Cabinet office savings have set a high benchmark

A Cabinet Office report, The State of the Estate, shows that £1.4 billion of savings have been made from a thorough rationalisation of the government property portfolio.  Furthermore, £625 million was saved in 2013-14 by reducing the annual running costs of the estate.

That’s a great achievement in five years. We hope it continues in the next Parliament. Plaudits should go to Minister for the Cabinet Office, Francis Maude MP, for his efforts. The approach of the Cabinet Office to drive “smarter working supporting a robust programme of efficient space utilisation and disposal of surplus property and land” is the correct one, and it appears to be bearing fruit.

Using 2 million less m2 of space (a 20 per cent reduction), and ridding the bloated Whitehall estate of over 2,000 properties, this drive for efficiency has had impressive results. The total running cost fell below £3 billion in 2012-13 and has sunk further to £2.92 billion in the past financial year.

The Department for Communities and Local Government has achieved a 32 per cent reduction in total area and HMRC reduced in size by 87,474 m2. The largest estate is that of the Department for Work and Pensions, which occupies 19 per cent of the total estate. The Department for Business, Innovation and Skills (which the TPA has advocated scrapping), is the third largest with 15 per cent of total floor area.

The cumulative upshot of these achievements is that, on average, estate use measured by m2 per FTE is now better than in the (equivalent) private sector, according to the report. Using 11.3 Mper employee compared to 13.6 m2 the achievements are impressive and the greatest efficiency is achieved in the North East where space utilisation is just 9.5 m2 per FTE. Of thirty organisations with comparable data, 25 have become more efficient at using space and thirteen of these have done so by over ten per cent.

The savings haven’t been restricted to space efficiencies. Since 2009-10 reduced energy consumption has saved the taxpayer over £75 million, reducing waste has saved £11.5 million and the government has achieved a 31 per cent reduction in paper use.

Importantly these savings have been driven by reform, which we hope delivers lasting change. For example, The Way We Work programme has challenged the public sector to work in different ways that has promoted efficiency. There are others, but the results seem to speak for themselves. The challenge will be to continue this good progress now that the easiest measures have been implemented.

Looking forward, the report says that enough government land will be release to allow the building of 150,000 more new homes by 2020. The m2 per FTE target is being lowered to 8 m2 in new buildings and 10 m2 in existing buildings. Importantly it is thought that continuing the processes put in motion over the course of this parliament could lead to the disposal of up to £6 billion of land and property by 2020.   

A word of warning should come with this pleasing progress. As we set out in our Spending Plan, there needs to be a radical rethink about the scope of government. The TPA argues that there are entire programmes and departments which should be abolished such as the Department for Business, Innovation and Skills. A smaller state would give the private sector greater room to grow faster and would allow individuals to choose how their money is spent.

The challenge must be look at other areas of the public sector where efficiency savings can be made. In our Spending Plan analysis, we calculated that improving NHS estate use could save £3.6 billion in 2019-20 and while there are different challenges to face within the NHS, the Cabinet Office has set a high benchmark.

However, while bearing in mind the need for wider reform, the achievements of the Cabinet Office and Francis Maude are most welcome and it would be churlish to ignore them. The savings made, simply as indicators of better value for money, are laudable and are good news for the taxpayer.

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