Public Accounts Committee also casts doubt on value-for-money of hubs programme
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The government’s plans to reform how its UK-wide property estate is managed and make billions of savings are being hampered by out-of-date IT systems, poor data collection and a lack of ambition, MPs have warned.
The Public Accounts Committee said the government’s plan for a network of government offices hubs across the UK seems to be “in disarray” due to the failure to replace old technology, a lack of understanding of the reduction in office use post-pandemic, and rental market fluctuation.
The committee also raised concerns about government’s plans to raise £2bn through a property sell-off and reduced operating costs across the property estate, questioning if the £1.5bn in building sales ambitions could be achieved and, in contrast, calling the £500m operational savings proposal too unambitious.
The failure to replace ageing IT is key to the issues with the government property portfolio, the committee said.
The Cabinet Office expanded its data collection in 2020, shifting from only gathering data on the civil estate – covering the likes of offices and warehouses – to gathering data on all government property, including facilities such as schools and hospitals.
But the 17-year-old government property database, ePIMS, is unable to accommodate the additional data and so it has to be updated manually until a new system is up and running.
The Cabinet Office has attempted to update the property database, but its efforts have been hampered by a “series of unnecessary delays and setbacks”, the committee said.
The Cabinet Office announced its new property database in 2018, with an anticipated launch date in 2021. However, contractor Landmark Solution failed to complete the project despite being given a year extension, blaming staff turnover, and the Cabinet Office terminated the contract in July this year.
The government has not yet appointed a new contractor and PAC said the Cabinet Office could not say when the new system will be up and running or how much it will cost.
MPs said the IT issues, combined with the limited data on office usage post-pandemic, means the government “does not have the data or IT system necessary to oversee and manage the government estate”.
Sir Geoffrey Clifton-Brown, deputy chair of the Public Accounts Committee, said the stalled £1m IT upgrade is hampering savings reform across the property portfolio: “The plague of ageing, inadequate data systems strikes again, this time at the heart of government’s £158bn property estate.”
MPs also said that, given the decreased office working since the pandemic and the long leases the government has locked itself into, they are “sceptical” about the value for money of the government hubs programme, through which thousands of civil servants are being relocated from small offices into up to 50 large, modern government hubs located in cities across the UK.
Based on limited data, the Government Property Agency has calculated that there has been at least a 25% reduction in office attendance.
MPs warned it is “therefore possible that fewer hubs, or smaller hubs, will now be required” but the government “risks being locked into long-term, expensive leases”.
Giving HM Revenue and Customs as an example, the committee said 12 new hubs are locked into 25-year unbreakable leases at higher than current market rents.
“This means that six large hubs are locked into much higher rents than the current market but the capital values for the leases have also declined,” the report said. “HMRC is now trying to sub-let spaces at a rent which is higher than the market. We warned HMRC about this practice.”
Clifton-Brown said the plan for a network of government office hubs across the UK “appears to be in some disarray, with radical shifts in office space use and rental values”, adding that the Cabinet Office “simply hasn’t got enough grip on the facts on the ground to adapt”.
A government spokesperson said: “We are regularly able to agree leases at below market rates, allowing us to invest in new hubs all across the country which consolidate staff in a smaller number of buildings and will enable us to close 130 offices by 2030. This saves the taxpayer millions of pounds while also allowing us to move 22,000 civil service roles out of London and into communities.”
The Government Hubs programme has saved over £170m per year through building closures in London alone, the Cabinet Office added.