Council assets to go under knife as local authorities review property management
Councils now drawing up their annual asset management plans face greater challenges than usual.
Despite submitting budgets in April, they have to be reviewed, following initiatives such as Total Place. Further reviews are likely because of the uncertainty about the spending cuts planned following the election.
As a result, councils are appointing private sector advisers. On 1 May, Camden Council employed Drivers Jonas Deloitte to review its £3.1bn property portfolio. Bolton Council commissioned GVA Grimley to produce a similar report in April. Next month, the recently formed Cornwall Council will start a review of its investment portfolio.
Public property bosses say most councils are reviewing their asset management plans to help meet “unrealistic” targets of saving £5.5bn a year by 2011, according to research published by consultant Interserve. Of the 152 local authority staff surveyed last month, 84% say it is unrealistic to reach the £5.5bn target.
It has not been mandatory since 2004 to produce a plan, but local government auditor the Audit Commission has reprimanded county and borough councils that fail to comply.
Next year, the Audit Commission will also demand that district councils publish asset management plans.
David Bentley, head of asset management at the Chartered Institute of Public Finance and Accounts, says the large number of cost saving initiatives established by the previous government has prompted the reviews: “The Total Place and the Operational Efficiency Programme have forced councils to review their asset management plans.”
Bentley says common changes are the introduction targets to save desk space by up to 20%, “sweating” assets such as schools for use as community facilities, and finding ways to share buildings to provide several services.
Bob Perry, president of the Association of Chief Estates Surveyors and chief valuer and surveyor at Cornwall Council, published the county’s first asset management plan in January. He is launching a review of its investment property in a bid to sell underperforming assets and fulfil the government’s “extremely demanding” targets. “They are going to be difficult to meet,” he concedes.
Simply making savings on council property is unsatisfactory. For Bentley, the holy grail is area asset management plans that cover all public sector assets in an entire area, such as those under the Total Assets initiative announced in April’s Budget.
But he adds that some of the new policy targets would hinder progress: “The localism agenda means the idea of free schools, for example, would prevent the economies of scale of joining up public services.”
With a new government in office, more changes may yet be needed.
Total Asset pathfinders
In April’s Budget, the government announced 11 areas that would experiment with more joined-up asset management and funding streams. The Total Asset pathfinders that will report to the government in April 2011 are:
- Cambridgeshire
- Durham
- Hackney
- Hampshire
- Hull
- Leicestershire
- Leeds City Region
- Swindon
- Solihull
- Wigan
- Worcestershire
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The fact that Camden Council has a “£3.1bn property portfolio” should alert all of us to the need for asset management plans for local authorities. In fact, if Camden Council were to sell all the residential property it owns, much of it in prime central London markets, although nowhere near its real value because of estate management and “monocultural” enclaves, I bet the value would be much, much higher. I hope George Osborne might have a chat with Drivers Jonas (as we’re footing the bill for Camden’s consultant’s work) and tell us what the score is. £6bn’s worth of hidden asset value might easily be discovered lurking in council portfolios all over the country – but you won’t know until they produce asset management plans. This is big stuff and both local and national taxpayers should be taking an interest in what their local authorities own and how they manage it.
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