Squeezing the assets

9 May 11
Faced with the need to save money, public bodies are rushing to sell off their buildings. But there is another way – looking at public sector assets as a whole and working out how to make better use of them
1 May 2011

by Bob Baber

Faced with the need to save money, public bodies are rushing to sell off their buildings. But there is another way – looking at public sector assets as a whole and working out how to make better use of them

Are we about to witness a stampede to offload public sector land, buildings and the staff capacity to manage what’s left? There are some signs that this is what is starting to happen, for instance, with branch libraries. More than 500 out of 4,517 libraries in the UK are under threat or have recently closed or left council control.

This hints at a single service rationalisation of public property that is symptomatic of ‘silo’ thinking, the very thinking that has resulted in most of our public buildings being built for a single purpose and run in isolation from other public services.

In all, public sector-owned property in England is worth 15 times more than Tesco’s assets – with an accounting value of £370bn. The open market value would be much higher.

As pressure mounts for organisations to make immediate savings and raise capital, selling off publicly owned buildings can seem attractive. But this rush threatens longer-term holistic asset planning, which could ultimately lead to greater savings and better outcomes for local communities. Likewise, getting rid of the technical property skills and knowledge held by staff will reduce the sector’s capacity to plan longer-term asset rationalisation programmes that span across public services.

Over the next few months, the government is expected to promote ­a holistic approach to managing public property across neighbourhoods. This is founded on the premise that savings can be made and better outcomes provided if public sector assets are managed as a collective resource across local areas. This is in contrast to the prevailing approach in many places where public sector property is managed within silos behind organisational, service and administrative boundaries that have little relevance to service users.

The legacy of managing public sector assets behind these artificial lines is visible across our communities. We see public buildings designed for a single purpose and in part-time use but with the ongoing cost of their upkeep a constant drain on the public purse. Once created, the permanency of bricks and mortar makes it difficult to break away from this model of public service provision. Trying to change this confronts a basic human instinct to defend and expand the places that we currently occupy, even if the space is not strictly needed or fit for purpose. This is as true for communities and workplaces as it is in our own homes.

There is a persuasive body of evidence to show that a place-based approach to managing public buildings provides better value for money to the public purse. The previous government’s Total Place programme examined a ‘whole-area’ approach to providing public ­services in 2009. It reported that if place-based asset management were adopted more widely, it could raise £35bn in capital receipts over ten years and save £1.5bn in ­running costs.

There are many examples of public organisations working together on one-off building projects but few that do it strategically across the whole of their collective property holdings. Kent is one of the areas already doing it. People living in the county can visit one-stop shops in central locations in towns that provide a ‘gateway’ to both county and district council services under one roof. Other counties are also  setting out on this path, including Hampshire and ­Cambridgeshire.

This approach requires all local public service ­providers, including the third sector, to work together with a shared ambition. For example, they could seek collectively to have fewer but higher quality buildings, which are more intensively used, at less cost and with lower carbon emissions. Fundamental to this ‘one public estate’ model is a ­collective understanding of the needs of local ­communities and how users want to access public services.

This model of different or complementary services sharing the same buildings offers the further prospect of being a catalyst for sharing other resources and costs, such as ICT and staff, leading to other economies. Likewise, the proximity of many public services in the same place creates an environment for synergies to evolve that add value to the service and enhance the experience of service users.

This is where the ­government’s expected promotion of place-based and customer-focused asset management fits in. It is being trialled through the Capital and Asset Pathfinders project, which seeks to remove barriers to a ‘one public estate’ approach. The 11 pathfinders are: Cambridgeshire, Hampshire, ­Solihull, Swindon, Worcestershire, Wigan, Hackney, Durham, Hull, Leeds and Leicester/Leicestershire. Case studies from these areas will demonstrate to the wider sector how this can be done and the savings that are achievable.

One barrier the project has looked at is the disconnect between funding sources for public buildings. If these were joined up, it would make it easier for public bodies to connect asset rationalisation and development programmes at a local level. Joining up funding in this way is not new but is a fresh assault on an old chestnut that the previous government tried to crack ten years ago – then called the ‘single capital pot’. One of the most visible results of this project will be the foundation for a national digital map of all public sector property assets. The rationale for this is that public bodies need to know what each other owns if they are to spot the opportunities for efficiency gains from their collective land and buildings.

Online public access to a map of all public assets is also complementary to the government’s plans for greater public sector transparency. If the findings of some of the test areas on mapping are typical, then there will be some surprises in store for many on just how much the public sector owns in our towns and cities.

Keen observers of government initiatives on public sector property might connect the public asset map with new community rights emerging from the government’s localism and transparency plans. For instance, it could provide the public with a window on to unused public assets. The government has announced its intention to give communities rights to request the sale of disused public land and property. Likewise the map is a small step away from a plan for councils to keep a ‘list of assets of community value’ alongside a Community Right to ‘Buy’ (or, more accurately, to ‘bid’ for assets).

Place-based asset management requires a ­wide-angle long-term vision founded on consensus between local public service providers on community priorities. In many areas, those involved in local government property have been ­battling to get the separate services in their own ­organisations to manage their respective properties as a collective resource. These battles will be even greater for services ­provided in separate organisations.

Maybe this time it will be different because of the ­imperative for public service providers to cut costs. Property takes a significant slice of the revenue and offers a sizeable capital receipt. But the urgency for savings also presents the risk that the services will retreat into their silos and adopt a tunnel vision focusing on their own departmental needs.

Will this mean public service managers look only as

far as the next few years of budget rounds rather than take the long-term vision needed for effective asset management? Will the desire of managers to protect their own services from cuts override any willingness they might

have had to collaborate and share the buildings they ­currently occupy?

And there is another dilemma facing the public sector on managing their assets. Initiatives on property often require some investment upfront to make savings over the life of the asset. Capital receipts from surplus assets and the pay-back from revenue savings often come much later. It also takes time to form partnerships between public agencies, to consult communities and plan projects. But time and money are in short supply.

It is this dichotomy that is facing the public sector now. Public buildings have long lives. They are generally fixed in their use and their place; getting it wrong now will have long-term consequences for communities. The anticipated prompt from the government in the direction of a place-based approach is timely but will it be enough to overcome the gravitational pull towards quick-fix solutions?

Bob Baber is a senior property adviser at CIPFA Property and a specialist adviser on the government’s Capital and Asset Pathfinders project. He can be contacted on [email protected]

A CIPFA conference on May 26, ‘One Public Estate’, will present the next steps for the project 

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