A year into the Government Property Unit’s latest attempt to coordinate the use of public land assets, Mark Rowe tests reactions to the scheme – and draws out the lessons learned. Illustration by Miles Cole
Mention the word ‘landowners’, and most people think of stately homes, Scottish estates and grouse shooting. But in fact, the UK’s largest landowner is the public sector. According to the Government Green Book – the Treasury’s guidance to public sector bodies on appraising proposals before committing funds – the value of the public estate stands at £380bn, of which £230bn is local authority land and property.
These figures, though, are shrinking as government implements its plans to sell off buildings and integrate services. The aim is to gather receipts from sales and reduce running costs – which the Treasury puts at £25bn per annum, with a £40bn maintenance backlog. Government, both local and central, appears to believe there is untapped potential to sell land to stimulate regeneration – the Local Government Association, for example, says that 40% of developable land is held by the public sector. The 2013 spending review contained a commitment for central government to release £5bn worth of public land between 2015-2020 for what the LGA, in a briefing paper on capital and growth, describes as “more productive economic use in the private sector”, while local authorities are expected to realise £13.3bn in property sales during 2015-18.
The latest scheme to facilitate this strategy is One Public Estate (OPE), which brings together central and local government, plus other public bodies, to take a geographical – rather than an organisational – view on getting the most value from public sector land. Launched a year ago, it involves 12 pilot areas and will expand this month to include a further 15 councils.
The fact that the OPE is the successor to three similar programmes, all implemented since 2010, provides a heavy hint that it’s taken a while for the Government Property Unit (GPU) – which sits within the business department’s Shareholder Executive, but answers to Cabinet Office minister Francis Maude – to find the right model. During that time, the GPU has moved from trying to manage its own local property pilots to teaming up with the LGA; the OPE, it says, is all about tapping into local knowledge rather than dictating from on high exactly what will be sold, built and shared.
A year on, the GPU says that the pilots have secured £21m savings in running costs, and generated £88m of capital receipts. In the long term, it says, their collective benefits could run to £40m in savings, and the creation of 5,500 jobs and 7,500 homes.
The success of the scheme relies on public bodies working together to find common benefits. David Bentley, head of asset management at the Chartered Institute of Public Finance and Accountancy (CIPFA), draws a parallel with the sharing skills we’re taught as children. “As a child I played with Lego, and so did my sister. If we shared it, we had more Lego to play with. Historically, central and local government didn’t play together. There wasn’t much sharing of the ‘Lego’.”
So what have the pilots done to reduce costs and make better use of land? In Worcestershire, the police and fire services will later this year move into the country’s first purpose-built shared police and fire station – a move expected to cut running costs by 25% and raise up to £125m through sales. In Hull, a new health centre has brought health and community services under one roof, and enabled the council to terminate 13 leases and vacate six buildings. In Andover, the OPE plans to re-use the magistrates court building – scheduled for closure – to co-locate cultural, leisure and health facilities.
In Leeds, the city council sold an eight-acre site to West Yorkshire police for a new divisional HQ; the council then purchased the city centre police station to facilitate a car park for a John Lewis store that will create 991 jobs. “The OPE was the catalyst that brought people together,” says Dayle Lynch, project manager for asset management at the council. “Until then there wasn’t a regular structure for people to talk to each other.” She adds that the police deal “was just one of several projects under OPE,” which brought together “all the significant partners, the health bodies, further and higher education.” The scheme has “enabled the neighbourhood police to move in with our neighbourhood housing department, which is common sense but somehow wasn’t that easy to do before,” she adds.
Lynch emphasises that OPE has done more than simply sell land. “It’s been about how we can use existing land better: co-locating, perhaps vacating a freed-up building to release capital receipts.” She believes that regular dialogue is key to making OPE successful: “To start with, it’s easy to be in your own bubble and look at your own issues.”
Partners need to have a clear idea of the business model for new projects, she adds – for example, whether occupants will pay rent or simply contribute to utility bills – and this works best if agreements are put in place at chief executive/director level. “Bring them into meetings, and get a memorandum of understanding to the effect that this is what you are going to do,” she advises. This can be time-consuming, “but you need to do that as early as possible, because otherwise you get close to achieving the deal only for these questions to come up.” Lynch is also supportive of the GPU’s role, saying they were “very helpful in putting us in touch with the right partners.”
The OPE’s emphasis on tapping into local knowledge is welcomed by Stephen Jacobs, the LGA’s senior programme manager for the OPE. He notes, however, that the requirement to work together – and, sometimes, to put wider benefits ahead of organisations’ narrow interests – has taken some getting used to: “People are having to learn new tricks. It’s about understanding what keeps the person on the other side of the table up at night. You’re getting organisations to work together in ways they haven’t always done. That isn’t always easy.”
As the programme expands, how can it maintain momentum? The consensus is for fine-tuning rather than radical overhaul. “The voluntary model is better than compulsion,” says CIPFA’s Bentley, “but there are certain limitations, and maybe there needs to be some consideration on relaxing these.” For example, he says, “if local authorities generate capital receipts, they can use them to fund capital expenditure.
That’s not always the case right across the public sector.” If NHS bodies and central departments can’t reinvest the proceeds of a property sale in new assets, they’ll be less keen to get involved.
In addition, Jacobs believes there is a case for establishing a “virtual land bank”: a database of public sector land that could be developed, sold off or integrated. Perhaps unsurprisingly, he argues that it should be maintained by the LGA: “The LGA would be the co-ordinator. Before any acquisition takes place, you consult the land bank to see if any other more appropriate land is available.”
Anybody who’s watched the government’s efforts – which go back to Gordon Brown’s days – to establish a single database of public property assets will know that this is a long-term ambition. But in the meantime, relatively minor changes might give the OPE more heft. Lynch, for example, argues that its pilot schemes should be able to extend their work across wider geographical areas. “We have clear boundaries as a council, but our residents don’t,” she says. “And West Yorkshire police go beyond our boundaries.” The principle could apply to types of organisation as well as locations, she adds: “We need to bring in the third sector, as they are contracted for a lot of council services.”
Bob Baber, who wrote a report on previous government efforts to rationalise its estate, cautions against expecting rapid progress. “Anyone who’s owned a house knows that property takes time,” he says. “With one agency, it takes long enough to sort out acquisitions and disposals. When you have several agencies, it’s going to take a few years before you put things on the ground that local people will recognise.”
Even so, Baber says councils should be ambitious. “They still need to be nimble; take ad hoc opportunities if they come up. It might be that two agencies are talking to each other and a titbit of information turns up about a property. If a deal is there, they should seize it.”