not good value for money.
The cross-party committee said that a shift in 2020 from collecting data on offices and warehouses to collecting data on all government-owned property (which includes, for example, schools and hospitals) is partly to blame for the inefficiencies.
According to the report, a new bespoke database which should address the issues has been hit with a series of "unnecessary" delays. The contractor, who was supposed to deliver the database in 2021, was fired in July 2022 and a new contractor is yet to be appointed.
The committee also said the Government does not have enough data to make some decisions regarding its office-space portfolio.
The report said: "Demand for office space has decreased since the pandemic and it is unclear what long-term impact this will have on commercial rents. Government has incomplete data on the usage of offices and, although new systems are being rolled out to gather such data, it is not yet available."
The report later added that, without a clearer understanding of what is needed, "the government risks being locked into long-term, expensive leases, the costs of which could be passed on to the departments that sublet space for years to come".
In light of this, MPs said they are "sceptical" that an initiative called the Government Hubs programme, which seeks to relocate civil servants from small offices into large offices, still represents good value for money.
MPs highlighted one current contract which has seen HM Revenue and Customs locked into 25-year unbreakable leases for six of its hubs with higher rents than the current market.
Further concerns were raised about the Government's plans to reduce the operating costs of its estate. Data from 2020-2021 show that the operating costs for central government property were £22 billion, which on a valuation of £158 billion is 13.92%, "which is higher than we expect," the committee said.
The Government's current strategy, which aims to reduce the annual operating costs by £500 million by 2025 (roughly a 2% reduction), is "not sufficiently ambitious", the committee said.
The report also questioned Government plans to dispose of surplus property and generate £1.5 billion by 2025 to be reinvested, as detailed plans have not been published about how it will achieve this target.
"In our report on the last disposals programme, many departments were significantly behind their targets for land disposals. This time, the Cabinet Office needs to ensure that the departments with the largest land holdings fully participate in the disposals programme."
Commenting on the report's findings, Sir Geoffrey Clifton-Brown MP, Deputy Chair of the Public Accounts Committee, said: "The whole plan for a network of government office hubs across the UK appears to be in some disarray, with radical shifts in office space use and rental values, but the Cabinet Office simply hasn't got enough grip on the facts on the ground to adapt."
He later added: "Government is clinging to the idea it can sublet surplus spaces which are now considerably higher than market rent. The PAC has already warned that just won't wash."
Adam Carey
