Open-access content 27th November 2008
4 December 2008
by Adam McNestrie
The naysayers might have struggled to maintain their worldlywiseisms if they attended the Asset 08 conference on the management of the government estate. This wasn't a gathering of identikit bureaucrats brought together to push jargon gratuitously round the conference floor before fattening themselves at the hospitality trough; it was an assemblage of men and women deadly serious about enhancing the management of the public estate.
The management of that estate presents a massive challenge, but potentially an even bigger opportunity. The portfolio of property is vast, disparate and complex. It covers 12.3 million sq m; it costs £6 billion a year to run; and it contains 7,200 buildings managed by 150 property-owning organisations.
Figures quoted by Mike Burt, director of government estate transformation at the Office of Government Commerce (OGC) suggest that, since April 2008, the estate has been shrunk from 12.8 million sq m to 12.3 million sq m with one unnamed government department consolidating 28 buildings into just two.
And on workspace efficiency the government is actually outperforming the private sector. Its cost of office space per sq m is £409 against £453 in the private sector; the cost of office provision per employee at £5,839 is comparable to the private sector benchmark. Burt was adamant that the paradigm of public sector inefficiency was an anachronism. "There has been a real transformation in the last ten years and I think that puts us ahead of the private sector."
The central idea of the conference - its premise almost - was that asset management has to aspire to the strategic. Burt talked about the "next dimension" - "strategic asset management that looks at the estate as a corporate asset." He was echoed by Andrew Holdsworth of government property consultancy DVS who insisted that asset management was more than "mending a leaky roof." "It is about aligning assets to business objectives."
Anti-waste doyen Sir Peter Gershon joined the chorus, advocating what he called a "holistic approach": "A property strategy cannot be viewed in isolation. There needs to be close linkage with the wider business agenda."
The series of speeches and seminars represented an elaboration on this theme - each one examining the potential of asset management to support the core business and advance wider business objectives. One of the necessary preconditions for good performance is to know that you are performing well. Organisations need to be self-transparent and performance needs to be measurable. Benchmarking is the key to both. As Gershon told delegates: "There needs to be a common system of measurement, so that we can be confident that apples are being compared with apples, not apples with oranges."
Benchmarking is all about inter-organisational collaboration: the agreement of common standards and frameworks. And in this guise it supports two further Gershon priorities. The first is the "acceleration of the diffusion of best practice." Gershon said that one of his greatest frustrations while compiling his 2004 report on efficiency savings in the public sector had been the existence of world-class examples of best practice cheek-by-jowl with mediocrity.
The second of Gershon's priorities was the achievement of a more finely drawn discrimination between core and non-core business activities. The idea is that organisations have comparative advantage in performing certain functions, but that they have weak links in their business processes as well. "Enterprises need to ask "Which activities can we be really good at?" Because we can't be good at everything and need to make use of partners where we aren't."
One of the contexts of the conference was the 2004 Lyons Report which recommended the relocation of 20,000 civil servants from London by 2010. Dennis Roberts talked about the Office for National Statistics's relocation of 600 staff to Newport, but again it was Gershon who summed up the issue. Calling for "a radical rethink" he asked: "Why does so much of civil service work have to happen within five miles of here [Whitehall]?"
The need is purely psychological: the desire to be close to the wellspring of power. But indulging that need, giving in to the pull of the Whitehall black hole, is costly and inefficient. Expect to see the centrifugal force of recent years grow stronger still.
Shedding light on the dark corners
Yvette Cooper, chief secretary to the treasury, was in embattled anti-credit crunch mode at Asset 08. Talking past the delegates for much of her slot, she sounded like the case for the defence in a trial of the Labour government. Of more direct relevance were the hints she gave about the Operational Efficiency Programme which will apparently see the Gershon approach penetrating even to "the dark corners of government," as the government pushes for £30 billion in yearly efficiency savings. Cooper was giving her audience a foretaste of the pre-budget statement, referring among other things to proposed action on energy procurement to address the 50 per cent price differential per unit of energy between different government agencies.