The government plans to create a centrally run property vehicle to own and manage its office estate in Bristol and London, with a view to seeking private partners and expanding its scope across the country.
Property Week has learned that the project, due to be launched in April, transfers control of offices in the two cities from individual departments to the Government Property Unit, led by managing director John McCready. Departments would then act as clients, and each would be required to request property from the portfolio based on its needs.
The plan will be government property’s key contribution to cutting £83bn in the next four years, as part of the Comprehensive Spending Review.
On Monday, retail billionaire Sir Philip Green underlined the need to centralise procurement of services such as property as part of his efficiency review for the Cabinet Office. He supported the five-year moratorium on government leases, which was revealed by Property Week two weeks ago.
It is understood that McCready will pledge to save up to £5bn on annual property costs through putting government offices into the vehicle.
Details of private sector input are yet to be finalised, but Property Week understands that the unit wants a private sector partner to bring money and expertise to the portfolio. Consortia could bid for one or more contracts covering up to 65m sq ft of office property, altogether worth billions of pounds.
Contracts are unlikely to take the form of sale and leasebacks or a full-scale outsourcing of property. Instead, large management contracts could be tendered in a similar way to the Ministry of Defence’s regional prime contracts.
In London, the government occupies around 24m sq ft, concentrated in central London and Croydon.
In Bristol, the Ministry of Defence has a strong presence. Its 1.3m sq ft Abbey Wood complex is among the largest office developments in Europe.
Green’s review highlighted the potential wastefulness of moving civil servants to cheaper locations. He pointed to the Qualifications and Curriculum Development Agency, which spent £44m on moving from London to a new building in Coventry in 2009 and has since been axed.
The Ministry of Justice is understood to have shelved plans to relocate 1,000 civil servants outside London by 2015. David Cameron weighed in to the debate this week, writing to departments and slamming the previous government for making “crazy decisions” about property.