14 May 2004
The Home Office should take advantage of the opportunities presented by the Lyons review and move significant numbers of staff out of central London, a senior MP has urged.
Edward Leigh, chair of the influential Commons' Public Accounts Committee, this week criticised the 'poor' forecasting of staff numbers that meant the new Private Finance Initiative-built headquarters for the Home Office is likely to be too small.
A PAC report published on May 11 found that, rather than falling to below 3,000, Home Office staff numbers increased to almost 5,000 as the department took on additional responsibilities. As things stand, 1,500 members of staff cannot be accommodated in the new building, due to open in January 2005.
'Given this shortfall, the Home Office needs to seize on the opportunity afforded by Sir Michael Lyons's review of relocation across central government to move staff out of London,' Leigh said.
'I find it difficult to believe that 1,300 staff should need regular access to ministers and Parliament and, now that there is insufficient space for the Prison Service to be headquartered in the new building, a regional location for the service's central staff should be seriously considered.'
In March 2002, the Home Office signed a 29-year £311m contract with Annes Gate Property plc for the construction and management of a new building at Marsham Street in Westminster.
Although Civil Service staffing requirements regularly fluctuate, PFI deals tie government departments into paying for building maintenance, no matter how few staff are accommodated.
There were further criticisms of the deal. The PAC said it was doubtful that the Home Office's right to share refinancing gains is worth the £2.75m price the Home Office paid for it.
MPs noted that the Treasury had negotiated wide-reaching concessions on sharing re-financing gains without making any payment for them.
The committee also urged the Home Office to make a speedy decision on the future of Horseferry House, another Home Office building, which is in such poor condition that it is incapable of future economic occupation.
Cost of running the Treasury soars by more than 50%
The Treasury's core running costs have risen by more than half in just three years because of a recruitment drive and the acquisition of its new building, the annual report has shown.
The department's core budget, which goes almost entirely on administrative costs, including accommodation, rose from £63m in 2001/02 to an expected £98m for 2003/04.
Its spending is set to increase even further, according to projections contained in the report, dropping back slightly to £96m in 2004/05 before peaking at £104m in 2005/06.
Chancellor Gordon Brown promised in the March Budget to freeze his department's administrative costs at their 2005/06 level until 2007/08. But these figures show that he is doing so after a period of rapid expansion in his department's spending.
The report, published on May 10, cited two main reasons for the rise in the administrative budget. First, there was an increase in the number of full-time equivalent staff at the Treasury, which has gone up from 909 in 2001/02 to 1,050 for 2003/04.
The department said the current level meant it was now fully staffed, following several years of staff vacancies, and this level would be maintained until 2008. This expansion had taken place 'to reduce staff working long hours and help widen the diversity of people working at the Treasury', the report said.
The other main cause of the mushrooming costs was the modernisation of the Treasury's offices. Its Horse Guards Road extension, built under a 35-year Private Finance Initiative deal, costs the ministry £15m each year.
NAO extols benefits of Mapeley Steps deal
Whitehall departments should co-operate to conclude deals with the private sector to run and service their offices, the National Audit Office has said.
In a report on the controversial Mapeley Steps deal, in which the Inland Revenue and Customs & Excise transferred ownership and management of estates to a private consortium, the NAO said benefits were better than expected.
'A very competitive price' was secured for the deal, which is expected to save the two departments £300m on the £1.5bn contract over 20 years.
The arrangement also gave the departments greater flexibility to meet their business needs in the face of the drive to shift civil service jobs out of London.
However, auditor general Sir John Bourn said: 'There are risks to such a keenly priced deal which the departments must manage very carefully.'
The deal became controversial when it was revealed that Mapeley's owners were based offshore, in the tax haven of Bermuda.
This means that the UK will not gain tax from any future sale of the business, while shareholders are not liable to capital gains tax.
PFmay2004
