How can we make the most of the public estate?

The first Leaner and Greener report, published earlier this year by the Westminster Sustainable Business Forum (WSBF), suggested that local government could save up to £7bn per year by getting rid of 20-30% of its existing estate. The report states that this can be achieved by rationalising and rethinking through the co-location of services, reducing unnecessary space and aligning procurement.

Estate rationalisation and productivity improvement would deliver considerable environmental benefit

Leaner and Greener II, launched on 7 November, raises the stakes by identifying an additional £8bn of savings across the public sector as a whole from increased workforce productivity, principally through space reductions incorporated alongside new methods of working and, importantly, looking at the vehicles for how this is to be achieved. The second report argues that by improving working conditions and introducing more flexible ways of working, this can be realised. Furthermore, some of the money saved can then be reinvested in rationalising the public property portfolio.

Estate rationalisation and productivity improvement on this scale would also deliver considerable environmental benefits, especially in terms of reduced energy consumption and related carbon emissions. Additionally, public bodies that pool their property requirements, skills and capabilities can invest jointly in carbon reduction schemes and renewable energy generation at a scale that can bring significant benefit.

So how can this be done? Leaner and Greener II makes 19 recommendations for improvement, many of which are dependent on new structures for the management and ownership of public sector property assets, including:

• A Local Strategic Property Forum, formed in a locality from as many public sector organisations as possible, to share customer data and provide the basis for developing common property and service strategies to improve the strategic use and efficiency of property.
• A Pooled Property Partnership Board, going beyond the remit of the Local Strategy Property Forum, empowered to exercise strategic asset management over the property of individual Forum members (who retain ownership).
• A Public Property Company, a new legal entity that goes further than the Pooled Property Partnership Board and holds public property assets in a ‘pool’ and seeks to maximise their potential for rationalisation.
• Public Private Partnerships, with a particular focus on exploiting the skills available in the private sector, where these cannot be harnessed in a particular public sector group, in improving estate management and space utilisation, and in financing.

New structures for property management

The new structures proposed in Leaner and Greener II for estate management and rationalisation are essentially a series of steps progressing to a consolidated model for strategic property management. Public bodies taking these steps, starting with the Local Strategic Property Forum - where service providers as diverse as police, schools, healthcare (where some local organisations are already embarking on operational joint working) and even some voluntary organisations share data on ‘customers’ and identify common property objectives and needs - and moving towards a Public Property Company that owns and manages most or all of the entire local public estate in a strategic way, are setting out on a lengthy journey that many will find challenging and, no doubt, politically fraught.

The report acknowledges these challenges, and recognises the importance of building trust between the various participants early in the process. Case studies demonstrate how some local authorities are already working in partnership with other public service providers to rationalise the local public estate. In addition to our work with Surrey, Hampshire and Bournemouth on projects that support the case studies cited within the report, Davis Langdon’s experience of supporting the formation of public consortia for building works procurement (through, for example, the National Change Agent for Social Housing programme that we have run with Trowers & Hamlins over the past six years) shows that great benefits are possible through pooling resources and buying power.

Better to focus initially on key areas where major savings are possible, for example in office-based services, before tackling the sector as a whole

But these benefits are hard won. Real, beneficial ‘pooling’ involves not only building trust, but aligning objectives, changing deeply embedded cultures and practices, and working together in a genuine spirit of risk-sharing and collaboration. This will require a significant change programme right across the sector.

Potential savings and benefits

Many private sector organisations have moved towards ‘shared service’ models for both front and back-office services. Public bodies have also made savings in this way via the Government Shared Services initiative. But the public sector has been less to the fore in increasing both worker and property productivity by improving space utilisation and introducing new ways of working. The report’s headline savings of £8bn come from a 5% increase in productivity across all six million public sector employees. While a 5% improvement may seem modest - the report recognises greater potential, and work by our own workspace consultancy, DEGW, shows that very significant improvements in office productivity of 15-20% and higher are readily achievable through improved space utilisation and ‘smarter’ working arrangements - replicating this for all employees across the diverse public sector is a major challenge. Better to focus initially on key areas where major savings are possible, for example in office-based services, before tackling the sector as a whole.

In our experience, for the savings envisioned to be truly released the HR change programmes that will need to be driven through to implement such change must not be underestimated. Public bodies embarking on these initiatives will need to adequately budget for these - in not only resource cost and time, but also leadership and governance from senior change agents, and invariably this will start at the top with the chief executive or leader. The IT initiatives and spend to enable such change will also be significant and careful consideration to the funding of this will be needed. It is most likely that pre-investment in IT and HR will be needed before that payback on estates is yielded

This commentary highlights key points in Leaner and Greener II - Putting buildings to work, 2011 - you can download the document at http://www.policyconnect.org.uk/wsbf/leaner-and-greener-ii-putting-buildings-work

Dr John Connaughton is director of thought leadership at Davis Langdon, an AECOM company