The austerity agenda means the public sector is trying to serve more people with less money, says Philip Black. Managers of the public estate need to think about delivering different services from shared buildings
The austerity agenda has posed its own challenges for the public sector, not least the ongoing and increasing pressure to reduce costs without affecting service. As a result smarter delivery, demand management and increasing commerciality has resulted in a need for transformational change. We also can’t ignore the pressure of our expanding population. As funding decreases, demand is increasing, and this is affecting all front line services, including health and education.
Historically, the function of people and technology as enablers of change has been well understood, but the role of the asset has been unclear. The challenge has been that physical assets are seen as an inflexible, immovable and expensive inhibitor. Yet in reality, physical assets - whether buildings, infrastructure or the public realm - can create long-term structural improvements to how services are delivered, and at relatively little capital cost, providing they are approached correctly. Assets are an essential component in driving change, levering value, raising capital and generating revenue that can be used to fund these future service models.
Many organisations operate from dispersed property portfolios, which do not necessarily meet operational needs. Within the NHS alone, total “wasted” space exceeds 1.3 million ft2. The answer lies in the rationalisation of the public estate, including reorganising services for more effective collaboration. Optimising operational portfolios can reduce costs by up to 30%, releasing money for the frontline. Just by improving the efficiency of its estates facilities management programme, the NHS in England could be saving £1.5bn a year, plus a significant capital receipt (according to the EC Harris Health Efficiency report 2014).
While it is easier to implement changes locally, the need for flexibility to deal with evolving circumstance is essential. A single public estate allows new forms of delivery around customer needs
Going further, an estate review across co-located and neighbouring organisations can do much towards creating a single public estate, i.e. different public sector services using the same building. This can unlock efficiencies and release cashable savings, not to mention free up surplus estate to deliver wider regeneration or development objectives. This creates an opportunity for locally based regeneration, or for investment companies to accelerate regeneration and/or increase revenue. Steps have already been taken towards this with a common access pass making it easier for civil servants to share buildings, and the recasting of the Government Security Classifications, reducing costs and removing barriers to more agile working.
One of the benefits of bringing staff together is greater collaborative working. Shared estate initiatives, such as the Temple Quay Campus in Bristol or the move by the Department for Communities and Local Government into the Home Office’s headquarters, are already delivering services shaped by users’ needs rather than departmental structures.
However, the idea of grouping service delivery around a place rather than organisation can have far reaching implications, and starting from a fragmented asset base is just one challenge. Focusing exclusively on reducing operational costs - particularly the direct costs of owning or leasing office space and other property - fails to take into account broader costs and inefficiencies associated with the physical environment. Too often asset rationalisation programmes are run in isolation from the wider strategy set by the political and executive leadership.
Meanwhile, behind the pressure of funding cuts lies the risk of exposing an organisation, its employees and the public to risk. This might be increased by potential loss of data and knowledge, which may occur when an organisation centralises its property management functions or restructures departmental responsibilities. This risk means that a top-down review across the whole organisation is essential.
While it is easier to implement changes locally, the need for flexibility to deal with evolving circumstance is essential. A single public estate allows new forms of delivery around customer needs. This leads to less surplus estate, and forms the key plank of a masterplan factoring in social and economic considerations. This becomes a business case, a marketing plan, a physical blueprint and a delivery plan all in one.
The digital revolution also plays its part, not just in easing access to services and removing interaction costs, but also by providing an opportunity to work remotely, in districts and wards, co-located with other services as assets become smarter and more flexible. The advent of mobile and tablet technology has enabled enormous opportunities in the way we work, report, refresh information and create data, removing process duplication along the way. As technology improves we will continue to shift away from static working and cellular offices, which bring with them questionable utilisation costs.
While there are a number of challenges associated with creating a single public estate, there are examples of successful implementation with neighbouring local authorities looking to share anything from physical sites to operational back-office functions and HR.
Practical steps will accelerate adoption within local government, but the process requires clear political leadership. The single public estate model is one that can unlock efficiencies and enable opportunity, if managed correctly.
The Cities Devolution Bill being introduced later this year, giving extra power over police, housing, transport, infrastructure and other areas, could be the catalyst for creating a single public estate as a genuine model for transformation.
This could be the game changer.
Philip Black is UK head of public sector at EC Harris