Public: Property and regeneration | Public

Fixed assets: the government estate

Fri, 16 Apr 2010 08:01:00 GMT

With a portfolio worth £280bn and estimated running costs of £25bn the public property market is one area where savings could and should be made, however selling off assets is not an easy - or quick process

One characteristic of property, both from a landlord's and an occupier's point of view, is that manoeuvring with it is like turning a supertanker: you have to have made the decision to change course a long time before you hit the rocks.

Leases can be long, commonly up to 25 years, and disposing of property, whether it is owned or rented, is not a fast process.

And, as has been made painfully obvious by the recent economic downturn, timing is everything if the most is to be made of a property's value, whether realising profits or cutting costs.

Headline grabbing savings

Perhaps that is why the assortment of public-sector-cost-cutting promises contained within the three main political parties' manifestos have largely been unspecific about the property occupied by the public sector, despite its estimated £280bn worth (Source: Kable, Public Sector Property to 2013), the £25bn annual running cost of the central government estate alone and the apparent potential for headline grabbing cost-saving statements.

The Conservatives have indicated that making reductions in public sector property costs could contribute to their plans to cut departmental spending by an additional £12bn over savings already planned by Labour.

Property will perhaps form part of the "wholesale review of value for money in the public sector" that the Liberal Democrats have promised will be based on the findings of the National Audit Office and the House of Commons public accounts committee.

Labour has reasserted that if re-elected it would cut back office and property running costs. It's not overtly stated but property is perhaps part of the efficiency savings of £15bn in 2010 and 2011 and the "operational efficiencies" that the Labour manifesto says will cut government overheads by an additional £11bn by 2012-13.

And, to be fair, the present government had already started to look at cutting property costs, the potential of which was identified by Lord Carter of Coles in his part of the Operational Efficiency Programme (OEP), published with the April 2009 Budget.

Office accommodation

Among the findings of this independently authored report was the conclusion that using central government's offices more intensively could reduce its need for office accommodation by 30%, with this single measure saving £1bn a year. Slimming down the remainder of the estate by 20% over 10 years would save running costs of £2bn to £4bn a year while collaborative procurement of facilities management (FM) would save £0.5bn.

Lord Carter reckoned that £20bn could be realised from the whole of the public sector's freehold estate. However, it's no quick fix and will take 10 years – or two parliaments – to realise.

The validity of the OEP won't end on 6 May, whoever wins, and maybe when overlaid with plans to cut quangos, do away with or reform regional development agencies, devolve decision making etc, the scope for property savings will be even larger.

Perhaps it's just as well that John McCready, the head of the Shareholder Executive's recently created Property Unit, has had a few months to get his feet under the table.

Alongside the Office of Government Commerce he's likely to be the person piloting the property supertanker through the next parliament, and possibly the one after that, assuming that successive governments value the advice of someone with actual property knowledge when making property decisions.

Housing at the heart of communities

Thu, 25 Mar 2010 12:33:29 GMT

A new independent report published today shows the holistic benefits to tenants of councils holding onto their housing stock - despite few financial incentives for local authorities

The fact that 1 million tenants in more than 100 local authorities chose to stick with the council as their landlord, despite being denied funding made available to those transferring to housing associations or going down the Arms Length Management Organisation (ALMO) route, is a testament to the vital role council housing plays at the heart local communities.

And our latest research shows that the faith those tenants placed in their local authority landlord was not misplaced. In fact, councils that retained ownership and management of housing are delivering a range of benefits to communities that go way beyond their traditional housing role.

Under One Roof: The holistic benefits of retained council housing demonstrates how stock retained councils are able to add value to economic, social and environmental sustainability as well as delivering services in a joined-up manner.

The report, out today, is published by the Association of Retained Council Housing (ARCH) and the Association for Public Service Excellence (APSE). It shows how direct ownership and management of housing ties in with planning, community leadership, economic development, tackling homelessness, environmental improvements and a whole host of other local government activities.

Survey results found that tackling anti-social behaviour is the area where direct ownership has greatest impact. This was followed by; community cohesion, efficiency and value for money, community engagement, health and wellbeing, addressing environmental challenges, regeneration and neighbourhood renewal.

A catalyst for engagement

The report shows how staff working within a single organisation can liaise more closely when delivering different services to the same individual or family and work in partnership with the police and other agencies. Interviews with tenants also revealed how involvement in decisions about their homes can be a catalyst for engagement in local democracy and involvement in improving other services.

One of the many examples in the report is West Lancashire, where an 11% drop in crime has been achieved due to the housing department placing a member of staff in a multi-disciplinary team. Another is Wandsworth, where emergency control, highways, anti-social behaviour, dealing with dangerous dogs, democratic engagement and provision of additional homes have all been enhanced through the council owning and managing its own housing.

