Francis Maude – 2013 Speech on Government Property

Below is the text of the speech made by the Cabinet Office Minister, Francis Maude, at Admiralty House on 2nd December 2013.

Introduction

You can tell a lot about a government’s priorities by looking at its buildings.

To think of totalitarian regimes of the past conjures up images of large monotone concrete office blocks. Faceless, uninspiring, conformist – they reflected the bureaucracy of the all-powerful state; political systems that claimed to serve the people, but left little time for individuals.

In the UK, the earliest government buildings were an extension of the Royal Court. It’s no coincidence that the only surviving parts of the original Palace of Whitehall are the Banqueting House and the remains of King Henry VIII’s tennis courts.

It’s said that Henry would rent his tennis courts out to the public when he wasn’t using them – so someone who knew how to maximise the value of government property – and in some ways perhaps a man after my own heart.

Later buildings reflected more of an international outlook as Britain found its place in the world – the India Office down the road, and Admiralty House, where we are now, are cases in point.

Today, the public rightly has little time for excessive grandeur. They expect government buildings to be efficient, effective and to serve the interests of those on the outside as much as those on the inside. So I’m going to talk about our property strategy and I’ll demonstrate the priorities at the heart of this government.

Because through the management of our estate, you can see the kind of government that we are:

– an efficient government – determined to spend the taxpayer’s money with the same care and consideration as we would our own

– a government that’s committed to economic growth – making sure every penny we spend boosts Britain’s competitiveness

– and a reforming government – seeking new and better ways of delivering public services

Let me explain how.

Efficiency

The government is the UK’s largest landowner and the public sector estate is valued at £370 billion – with running costs of £25 billion a year.

So when it came to saving money by making government more efficient, we naturally turned our sights to property management. Departments and their arms-length bodies have traditionally owned and managed their own property. So we found a system that was inconsistent, disjointed and inefficient – duplicated functions where there could have been shared services; fragmentation where there should have been coordination.

Successive governments had taken out expensive new leases, even though freehold space was available and unused. And the taxpayer was picking up the tab for outmoded or vacant buildings.

We established the Government Property Unit (GPU) to be a catalyst for change, with a mission to create an efficient, effective estate that represents value for money.

GPU’s role is certainly about collaboration. But coordinating assets owned by 24 ministerial departments and hundreds of other government organisations is no easy task. So it’s also about providing direction. And that meant equipping them with the necessary tools to steer through change when collaboration alone is insufficient.

Chief among these tools were the tough controls we introduced to stop unnecessary expenditure – and we’re unashamedly militant about enforcing these. Approval is needed for any spend over £100,000 – be it the renewal of lease or exercising a lease break option, a new acquisition or a new build development. These tools worked – enabling rapid downsizing as we withdraw from leasehold properties and concentrate staff in the buildings we actually own.

Just look at the results: we’ve exited 1.81 million square metres of property since May 2010, disposing of 770 freehold assets and raising over £1 billion in capital receipts.

But estate rationalisation is one part of a much wider efficiency programme.

We’ve also been reducing the size of the civil service workforce – it’s fallen by 15% since 2010 – and this saved £2.2 billion on pay and pensions in the last year alone. A smaller workforce has naturally allowed us to make further property reductions. In fact, it becomes a virtuous cycle: 1 department moving creates opportunities for others to do the same.

The building at 1 Horseguards Row – just by St James’s Park – is an impressive example of how departments can share office space. Originally home to HM Treasury and HM Revenue and Customs, it now also houses staff from 5 other ministerial departments and several smaller public bodies – all happily existing side-by-side.

New shared property in Bloomsbury

And today, I’m pleased to announce that the Cabinet Office and Government Property Unit will deliver a new shared property by spring 2014, which will produce savings of £60 million over 10 years.

The 8,000 square metre building in Bloomsbury, vacant since the Insolvency Service moved out in 2010, will now be home to 7 different government agencies – ranging from the Arts Council England to the Immigration Service Commissioner. Although the different organisations have varied roles, all the facilities that can be shared, will be shared – from reception areas and conference suites to cycle stores and first aid.

