Costs of Whitehall PFI buildings ‘eye-watering’, says government property head

15 Nov 12

The executive director of the Government Property Unit has said the costs of Whitehall’s Private Finance Initiative buildings ‘stick in my throat’ and he hopes to reopen the agreements in the future.

Speaking yesterday at CIPFA’s National Asset Management Conference, Bruce Mann said the three central government PFI offices cost three times as much per desk as freehold offices.

He said: ‘It sticks in my throat that, in terms of central government, we are locked into three PFI deals that, in the cold light of day, don’t look to me like the best deal the government has everdone.’

Mann told delegates that the GPU, which was established by the Cabinet Office in 2010 to find efficiency savings, plans to reduce the number of central government buildings occupied in London from 213 to 22 or 23 by 2018. It also aims to reduce the number of buildings occupied outside London from around 860 to around 120.

Implementing this strategy was the current priority as around £150m a year is being wasted through the inefficient use of government buildings, he said.

The ‘imperative for change’ is the projected surplus between the number of workspaces the government offices will have, and the projected number of civil servants in the future. ‘The gap is, as I put it to departments, wasted taxpayers’ money, about £150m a year,’ he said.

However, after ‘today’s issue’ of saving these ‘hundreds of millions of pounds – which can be got at, in my view, quite easily’ – had been resolved Mann wanted to ‘get inside’ the PFI deals for renegotiation.

When comparing the costs per seat of freehold, leasehold and PFI buildings, ‘my eyes water every time I look at the PFI numbers, it is that simple’, he said.

‘I recognise that in many cases, certainly in the three PFI buildings in the Whitehall area, that is a function of the fact that the PFI contractors went in and made good some deeply historic neglect of these buildings. Therefore there is, if you want to think of it that way, some investment costs that need to be paid back.

‘On the other hand, if I look at those PFI deals, I see some financing numbers which look to me extraordinary, speaking personally. In the medium term, I would quite like to get inside those PFI deals. It is not today’s issue… but I wouldn’t half mind getting inside some of those because I think there’s money to be had.’

However, changes to any PFI deal would require individual negotiation of each, with ‘no central lever we can pull’, he added.

‘There’s no simple mechanism, which means it’s going to be a hard grinding every inch of the way on those, but I think there’s money inside there we ought to be going for. In the meantime, they’re not bad buildings, they’re quite popular, and we can use them for the strategy I described to test out some of new working environments.’

Mann told PF that the Treasury had improved its liaison with the GPU since the Public Accounts Committee criticised it for standing in the way of property sharing earlier this year.

The PAC report was based on an examination by the National Audit Office in December 2011. Mann said that since then the Treasury had ‘kept going’ with work to agree property-sharing deals between departments.

The department was now being ‘quite creative about some financial solutions which enable package deals to be done’. These can include some ‘lubrication’ of property revamps to then free assets for sale or other purposes, he added.

‘They are seeing the bigger picture, which four months ago [when Mann took the post at the GPU] I was quite worried about. I won’t say we have a new set of rules or anything like that, but we are moving in that direction.’


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