While the research analyses the benefits of stock retention, we are by no means suggesting that this should be the only option. We are instead arguing that, where councils directly control properties, there are advantages in terms of being able to join up housing with other local priorities and services.

Opportunities to build new homes

APSE and ARCH have campaigned for stock retainers to have a level playing field with other social housing providers. We have been heartened by opportunities to build new homes for the first time in decades and we are looking forward to the reform of the iniquitous housing finance system getting under way and hope the importance of council housing in meeting national economic, social and environmental goals is fully recognised in the next parliament.

The launch of Under One Roof follows last week's report from the Public Accounts Committee, which highlighted that councils opting for the ALMO route or transfer to housing associations received extra funds while stock retainers had to meet the Decent Homes standard out of their own pockets and achieved better value when improving properties.

The holistic benefits described in this APSE and ARCH report have therefore been delivered by retained stock councils despite the odds being stacked against them financially. This surely begs the question of what might be delivered if the councils whose tenants have chosen for their local authority to be their landlord are given the proper control and resources they need.

• Copies of Under One Roof: The holistic benefits of retained council housing are available from: mbaines@apse.org.uk
Price £20 APSE and ARCH members, £40 non-APSE and ARCH members

Paul O'Brien is chief executive, Association for Public Service Excellence

Budget analysis: Treasury sets up infrastructure unit for long-term investment

Thu, 25 Mar 2010 11:24:26 GMT

Private funds sought for infrastructure, as chancellor announces a new green investment bank

The government has signalled its intent to continue relying on private companies to provide the vast majority of funding for new infrastructure projects such as roads and power plants.

However, in yesterday's budget, the chancellor Alistair Darling conceded the government would have to play some role, announcing the creation of a green investment bank that would provide £2bn of upfront funding to stimulate private investment.

He also said a Treasury unit, Infrastructure UK (IUK), would draw up a new national infrastructure framework to give clarity over the next 10-50 years.

The budget says the UK needs to spend £40bn-50bn on infrastructure each year until 2030, much higher than the current average of £30bn a year.

The new investment bank will put £1bn from the sale of existing assets – Darling cited the Channel tunnel rail link – into its £2bn fund.

The bank will focus on transport and energy projects, notably offshore wind power stations, where the lack of investment is most feared. IUK will also draw up a national infrastructure framework, to help co-ordinate investment decisions, to be published by the end of this year.

It will set out a long-term, 50-year vision for UK infrastructure, and specify "outcomes" expected over the next 10 years.

IUK will also investigate the cost of major civil engineering works, following Treasury concerns that building costs in the UK are higher than in Europe.

Locally, regional development agencies will establish growth funds within their capital budgets to promote "high-value investment".

The government is also piloting accelerated development zones, in which selected councils will receive capital grants of £120m to support key building projects and commercial developments that encourage growth.

The pilots will help establish whether other funding ideas, such as tax increment financing, are viable.

Property: government adopts a professional approach

Wed, 10 Mar 2010 12:40:17 GMT

This week the government's launched its property asset management with a vice admiral at the helm to steer it through the choppy waters currently lapping at Whitehall's shore

Among its objectives of saving money the government hopes to drastically reduce the cost of running its estate. But as well as talking the talk it has to walk the walk and a new campaign has been launched to ensure that Whitehall departments have all the relevant skills in place.

The launch, under the auspices of the Office of Government Commerce, an independent office of the Treasury, also helps to clarify the role of the "head of the asset management profession", a newly created position to which Vice Admiral Tim Laurence was appointed last summer.

Laurence launched the initiative this week explaining that its aim is to identify and build the skills needed to support the delivery of the government's high performing property strategy.

That in its turn aims to reduce the annual running costs of the government's £30bn estate by up to £1.3bn before 2013.

The OGC says that the approach mirrors methods it adopted to build the government's procurement programme and project management professions.

As well as publishing best practice guidance and developing a competency framework the campaign will establish a professional community within government.

Laurence commented that a key objective of the new profession is to build a sense of community. He added that the "pan-government" campaign will "help develop our identity and our role in managing government's property assets to meet business objectives."

A census is being conducted across the civil service to establish definitions for the profession and support the recruitment of professional membership in order to encourage membership of this community.

The launch also included an open invitation to "public sector individuals" registering an interest in joining the government's property asset management profession to contact the OGC service desk.

As part of the campaign the OGC simultaneously published guidance on the operation of the Property Asset Management Capability Assessment Model (PAMCAM). This is described as a self-assessment tool that will highlight shortfalls in skills and capabilities.

The Royal Institution of Chartered Surveyors (RICS) is working with OGC to develop best practice standards, guidance, training and qualifications.