This kind of project – coordinated, innovative, cost effective – is one of the reasons why GPU’s London Estates Rationalisation Team was presented with the 2013 Award for Excellence in Property Management by the UK Association of Chief Estates Surveyors. In London alone, the GPU has helped reduce the amount of government floor space by around 22% in fewer than 4 years. Overall, space efficiency on the government estate is now less than 12 square metres per full-time employee – down from 13 square metres in 2011.

But there is more to do – much more.

With the support of GPU colleagues, departments are on track to deliver a workplace standard of below 10 square metres per full time equivalent by 2015.

Admittedly some eyebrows were raised when we decided this space standard while sitting in my tennis court sized office. However, we know that similar efficiencies exist in the public sector at large. That’s why GPU has worked with local government authorities to establish 12 local authority pilot areas to seek out the same kinds of efficiencies as we’ve found in central government.

UK growth

But in addition to delivering efficiencies, our other consideration in managing our estate has been to help support businesses and stimulate growth. An iconic scene in the most recent James Bond film ‘Skyfall’ is a perfect example of this. After a tense penultimate scene 007 stands on the rooftop of DECC and pensively takes in the view of Whitehall with its fluttering flags encapsulating the patriotism upon which this string of films is established.

It’s not often that government efficiency leaves you shaken and stirred but this was a great advertisement for the UK film industry and for the ability of the GPU to back British brands. This was a great way to bring in revenue from the government estate – and to support the UK film industry. That’s admittedly one of the more eye-catching examples.

But, quite simply, we want to ensure that every penny of government spending boosts, rather than undermines, Britain’s economy.

Another good example is Admiralty Arch. Once the home to the First Sea Lord, it’s a beautiful building – indeed a landmark. Inside, however, the story was rather different – a series of tired and tatty compartmentalised offices, joined by a rat run of doors and stairs. No longer suited to modern government, it cost £900,000 a year to run and was in urgent need of modernisation.

We could have spent millions bringing it back up to scratch. But we came up with a better solution – a new life as a hotel.

The building will be restored to its former glory; the public will enjoy greater access and the taxpayer gains £60 million through the sale of the leasehold.

And, crucially, in its new guise we’re helping to create jobs in construction and tourism too.

The whole London property market has been a major beneficiary of our approach.

You only have to walk down Victoria Street to see the blaze of redevelopment that’s been made possible by rationalising the government estate – outmoded 1960s-era buildings are being knocked down or refurbished to make way for a range of new commercial and residential uses. The benefits reverberate throughout the supply chain, supporting architects, planning practices, construction firms, suppliers and hauliers alike.

So it’s not surprising that when property consultants Knight Frank examined the impact of government exiting 16 buildings in London, they estimated that local economy received a £3.5 billion boost. Land and property owned by government is a hugely valuable commodity – and particularly important for local communities, keen to unlock the potential for redevelopment.

The GPU is now conducting a Strategic Land Review to identify at least £5 billion of government land and property to be sold between 2015 and 2020.

In particular, we want to help increase the supply of land available for affordable housing.

To date we have released land with capacity for 58,000 homes – and our ambition is to release land to support 100,000 homes by 2015.

But the role played by government doesn’t end at the point of disposal.

We’ve made it a priority to reform how construction is done in the public sector. Yes, to build the schools, hospitals, and roads this country needs – at a good price for the taxpayer – but also to produce a stronger, more competitive construction industry.

The government’s Facilities Management Strategy will be a significant contributor to future efficiency savings.

Similarly, Government Soft Landings, which you will be discussing later this week, will better align the design and construction of government assets with the needs of those who operate and use them.

And Building Information Modelling will be mandated for all central government projects in 2016.

One of the first projects to benefit from this technique was Cookham Wood Prison, where £800,000 was saved by giving the governor, staff and contractors a walkthrough of the 3D model at the design stage so they could suggest changes to suit their needs.

Reform

So our policies are delivering savings and supporting growth right here, right now. But what of the future?

Winston Churchill worked from this building when he was First Lord of the Admiralty – during the First World War and again at the start of the Second World War.

Churchill once said “We shape our buildings; thereafter our buildings shape us.”

