Scottish ministers plan property sale

19 Dec 11
The Scottish Government plans to offload at least a quarter of its property over the next four years, and has hinted strongly that it wants councils and health authorities to follow suit.

By Keith Aitken in Edinburgh | 20 December 2011

The Scottish Government plans to offload at least a quarter of its property over the next four years, and has hinted strongly that it wants councils and health authorities to follow suit.

Alastair Merrill, commercial and procurement director for the Scottish Government,  told Public Finance: ‘Within central government in Scotland we thought we needed to demonstrate that we were on the front foot on this and so, we thought, let’s set ourselves a challenging target.’

Asked how confident he was of meeting the 25% disposals target, he said: ‘Ministers will nail me in a very sore place if we don’t deliver,’ adding: ‘From my perspective, that figure is probably a starting point. I would look to go beyond it.’

The plans emerged at a conference in Edinburgh on managing the public sector estate, and follow a series of critical reports by the Accounts Commission, Audit Scotland and the Scottish Futures Trust. They identified a lack of coherent estates strategy among Scottish public bodies, a mounting backlog of maintenance work, and the possibility of major savings. 

Asked whether the government expected equivalent action by other bodies, Merrill said he was not in the business of telling them what to do, but noted: ‘The SFT report highlighted significant potential for savings from the NHS and councils as well.’ In total, the SFT put potential savings at about £28m a year.

‘This is very much on ministers’ radar, both because of the savings that rationalisation of the estate can deliver, but also because of the importance of strategic investment to deliver Scotland’s recovery,’ Merrill said.

‘The spotlight is shining into the dark corners of every publicly owned building as never before.’

According to Audit Scotland, central and local government owns land and buildings worth £34bn in Scotland, plus roads valued at nearly £20bn.

Dick Gill, of Audit Scotland’s performance audit group, echoed Merrill’s call for a transformation in property management. Many properties performed poorly in energy efficiency terms, and the -maintenance backlog in 2009 was estimated at £1.8bn for councils and £500m for NHS premises, he said.

But others highlight the difficulty of scaling down the public estate quickly and at a reasonable rate of return, -especially when the property market is in the doldrums and many commercial -buildings are empty.

Gordon Taylor, chair of the -Federation of Property Societies Scotland and property asset manager for Perth & Kinross Council, said local authorities often confronted a dilemma – whether to sell properties cheaply or to continue -maintaining them until the market picked up.

Taylor also pointed out that a high proportion of public property, some of quite recent construction, fell short of current sustainability standards. The requirement for all public buildings to be carbon neutral by 2018 gave urgency to the opportunity to rationalise the estate, he said.

He predicted a future where reliance on buildings gave way to alternative channels for service provision. More public bodies would share offices and services, and there would be fewer public buildings, which would be of a higher quality and use space more efficiently.

Don Peebles, policy and technical manager at CIPFA Scotland, said that in current conditions selling off property might not be the best way to make savings. More might be achieved by using buildings more smartly – although that could involve some form of upfront spend.

‘Asset disposal is only one part of asset management,’ he said. ‘The whole professional approach has to be considered – asset management is more than just cash realisation, important though that is.’


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