Property management should be a priority for public sector

Thu, 25 Feb 2010 12:17:37 GMT

Selling and reorganising buildings in local authority control can potentially unlock much-needed cash, but a proper strategy needs to be in place first

In the past there has been a growing realisation that the public sector is sitting on, or in, property that could provide many of the answers to the government's current problems, both financial and in terms of the quality of public sector service delivery.

There is the potential to sell assets, both to raise cash and reduce future liabilities, and re-jigging property can aid the process of streamlining frontline services.

The prime minister raised the bar for local authorities last October when he stated that £16bn could be raised from asset disposals with £11bn of that provided by local government.

Whether the savage public sector expenditure cuts envisioned by both sides of the political divide come sooner or later, the efficient use of property assets will be an imperative for public service providers in a much more significant and transparent way than ever before. So says one of the major firms of property consultants, GVA Grimley.

Local authorities are going to be in the firing line and the firm believes that one consequence will be a 50% reduction in the amount of property occupied by local authority departments.

"Property needs to be at the centre of debate about service change and financial efficiencies," the firm says in what it describes as a "thought leadership research bulletin" called Cutting Costs Not Corners.

Obstacles

One of the main obstacles to achieving government spending reduction objectives is likely to be timing, however. "Given the relatively illiquid nature of property, ambitious strategies need to be put in place now if the unprecedented reform agenda for public sector property is to be met," says the report.

Property is one of the areas where demand can be reined in and savings can be achieved through increased use of outsourced services. But a switch to more flexible ways of working for those activities retained by local authorities will also reduce demand for space while having the potential to increase productivity.

So we can expect to see more council employees working from home and sharing desks when they are in the office. However, to realise the full benefits of changing working practices will mean not just a reduction in the amount of space but also a change in the type of space that is required. There will need to be more "touch down" facilities and meeting spaces as well as "highly IT friendly" environments.

GVA Grimley also says that an "invest to save" model will be needed to create this new type of space.

The report acknowledges that the agenda for public sector property asset management is huge. And it points to further complexities. The fall in property values over the last two years means that the goldmine that local authorities may once have been sitting on is now worth considerably less. However, the other side of that coin is that public sector bodies may find it easier to sell the property that they occupy and simultaneously lease it back from the new owner.

Builders crack the art of consideration

Fri, 08 Jan 2010 09:30:00 GMT

Construction sites have not been exactly environmentally friendly in the past - nor the most political correct of workplaces, but for more than 10 years there has been a quiet revolution going that has seen builders repoint their image

You may have wondered if it is a trick of the imagination or whether building sites really are less conspicuously noisy and dirty than they used to be, or whether there are quite so many wolf-whistling brickies swinging from the scaffolding?

If so, you are almost certainly right, there has been a change for the better on each score. Some of it is undoubtedly due to more stringent environmental and health and safety legislation and the effect of the widespread adoption of policies of corporate social responsibility (CSR).

However, part of the improvement follows a deliberate effort by the construction industry to clean up its act and repoint its image.

The origins of this smarter, more grown-up industry can be traced to the 1994 publication of Sir Michael Latham's review of the construction industry, Constructing the Team, one of the spin-offs of which was the considerate constructors scheme (CCS).

Officially launched in June 1997 when 75 sites were registered, the considerate constructors scheme had clocked up 1,000 sites by November 2000, and by December 2009 - recession notwithstanding - 40,000 sites had been registered by construction companies, all keen to toe the line and abide by the 'site code of considerate practice' which forms the basis of the scheme.

Building companies of course benefit from the scheme, but so too do their clients, who after all have a longer-term vested interest in being a good neighbour.

Given recent levels of construction activity among public sector organisations and their need to be beyond reproach, it is no surprise that government and local authority building projects are prominent among them.

The CCS top 50 clients include the Highways Agency, which has registered 786 sites, the NHS (501), the Environment Agency (153), Defence Estates (138) and the Department for Work and Pensions (92).

Local authorities in the top 50 include: Leeds city council with 322 sites registered, Hampshire county council (226), Kingston upon Hull city council (198), the London Borough of Hammersmith & Fulham (194) and Staffordshire county council (174).

An awareness of the environmental impact of the site

The site code of considerate practice sets out to ensure that work is carried out with consideration for traders, businesses, site personnel, visitors and the general public and with an awareness of the environmental impact of the site as well as the effects of noise, light and air pollution.

Contractors have to use local resources when possible, reusing and recycling materials when they can. Sites have to be kept clean with facilities such as offices and toilets well maintained. Dirt and dust has to be minimised and contractors have to communicate regularly with neighbours.

They also have to ensure respectable and safe standards of dress. "Lewd or derogatory behaviour and language should not be tolerated under threat of severe disciplinary action," according to the code.

