With details of how the government will cut spending emerging almost daily, it’s hard to determine which announcements will be most significant.

However, a recent measure designed to slash property costs is certainly up there.

On 24 May, the Office of Government Commerce (OGC) extended its controls on new property leases and lease extensions to cover the entire UK public estate.

It means no government department or agency can renew a lease or choose not to exercise a break clause without Treasury approval.

This seems like a sensible step, as it gives civil servants clear priorities.

The high-level policy intention can be invoked to give impetus to the kind of efficient, although not necessarily popular, decisions that might otherwise be avoided.

These rules do raise some interesting questions, however.

Let’s say a government agency occupies two buildings in a town with one being more modern, better designed, or more sustainable than the other.

If the lease on the better building expires first. Will the agency be expected to relocate its staff to the lower-grade office, which could potentially still have many years to run on its lease? Despite the need for immediate action to rein in public spending, it will be important to avoid making bad long-term decisions.

Many public sector bodies will have already budgeted on the assumption they will be renewing a lease. If they are now unable to do this, they will not only be forced to find alternative space for staff, but may also be faced with large dilapidations claims for which there is no budget.

Based on its target figure of 10 sq m  per head, the OGC says the civil estate is over-spaced by around a third. The 10 sq m target could be lowered even further than that. Combine it with the possibility of flexible working and imminent redundancies across the public sector, and it the estate looks twice as large as it needs to be.

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James Grierson is head of public sector at DTZ

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