All the noise from Westminster is about saving another £11.5bn. But more quietly, some areas of government are working to rationalise estates and provide construction work
As the deputy prime minister puts it, the usual “argy bargy” is going on as we approach the government’s one-year spending review, due to be announced on 26 June. With another £11.5bn of savings sought by the Treasury, the ring-fenced spending areas of education and health are under assault from around the Cabinet table. Philip Hammond, the defence secretary, wants to raid both health and education budgets to pay for the healthcare of service personnel and the education of their children. Vince Cable thinks the health department should fund the Medical Research Council (currently under the auspices of his business department) and this on top of the £1bn already earmarked to be diverted to help plug the social care gap. The discussion will continue along the lines of winners and losers, government departments going through the political motions to protect budgets, right up until the end of June when all will be revealed.
All this talk of even more belt tightening in key sectors for our industry is not made any more pleasant given the continued gloomy outlook for construction, with the latest GDP figures showing output as one of the weakest areas of the economy, falling 2.5% in the last quarter.
On top of it all, the Public Accounts Committee has been quick to point to major concerns over the stalled progress of the £310bn National Infrastructure Plan, labelling the plan as little more than a “long list of projects requiring huge amounts of money”, as opposed to a real plan with strategic vision.
But it is not all gloom and doom as the naysayers would claim. Yes, the sector does need greater clarity on the pipeline of infrastructure projects and their investment, but there are encouraging signs too: the new £5bn London housing panel, and the re-procurement of a £4bn contractors’ framework with the Education Funding Agency.
Look even closer and there are very positive signs of the government getting its own estate in order. Increasingly, local authorities are giving close consideration to the assets they own and the purposes for which these are used - or in the case of their £7bn of surplus assets, for which they are underused. Instead
of simply mothballing hundreds of properties and strips of land, local government is taking steps to look at how best to realise the value of these assets to support the delivery of local priorities. Enfield has exemplified this approach with its new primary expansion programme, which will create an additional 2,400 primary school places for local families.
Overall, local government is responsible for around two-thirds of the £370bn public estate and so the greatest savings and efficiencies are to be made here. And there are some great examples beginning to emerge: the £355m development in South Staffordshire creating jobs and a thriving business hub; the Barton West development in Oxford, which will bring nearly 1,000 new homes to help regenerate an area of severe deprivation; and the innovative Garage Project in Havering in north-east London, freeing up disused garage sites on a housing estate to create modern homes that help address the affordable housing shortage.
Central government is making good progress too, and on a much larger scale, by sector. In the Ministry of Defence, the next few years will see the release of over 4,000 sites and construction contracts of around £9bn through a suite of New Generation Estates contracts. Health, too, where recent reports suggest that around £2.3bn of floor space is underused across the NHS. Here, the newly formed NHS Property Services is making great strides in ensuring that the NHS estate matches what is needed on the ground to deliver a modern and efficient health service right across the country.
Both of these large-scale examples should be heartening for all of us. As taxpayers, we can be assured that - quite literally - our own houses are in order, but as a sector more generally, that these moves to rationalise and modernise the public sector estate will result in a much-needed pipeline of work.
Clearly it is not simply a case of comparing the £17bn savings that can be made through estate rationalisation (central and local government) with the £11bn savings that the Treasury is looking to make in this next round of cuts - timescales are never that helpfully neat. But over time, managing the public estate more effectively will make an important contribution to getting the economy back on track and ensuring we have fit-for-purpose public services.