In north Staffordshire, Newcastle under Lyme College has just taken delivery of a new £60 million campus. Both the college and its contractor, Hertfordshire based building company BAM construct have been keen CCS participants. The college's vice principal Craig Hodgson said that he was not aware of the CCS prior to starting the project but one of the key requirements was to fit in with the local community.

"We didn't just want to arrive, put up hoardings and be a nuisance for two years," says Hodgson.

The reality was that after the construction period finished in December the college had not received a single complaint. "That's unusual for any project of this size," says Hodgson. "It was managed in an incredibly sensitive way and the first thing that the project manager did was to go out to the community groups and tell them what we were going to do and when we were going to do it – that takes the steam out of any complaints – then they stuck to their word."

"When you are a public sector organisation you want the public to feel positive and reassured because, after all, you are spending public money."

'Whitehall of the north'

Tue, 05 Jan 2010 13:32:00 GMT

A feasibility study on the potential of a civil service campus in Manchester is due to be released in the coming weeks

Estates managers throughout the civil service will have their eyes on Manchester next month.

Piquing their interest will be results of a study into the feasibility of a proposed civil service campus in Manchester will be released revealing the potential for trimming the public sector's annual accommodation bill by relocating - and co-locating civil servants from different departments - in purpose-built, modern and efficient buildings.

A masterplan, Strategic Regeneration Framework, for a scheme that will house 5,000 civil servants will go for public consultation in January.

If approved by government and Manchester planners, the civil service campus will be part of a mixed-use development that includes a new public park and private sector developments.

The campus project has the added benefit that it will transform on a large site around Manchester's Piccadilly Station, a run down and neglected part of the city centre.

February's feasibility study will examine the costs and benefits of the project in detail. Some of the likely savings are likely to be attributable to the energy efficiency of the buildings.

Architect Bennetts Associates is aiming at achieving a (BRE Energy Assessment Method) BREEAM "outstanding" rating. But crucially, the government already owns the land through BRB (residuary), the company that reports to the Department of Transport and handles British Rail Board assets that remain following privatisation of the railways.

Around half of the 5,000 the staff based in the new scheme would come from the Manchester area while the remainder would be relocated from London although it is not yet known from which departments.

The strategic regeneration framework was prepared by property consultant Drivers Jonas and Bennetts Associates in consultation with the Office for Government Commerce and the Government Office of the North West.

Liz Meek, regional director for the Government Office for the North West said that the proposed campus will create greater efficiencies by redeveloping government land and regenerating an important part of the city. "Most importantly this will also create better joined-up government delivering better public services for the people of the region."

Although dubbed in some quarters as "Whitehall of the north" the campus will accommodate a relatively small proportion of the civil service in the region. In the northwest as a whole there are about 60,000 civil servants of whom approximately 10,000 are based within Greater Manchester according to a spokesman.

However, the Government Office for the North West, the Highways Agency and the Training and Development Agency are all planning to move to nearby Piccadilly Gate – formerly Rail House -this year.

'Making assets work harder is good for the public purse'

Tue, 05 Jan 2010 09:53:00 GMT

As John McCready takes up his new role as head of the government's property unit, he talks to Paul Strohm about the state's £370bn portfolio and how he intends to manage it

While the dawning of 2010 seems guaranteed to herald a period of public sector austerity with the focus on reducing government expenditure, it also flags up a renewed enthusiasm for "sweating" publicly-owned assets and, where possible, rationalising them so that any surplus can be sold off.

Public sector property is prominently in the firing line and this week a former Ernst & Young senior partner, John McCready, starts work as the head of the government's newly created property unit, part of the Shareholder Executive formed in 2003 to help government-owned businesses perform better.

The new unit will help government departments and the Treasury to maximise value from the state's £370bn property portfolio and its scope extends across the whole public sector estate, crucially including local government.

In looking for someone to head the new unit the government could have turned to any number of large property consultancies or major property companies so it surprised some that the selection was made from among the big four management consultancies. But prior to working for Ernst & Young McCready, now 53, had worked for Blue Circle Industries, where he was chairman of the disposals group during the takeover by Lafarge, and prior to that he had been chief executive of both Whitehall Properties and Bluewater Park.

He says the government was looking for someone who knew how to take a complex property portfolio with all sorts of different facets and rationalise it.

An understanding of how government works

McCready, who trained as an accountant and holds an MBA from the prestigious INSEAD business school, has also worked for Goldman Sachs. He says the deciding factors in his appointment included this combination of commercial acumen, being steeped in the property market, understanding the financial market and an understanding how government works.

At first glance, the role of the new property unit, which will be based in Whitehall in the Department for Business Innovation and Skills with the Shareholder Executive, is not dissimilar to the estates function of the Office of Government Commerce, which is part of the Treasury.

