NAO urges greater collaboration between Whitehall departments over property estates

The National Audit Office has praised Whitehall departments for improving the efficiency of their office property, but urged them to stop managing their estates in isolation from one another if they want to achieve best value.

In a report the spending watchdog found that government departments had reduced the annual cost of the civil estate – including offices, laboratories and courts – by £600m in real terms between April 2004 and March 2010.

This cost has also been reduced by a further £212m since April 2010, thanks in part to a freeze on acquiring new properties or extending leases without the permission of Cabinet Office Minister Francis Maude.

But the NAO warned that many departments had reached the stage where they had consolidated their own estates as much as they could. To achieve further savings would require them to share space and use it more flexibly, it said.

The watchdog also concluded that the Government Property Unit – set up in June 2010 – had been slow to change the way the Government managed its estate.

“In its first year it concentrated on developing plans to transfer the control over the estate to a central body, which it failed to gain support for,” the NAO said. “The plans were later dropped.”

The report said a change of tack by the Government Property Unit set the basis for improved future property coordination.

But it warned that the weak commercial property market meant departments were finding it difficult to surrender leasehold buildings before the leases expire.

“The GPU has had to draw up plans that are necessarily opportunistic since decisions on which properties to retain and which to dispose of are based on what is easy to exit rather than on what best meets government’s needs,” the NAO said.

On the Government’s exploration of how property could help wider civil service reform, the watchdog said it had “yet to see this translate into concrete plans”.

It meanwhile claimed that an average space utilization of 10 m2 per person would allow the government to release about 2.1 million m2 of space – or “more than all of the office space at Canary Wharf” – that costs £830m a year to run. Central government’s office estate currently comprises 2,511 offices or 5 million m2 of space.

The NAO acknowledged that this would require “complex and substantial” reconfiguration of the estate and depend on moving out of surplus office space in a difficult market. It estimated that around £650m of the reduction could be achieved by 2020 by not renewing leases.

Amyas Morse, head of the National Audit Office, said: "The cost of the total stock of government office property has gone down markedly in recent years. Further substantial progress will require a step change in the way departments work together, involving an end to their managing their estates in isolation.

“The Government Property Unit needs to work to overcome the barriers preventing departments sharing office space, and help government find ways of using the estate to facilitate wider improvements in how the civil service works."

A copy of the report can be downloaded here.