WIREDGOV

Independent property experts say the Government’s work to consolidate and rationalise its estate has stimulated London’s economy by £3.5 billion, Minister for the Cabinet Office, Francis Maude, revealed recently.    

Global property consultancy Knight Frank LLP have estimated the Cabinet Office’s Efficiency and Reform Group has unlocked vast economic benefits by helping civil servants vacate buildings in some of the most sought-after locations in central London. Looking at 16 selected properties, Knight Frank argue that almost a billion pounds has been invested by the private sector in a blaze of redevelopment activity, as outmoded former government offices are pulled down and replaced, or refurbished and adapted for a mix of business, commercial and residential purposes.  

Francis Maude said:

My department’s Efficiency and Reform Group has helped save over £640 million for the taxpayer by getting to grips with our property estate and selling over 250 surplus buildings. This is part of an overall strategy which has saved the taxpayer £12 billion since May 2010. 

"We’re determined to help boost the economy by reducing the cost of the public sector and allowing the private sector to flourish – Knight Frank’s analysis shows our work has reverberated through the property and construction sector to stimulate London’s economy and they suggest it’s given our capital a boost of over £3 billion.

"We’re reforming the way government works – it’s becoming faster, smaller and doing more online. Civil servants need modern workplaces, better IT and the flexibility to work from different locations in order to be more efficient and make greater savings. It’s good financial common sense to let go of properties that no longer suit our needs and reap maximum benefit for both the taxpayer and the wider economy. Replacing 1960s-era government offices with modern buildings is another step which put us on the front foot in the global race."

Knight Frank’s £3.5 billion stimulus calculations have taken into consideration everything from:

• the injection of £2.3 billion of new investment capital
• the £1.13 billion value of ensuing work for the property and construction industry
• £7.5 million per annum of additional business rates and council tax income
• £54 million of planning gain and public benefits brought about through additional housing and tax revenue for local authorities, including 1,535 new homes for London (of which 253 are affordable homes). 

James Leaver, Head of Public Sector at Knight Frank, said:

We’ve recognised the Government has been working hard to reduce the size of its London estate. Many of the buildings which have been exited were nearing the end of or beyond their economic life. They offered an uninspiring working environment for their occupants and were expensive to run. Government departments are now consolidating, primarily into core freeholds and more efficient modern buildings. The culture in government is changing and buildings are now being shared, often by more than one government department.

"The release of these buildings has created much needed activity in the London property market and we are now seeing the regeneration of large areas of Victoria and Westminster. Our analysis demonstrates that, despite earlier concerns, which had been raised in some quarters, about potentially “flooding” the property market, this has proven not to be the case. A shrinking government estate has delivered efficiencies for government and opportunities for UK PLC.” 

Major redevelopments have kick-started in London as a result of the Government exiting property:

• In Victoria Street, civil servants from the Department for Business, Innovation and Skills have vacated Kingsgate House, which is being demolished to make way for a new mixed-use development incorporating a 15-storey residential building, 35% of which will be made available as affordable housing. 
• After almost a century serving as offices for the Land Registry, 32 Lincoln’s Inn Fields is now occupied by the London School of Economics.
• At Ludgate Hill, demolition works have begun on the former offices of the Crown Prosecution Service to make way for a new 380,000-square-foot office and retail development. 

Recently, civil servants from the Department for International Development left its expensive HQ next to Buckingham Palace to move into Government-owned offices at 22-26 Whitehall, in yet another example of joint deals secured together with the Government Property Unit – part of the Cabinet Office’s Efficiency and Reform Group.  These buildings have been vacated as a direct result of a nationwide programme run by the Cabinet Office to rationalise and modernise the civil estate, which has already generated over £640 million in 20 months since May 2010. This forms part of the wider Civil Service Reform Plan which was published last June. By deploying staff to alternative locations, encouraging departments to share office space and developing more flexible ways of working, the Government has been able to sell unnecessary freeholds and exploit break clauses in under-used leaseholds. 

Notes to editors

1. Civil Estate – Rationalisation Impact, an independent analysis prepared by Frank Knight LLP, is available at http://www.knightfrank.co.uk
2. Since Knight Frank began their analysis, the Cabinet Office has announced that Admiralty Arch, which is no longer required by the government, is being leased for 99 years to Prime Investors Capital Limited for use as a landmark hotel, while the Department for International Development has exited its leasehold on 1 Palace Street – a prime location next to Buckingham Palace. 
3. The Civil Service Reform Plan, published by the Government last June, sets out a series of actions designed to facilitate better working across departments, including exploiting new technologies and office designs that enable staff to do their work at anytime and anywhere.
4. For more information about the Government’s property portfolio strategy, please call the Cabinet Office press office on 0207 276 3811.
5. For queries about Knight Frank’s analysis and report, or for an interview with a spokesman from Knight Frank LLP, please call Charlotte Baylis on 020 70861 1744.