The size of the estate is so great that everybody's skills will be required

However, McCready does not think there is an overlap. "The size of the estate is so great that everybody's skills will be required," he comments. "OGC is exceptionally good because they understand the estate and they understand the way that government and local government work and they have worked closely with them.

"I think where the property unit comes in is taking that strategic view and saying 'OK, where can value really be created?'."

The aim, he says, is to work with OGC and obviously with the user of the property to say what is needed going forward to deliver value either out of operational improvement or capital value.

Most of the staff in the new unit will come from the private sector, from banks or other commercial organisations and McCready says this will help the government to understand how the markets will look at the property portfolio and what sort of deals the market will look for.

"It's a meeting of the two strains to deliver, hopefully, a beneficial outcome for the tax payer," he comments.

Part of McCready's role is what he describes as providing a "challenge function" to government. "It's not challenging people in an aggressive way, it's just saying lets just make sure that government is as smart and as effective and as best in its class as it can be," he says. "The private sector learns a lot from government and government can learn a lot from the private sector. I will be bringing private sector expertise and saying to the government 'maybe there's another way of doing it'."

Risk allocation

Risk allocation is one area at which McCready will be looking closely. "A lot of value is either created or destroyed because the risk allocation between private and public sector becomes misallocated. In my experience the key is in understanding where the real risk lies," he says. "There are financial risks, political risks, construction risks: there are all sorts of risks and it is always allocating to that person who understands how to best to take that risk that you minimise the cost."

But maximising value in a depressed property market will be among McCready's major challenges. "There is a degree of uncertainty and buyers don't always wish to pay that which vendors wish to receive, but I think that is beginning to change. We are starting to see quite a few deals come through in the market now."

McCready will have barely started his new job when the general election is called, but he is unperturbed. "There is a very necessary role here and I would hope that it is generally recognised throughout the political spectrum that making the assets work harder and being efficient with assets is good for the public purse," he says.

Consents for infrastructure projects to be streamlined

Wed, 23 Dec 2009 09:13:00 GMT

News that the infrastructure planning commission may see its brief widen to look at consents required to unlock major development sites has been welcomed by developers

While major infrastructure such as nuclear power stations and windfarms may get a faster ride through the planning process courtesy of the newly established infrastructure planning commission (Guardian Public 21 December), projects such as the roads and bridges required to unlock major development sites may be getting a helping hand too.

Not only did Alistair Darling's pre-budget report promise to look into a new means of funding such projects but last week the Department for Business Innovation and Skills announced a review of the consents required for such schemes besides planning permission which throw up barriers to investment.

The independent review, which will be headed by Adrian Penfold, head of planning and environment at property company British Land, will look at consents that need to be obtained additionally to planning permission for such projects as bridges, tunnels, pipelines, roads and energy plant.

Penfold says that he is aiming at a consents regime that is "simple, equitable and transparent" and which will enable early decisions on investment.

In his pre budget report Alistair Darling announced that the government will "continue to examine the framework" for the implementation of tax increment financing, a mechanism that would enable a local authority to raise finance against future increases in business rates that will be unlocked by infrastructure improvement.

The announcement received a positive response. Liz Peace, chief executive of the British Property Federation (BPF) which represents major developers. She said that councils must be given the powers they need to raise funding and that if we are serious about kickstarting construction then action will be needed to support tax increment financing (TIFs) and ensure that "we do not stifle great opportunities to rebuild our towns".

But the government's commitment to TIFs is perceived as hesitant. Alistair Parker of property consultant Cushman & Wakefield said that the single sentence noting that the government would think a bit more about TIFs was "disappointing" in the light of expectations raised by minister John Healey in May when local authorities were invited to put forward candidates for TIF pilot schemes and the creation of so called "accelerated development zones".

The BPF points out that by the summer 82 areas had submitted bids for 124 projects indicating strong demand.

"After nine years of consideration and consultation one wonders what aspects of TIF the Treasury has yet to explore," Parker said.

The idea of TIFs, which are used in America, is that total revenue from business rates will be raised owing to new developments such as business parks and TIFs would enable the funding of infrastructure such as roads and bridges that are often a prerequisite for development.

Parker said he is also disappointed that the Treasury has apparently failed to understand what he describes as the "pay-as-you-go" TIF variant.

This would use private capital to find infrastructure without reliance on public revenue guarantees. Parker says that, crucially, this variant does not require the primary legislation that the government yesterday said that it will now consider.

Planning commissioners take up their posts

Mon, 21 Dec 2009 09:04:00 GMT

The new infrastructure planning commission will be ready to accept applications in March on major infrastructure projects, hopefully speeding up the process in getting them off the ground

With the appointment of its latest batch of commissioners just announced and the simultaneous publication of a revised "route map", the new infrastructure planning commission (IPC) says that it is on track to begin accepting applications the beginning of March next year.

