Public sector buildings play a vital role in the delivery of public services. Whether prisons, hospitals, schools or Jobcentres, the public sector estate needs to be fit-for-purpose, accessible to all citizens, and sustainable.
The Government spends around £2.6 billion a year on running public sector estates. Last year, the Department for Work and Pensions (DWP) alone spent £640 million on estates. And just three more departments – the Ministry of Justice (MoJ), the Department for Education (DfE) and the Department for Health and Social Care (DHSC) – spent £865 million, comprising 2.1 million m².
‘Rationalising’ estates ensures that they are only as big as they need to be, with minimal excess spend. The Government aims to release £5 billion by 2020 through building sales, but departments are not on track to meet individual targets. Modernising the estate means taking an ‘old for new’ approach with well-designed and maintained buildings that allow for more flexible working styles. To deliver value-for-money in these estates, the Government should focus on three priority areas at the next Spending Review.
Government departments must fund estate transformation
Delivering the changes the Government wants to see in its estates will require committed funding. Investment to create more sustainable, fit-for-purpose estates will deliver savings in the long term. Funding pressures mean that monies for modernising public sector estates are being diverted to other areas. In 2016 the MoJ committed £1.3 billion to create 10,000 new prison places, intending to expand wings at some prisons and build five more. However, only £0.2 billion had been spent as of August 2018. In the NHS, since 2015-16, £3.65 billion has been transferred from the capital budget to the revenue budget to cover day-to-day running costs.
Capital budgets should be protected
Efforts to improve these estates have been piecemeal, which means that some departments cannot deliver effective, modern public services. The 2017 Naylor Review of the NHS estate warned that without investment, “the NHS estate will remain unfit for purpose and will continue to deteriorate.” In a survey of 1,000 GPs, half said that their GP practice buildings were not fit to meet current demand. Implementing local ‘Sustainability and Transformation Plans’ to improve the estate could cost £10 billion.
Maintaining the estate is just as important as reforming it
Facilities management is not currently being treated as a spending priority, which has created significant maintenance backlogs in several departments. In prisons, the backlog is £900 million, up from £712 million in 2018. In the NHS estate, it is £6 billion, up from £4 billion in 2009. Failing to stay on top of maintenance has resulted in upfront costs for urgent work – HM Prison and Probation Service overspent on their resource budget by £12 million in 2017-18, largely due to urgent and unanticipated maintenance.
Another theme of maintenance across these estates is poor satisfaction with outsourced facilities management. CarillionAmey have had two five-year contracts with the Ministry of Defence (MoD) for a total value of over £1.2 billion. Since the introduction of a contract for maintenance of 47,000 defence homes in 2014, satisfaction has fallen to 32 per cent with complaints around “inadequate repairs, failure of contractors to turn up to appointments, and poor communication between CarillionAmey and families.” This is consistent with numerous, similar complaints about outsourced prison maintenance. Following the collapse of Carillion MoJ have created a new facilities management company, and the MoD have procured for new providers on seven-year contracts valued at £2.9 billion.
Get in touch
If you're interested in public service reform we'd love to hear from you. And if you'd like to be kept up to date with our work, please subscribe to our mailing list.