More from less

Doing ‘more with less’ has become a popular mantra through the tough economic conditions the UK has endured these last few years. Budgets have been squeezed across both the public and private sector, and thousands of organisations have faced big challenges in trying to continue raising productivity levels despite operating with reduced resources.

However, few have faced anything like the challenge that George Osborne has now presented to the public sector and government departments. All non-protected government departments will see budgets fall by 25 percent over the next four years – an unprecedented cutback motivated by the Coalition Government’s desire to reduce Britain’s current budget deficit, which is estimated to be running at £149bn annually with a structural deficit of £113.5bn. Ideologically, the Government is keen to scale back the role of the state in general, and measures such as freezing public sector pay while giving the private sector tax breaks and national insurance incentives send out a clear message about what the future is likely to hold.

There remains widespread concern over how budget reductions might harm jobs, frontline services and even the UK’s overall economic recovery. Yet the truth is that the next couple of months could actually serve as a genuine opportunity for departments to be proactive and get a firm handle on areas of wastage and inefficiency. Some solutions may require creative thinking, but others are simple, straightforward and staring departments in the face.

For example, the civil service office estate currently stands at 7.7m sqm and generates massive operational and management costs. The somewhat sprawling nature of the estate stems largely from historical factors and the changing nature of government over the years. However the fact remains that thus far, little has been done to fully address the issue and improve the estate’s efficiency. It’s not about selling off as many properties as possible and trying to cram thousands of staff into those that remain; it’s about recognising that the estate needs transforming if it is to improve service quality while also meeting sustainability and efficiency objectives.

Research conducted by specialist economic consultancy SQW suggests that best practice approaches to civil estate management could quickly and easily bring about some of the significant budget reductions asked for by Mr Osborne. The most striking statistic is that costs could be reduced by as much as £1.4bn per year within five years if the central government office estate was utilised more efficiently. Allowing for time to implement the necessary changes, this would amount to more than £4.3 bn being saved over the first five years alone – far beyond what is currently being projected in terms of planned property savings. And these savings only relate to the central government office estate a mere 10 percent of the overall £25bn annual running cost of the entire public sector property portfolio.

The approach examined by SQW does not simply focus on better utilising space, but considers the importance of delivering a high quality working environment for staff and customers – transforming drab and uninspiring premises into modern, efficient and dynamic offices. In doing so, higher levels of productivity, flexibility and customer satisfaction can be achieved. Existing departments, such as DWP and DVLA, are already seeing the benefits of this approach today.

By transferring risk from the public to the private sector, where it can best be managed, property efficiency solutions can offer savings to the taxpayer through contractual guarantees. For example, the DWP estate – managed by Telereal Trillium since 1998 – has now been reduced around 30 percent to 1.8m sqm, despite a 2003 departmental merger with the Employment Service that brought a portfolio of new properties into the mix. Eventually this is estimated to save around £780m for the taxpayer. Furthermore, property management strategies can also help public sector organisations achieve substantial and much-needed environmental and sustainability objectives, such as reducing utilities consumption, in order to hit both existing and future green targets.

Further details of cutbacks are not scheduled to be revealed until late October, so there is now a brief window of opportunity for departments to take action and examine how they can achieve the budget cuts with the least possible negative impact. Everyone has a mandate to protect frontline services. In this sense the SQW property research represents a breath of fresh air, providing real evidence that with better property management, the public sector can reduce costs whilst improving service delivery.