Which is just as well because the list of "anticipated" projects is growing and could quickly become a backlog.

In addition to the three commissioners already appointed – including former chair of NHS South West Sir Michael Pitt, who is chairman the IPC has just announced the recruitment of Gideon Amos, currently chief executive of the Town & Country Planning Association; Katharine Bryan, formerly chief executive of Northern Ireland Water; and solicitor Emrys Parry.

Two more full time commissioners will be announced in the New Year and the IPC is currently recruiting a panel of 30 part-time commissioners.

The IPC, which will consider planning applications for "significant" infrastructure projects was established in October to cut the time it takes to bring such schemes to fruition.

The new "route map" sets out the programme for the introduction of the new regime. In March the IPC will begin to accept applications from the energy and transport sectors while the waste water and hazardous waste sectors will have to wait until April 2011 and the water supply sector until April 2012.

Thirteen projects are on the expanding list of anticipated projects, including five windfarms, four nuclear power stations, a biomass power plant, two overhead power lines and a road alteration project in Kent.

Government appoints new property chief

Mon, 14 Dec 2009 11:21:08 GMT

Ernst & Young's John Mcready as head of the new property unit signifies a shift in policy from the government and brings a 'joined-up' approach to managing its portfolio a step closer

John McCready is to leave his post as a senior partner at Ernst & Young at the end of the month to head the government's newly created Property Unit of the Shareholder Executive (see our article in July).

McCready's appointment and the creation of the new unit mean that, for the first time since the property services agency was disbanded in the early 1990s, a "joined-up" approach to managing its property assets is within the government's grasp.

The need for the creation of the property unit was a recommendation of the operational efficiency programme endorsed by the April budget. It is being established in order to help government departments and the Treasury to maximise value from the government's property portfolio, which has an estimated value of £370bn.

The property unit's scope will take in central government offices, operational buildings such as those of the health service and defence estate as well as local authority property excluding council housing.

Its role will include reviewing strategic options and examining the different property models outlined in the Smarter Government document published on 7 December.

The property unit will also help government departments and local authorities to improve property management and identify assets for disposal and, where necessary, help with those disposals.

It will also help the Treasury to manage property better, a task which will extend to devising incentive structures and financing options.

Considered alongside the November appointment of quantity surveyor Paul Morrell as the government's chief construction adviser, the appointment in July of Vice Admiral Tim Lawrence, as head of the Government's Property Asset Management Profession and the inclusion of property in the Smarter Government initiative launched earlier this week, McCready's appointment seems to indicate that property is gaining more elevated status in government perception.

There was, however, some surprise in the property industry that the government had turned to one of "the big four" management consultants to find a property chief. However, McCready has been head of the housing and regeneration team at Ernst & Young.

Prior to that he worked at Blue Circle Industries where he was chairman of the disposals group during the takeover by Lafarge. He has also been chief executive of Whitehall Properties and Bluewater Park and has worked for the bank Goldman Sachs.

Pre-budget report: Investment in infrastructure is vital

Mon, 07 Dec 2009 11:04:48 GMT

A new body to plan what type of buildings Britain needs for the next 50 years will be a vital, if little-noticed, part of the pre-budget report

Infrastructure is never the sexiest of subjects, and yet its effects are all around us. This influence is felt not just in the quality of our buildings – the schools, waste plants, hospitals and houses – but also in our economy. Spending money on infrastructure creates thousands of jobs and pays for itself many times over through increased economic growth.

So when the pre-budget report is published on Wednesday, it will be worth peering through the likely torrent of commentary about tax rates and government borrowing to see what the Treasury has to say about its building plans.

One thing that the chancellor, Alistair Darling, is bound to announce when he stands up in Parliament is the creation of a body called Infrastructure UK. Background work on this idea has been going on since the summer, led by Lord Davies of Abersoch – better known as the City grandee and former Standard Chartered chairman Mervyn Davies.

Its remit, of which the outline is already clear, is nothing if not ambitious: to plan what buildings, transport and communications infrastructure, and energy generation Britain will need for the next 50 years.

The thinking behind Infrastructure UK is that even though British levels of investment in infrastructure have picked up hugely under Labour, that spending has not been coordinated. Large programmes – most delivered using public private partnerships (PPP) or the private finance initiative (PFI) – have been launched in all the key areas, but separately.

That leaves Britain at a disadvantage compared to its European neighbours and even countries such as Australia, which has recently launched a body to coordinate infrastructure investment (called, imaginatively enough, Infrastructure Australia).

"It's very, very important for the UK to have a centralised agency … that can prioritise projects across departments," says Yann Le Saux, the deputy director of French construction firm Bouygues, which for the last 10 years has been building schools and hospitals in the UK.