He was right. And it’s something that has influenced our thinking.

The Government Digital Service (GDS) is a case in point. We created GDS with a mission in mind: to build a digital government for the future – providing faster, simpler, better services for the public, at less cost to the taxpayer. From the outset we had a clear idea of the kind of culture that would bring about this transformation: it had to be creative, it had to be innovative and it had to be agile. I’d seen this kind of environment before when I visited IT companies in Silicon Valley.

So we built GDS in their image – deliberately situating it halfway between Whitehall, the traditional heart of government, and Shoreditch, the so-called ‘Digital Roundabout’, home to London’s hi-tech digital and creative firms. And inside, every spare area of surface is covered with post-it notes and charts that staff use to share design ideas and track progress. We want this to be the norm for government workplaces – environments that empower staff to find new and creative ways of delivering public services.

Speaking to civil servants, it’s clear they clamour for better workplaces. That’s why as part of our Civil Service Reform Plan we have launched a programme called ‘The Way We Work’. Property is part of this. But it’s a wider culture change.

Last year, the UK government adopted alternative working patterns to ease the pressure on the London transport system during the 2012 Olympic and Paralympic Games. We established 500 new alternative work spaces outside London, including an office hub in Croydon. These arrangements were specific to the Games, but we learnt important lessons.

Effective working doesn’t require employees to be at the same desk at the same time every day. It means thinking about the tasks to be achieved and choosing the most appropriate location from which to accompany them, freeing people to work in the most productive way.

Flexible working can bring significant savings by reducing the cost of overtime and extending service hours. But it needs to be managed better, remembering that the needs of the business should always be the first consideration. Decisions must be taken based on the outcome for the organisation rather than just the individual; accommodating employees is great – but it’s actually about unlocking their full potential.

And that requires a culture change, whereby performance is measured not on the basis of how long people are at their desks, but by the quality of their work. So we will be setting out new guidelines on flexible working for civil servants, together with support and training, to ensure it works to the benefit of employees and organisations alike.

And exploiting new technologies will help us carry out more work from alternative locations. So I’m determined to break down the barriers that make cooperation harder and frustrate hard-working, dedicated civil servants wanting to do their best. Top of the list is IT.

All too often, IT at work is worse – and more expensive – than the IT we use at home, when it should be the other way around. It needs to keep employees connected; and it needs to be invisible – you should be able to get on with your work without noticing it. Take it from someone who has experienced more than his fair share of frustration in front of a computer screen – no single workplace reform will improve morale more than better IT.

Another problem is overly-restrictive security arrangements. It’s why we are introducing a new single pass for government buildings. It will reduce time wasted having to escort visiting colleagues and it will help foster a sense of unity – civil servants shouldn’t feel like strangers in government buildings. These are the basic ingredients of better workplaces.

But we know we are behind the curve. Many of our country’s most successful businesses have already ditched their out-dated ways of working. Over the past 3 years Vodafone UK have been implementing their own reforms and the Government Property Unit has been learning from their experience. I was able to see it myself when I visited their Newbury Campus earlier this year – and W4 delegates will be visiting later this week. The evidence is enormously impressive. Vodafone have seen:

– a 30% reduction in their office portfolio

– a 200% increase in occupancy

– and a 20% productivity gain

I’m pleased that 2 UK government departments – the Department for Transport and the Department for Business – are piloting new kinds of workspaces based on the Vodafone model. Transforming the way we work in government has the potential to unlock multiple benefits: efficiency, productivity, cost-effectiveness, better staff morale and better recruitment.

And as work becomes something people do – instead of a place they go – new opportunities will be created to release savings from the public estate. Savings that can be better spent on front line services. And this can’t come soon enough.

Conclusion

In the UK government, we’re proud of what we’ve done so far – but we know we have much further to go. Indeed, the task of making ourselves more efficient is one that never ends. There are always new and better ways of doing things.

So it’s a great pleasure to be hosting this conference. You are the leaders and rising stars of public sector property. I’m sure you have many examples and innovations of your own to share. We are listening – we want to learn – and we look forward to hearing your own national perspectives during the week.

Thank you very much.