"The UK is still, despite 12 years of investment in infrastructure, behind the continent, behind countries like France."

Infrastructure UK will therefore try to coordinate the various capital spending programmes, so that, for example, new energy plants can be planned alongside rail extensions. It will also have to think about how private investment can be channelled into these projects.

The body is likely to have a strong PPP 'feel' to it: those helping Lord Davies in his preparations have included Sir Adrian Montague, a former head of the Treasury's PPP taskforce, and Cressida Hogg, the managing director of 3i, a major PFI investor.

A crowded field

How it will interact with other agencies remains an interesting question. It will enter an already crowded field that includes relatively low-profile (but often powerful) bodies such as Partnerships UK, Local Partnerships, Partnerships for Schools, and the Treasury's own infrastructure finance unit (Tifu), which lends public money to PFI schemes struggling to attract private finance.

Infrastructure UK could incorporate some or all of those bodies in an attempt to make life simpler; but if it does, the role of the Tifu becomes extremely interesting. It is, after all, a public infrastructure bank, albeit on a very limited scale.

In a report published earlier this year, the right-leaning Policy Exchange thinktank urged the government to establish an infrastructure bank similar to those operating overseas, notably in Germany.

Such a body, incorporating the Tifu and the Public Works Loan Board, which lends to local councils, could give real force to infrastructure policy, financing the construction phases of projects before they become operational and generate income.

"The prize is an institution," the report argued, "which facilitates the introduction of private sector capital without crowding it out, finances itself with a government guarantee … and whose liabilities do not score in the national accounts."

For the Policy Exchange, a body such as Infrastructure UK without any financing powers would be "significantly" less effective – just another advisory agency or centre of excellence.

The Liberal Democrats agree: their Treasury spokesman, Vince Cable, has already argued for a national infrastructure bank. "Government would provide guarantees but the national infrastructure bank would be professionally managed and make investment decisions on an objective, project by project basis. It would not be a nationalised industry," he said last month.

Not everyone is convinced, however. Contrary to the Policy Exchange's optimism, an infrastructure bank could very easily crowd out private finance, leading to no net increase in investment in buildings. Or it could become highly politicised, despite Cable's assurances.

Nor is it clear how Infrastructure UK, in whatever form it takes, will work with government departments. Will it be able to override their wishes, to dictate that certain projects will happen before others? Or will its decisions be subject to veto by departments, leaving it with no power to do anything other than give advice?

None of this will become clear until Darling has finished speaking on Wednesday. But the hope is that he will give infrastructure planning the prominence it has so long deserved, but not often received.

Making public property more efficient

Mon, 30 Nov 2009 17:39:00 GMT

It is time for a dramatic rethink of how public property is managed

Many public sector employees will have greeted last week's Conservative proposals to transfer government property assets with a shrug of the shoulders. What does it matter who owns or manages the buildings we work in?

The truth is, if it made no difference, then it would not be worth the costs of setting up a new body and transferring ownership.

Judging from the experience of the private sector, efficiency savings in the first couple of years could exceed 20%. That is the motivation for any future Conservative government in transferring ownership.

The efficiencies are achieved largely through a focusing of minds. Paying a realistic cost for property forces departments to use space economically and free up surplus space for disposal.

Senior managers become more acutely conscious of property costs when they have to start paying rent for the space they use. Depending on how those costs are allocated throughout the organisation, team leaders and other middle managers can also be encouraged to reconsider their use of space.

For employees, efficient use of space can mean a very different and, often, very welcome way of working. It is not unusual for a review to find 50% of office space unused at any one time, because staff are at meetings, on leave or off sick. An independent review would also take into account all the ineffective space in cellular offices and meeting rooms.

At a more strategic level, the mission of an organisation should be scrutinised and the properties checked to ensure they reflect priorities. The organisation's history might mean that a currently minor function occupies more than its fair share of space. Any management strategy of leaving room for flexibility or growth will also be questioned.

What might be different two years into an efficiency programme of this type?

· Compulsory desk sharing for those who are frequently away from the office.

· Greater encouragement to work from home for those whose roles allow them to do so.

· More efficiently populated space with fewer enclosed offices for individuals and a more open-plan style of working.

· Fewer meeting rooms dedicated to individual teams.

· More sharing of buildings and central functions between departments.

Of course, a review of property costs provides an additional incentive for the transfer of whole departments away from areas of high property costs. Part of the motivation in the recent past has been to relieve some of the overheating in the south east and bring good government jobs to areas needing regeneration or an economic boost. Those principled arguments have proved easier to resist than a screaming balance sheet.

The property strand of the present government's Operational Efficiency Programme already recognises the potential to generate substantial capital sums from asset sales and further efficiency savings through the efficient use of property. Pressure for changes of this type is likely to come regardless of whether it is Labour or the Conservatives who form the next government.

Any change of government would mean substantial reorganisation, through the formation of new ministries and restructuring in those that survive. Next time the reorganisation could be far more dramatic than a simple change of name plates on office doors.

Rob Oldham is a senior director at property consultancy CB Richard Ellis

London to be rebranded

Fri, 27 Nov 2009 15:59:00 GMT

The mayor of London says the capital needs more publicity in advance of the Olympics

Boris Johnson, the mayor of London, has announced that the capital city will be rebranded next year, with a new "Brand for London" to be unveiled in Spring 2010.

But while London may talk the talk, the reality may not always match up. The city sees an increasing need to promote itself to tourists and potential investors, despite recent signs of the capital's popularity.

This, for instance, the Bank of China announced it is setting up an office in a large building it is buying close to the Bank of England. The decision demonstrates that although some of the cachet of being a city dominated by finance and banking may have diminished over the past few years, London can still pull in the corporates.

The same is true for investment. Overseas investors are still keen to buy a slice of London. The third quarter of the year saw £1.602bn invested in central London's main commercial property markets.

Tourist numbers are also up: the capital's museums, galleries and attractions drew 6% more visitors in September 2009 than in the same period of 2008. About 15 million overseas vistors came to London in 2008 and together with the 11 million domestic visitors spent £22bn.

But London still needs a further push, according to Johnson, who announced that £400,000 will be spent on publicity campaigns in the UK and Europe early next year, following a £2m campaign this year.

Speaking at a recent conference, Johnson said a new "Brand for London" will be unveiled in Spring 2010, partly to tie in with the run-up to the 2012 Olympics.

While the extra spending may boost the capital's image as a leading destination for international leisure and business tourism, there are still concerns that the reality may not live up to the hype.

Jackie Sadek, head of regeneration at property consultant CBRE and chair of the British Urban Regeneration Association, said the general approach was eminently sensible and commendable, but does not go far enough. Sadek wants more spending on public spaces in the capital, such as Oxford Street. "We have a very strong offer but are very badly let down by the public realm," she said.

Urban renewal - Hong Kong style

Wed, 25 Nov 2009 12:43:42 GMT

Halfway through a two-year review, Hong Kong's Urban Renewal Authority is finding that dealing with commercial and social problems requires a new way of thinking - with lessons that are relevant to British cities

From ultra-modern skyscrapers to grubby flatted factories, from mega-rich business people to those living in shanty dwellings, Hong Kong is a region of extremes.

Its government's Urban Renewal Authority (URA) has to grapple with diverse and sometimes frequently conflicting needs of commerce and society which means a study of the way that the region is approaching urban renewal provides lessons that are widely relevant.

A glance at the ultra-modern, picture-postcard skyline of central Hong Kong suggests little in the way of urban renewal problems. The island's restricted land supply ensures that site values almost continually escalate, providing the economic justification for replacing obsolete buildings with something more modern, efficient and above all, taller.

But lurking behind the shiny glass and concrete surface of the city is a certain amount of friction. Not everybody is content with the way that Hong Kong is going.

Consequently the URA's current urban regeneration strategy is half way through a two-year long review process.

The URA's task is to maintain a balance between the commercial freedom that characterises the region and, among other things, the need for affordable housing, the desire to preserve social networks in local communities as well as to conserve what architectural heritage remains.

The last 30 years has seen much more development focused on the New Territories – the area of mainland China that falls under the auspices of the Hong Kong Special Administrative Region.

During the same period manufacturing in Hong Kong has declined from 25% of GDP in the 1980s to 3% in 2009 leaving a question mark over 17m square metres of flatted factories.

Meanwhile, when buildings of all types fall into disrepair fragmented ownership means that consensus is difficult to achieve and they often remain neglected.

The UK's Royal Institution of Chartered Surveyors (RICS), which is prominent in Asia with a branch in Hong Kong, has been asked to contribute to the URA's strategy review and published its recommendations during the MIPIM Asia property exhibition and conference staged in Hong Kong last week.

RICS chief executive Louis Armstrong said that the institution's findings are widely applicable: "We can learn a lot from Hong Kong and from mainland China as well. This is a particularly important piece of work as far as the RICS is concerned."

Among its conclusions the RICS says that for urban renewal to be successful clear public goals are required and the government must provide leadership. "a future 'vision' needs to be set by the public sector, which needs to see itself as a 'Public Entrepreneur'" says the report.

Policy needs to be consistent too. RICS says that drastic shifts and changes in government policy tend not to work – there must be some level of consistency. Furthermore, urban renewal, needs to be a process of evolution not revolution, RICS says.