Public property is “ripe for cuts”, says CIPD
The new government is right to make cuts to public sector property and regional development agencies, the Chartered Institute of Personnel and Development has said today.
John Philpott, chief economic adviser at the CIPD, has welcomed the promised freeze on civil service recruitment, which was announced as part of Chancellor George Osborne’s £6.25bn savings announced today. He also said that property, quangos, and consultancy are also “ripe for cuts”.
Today, Public Property UK reported that George Osborne wants to save £170m on public property, and sharply reduce the amount of public spending on quangos.
Philpott said: “The chancellor and chief secretary have made sensible decisions on where and by how much to cut public spending. Quangos, IT, consultancy, advertising and property have long been ripe for cuts.
“It also makes sense to reduce less effective forms of spending by regional development agencies.”
However, Philpott warned that this may be the wrong time for swingeing cuts, arguing that 50,000 public sector jobs will now face the axe in the current financial year alone.
He said: “In addition, there will be knock-on effects into the private sector on businesses that undertake contract work for the central and local government and other public bodies, plus the wider impact on demand for labour in the economy as a whole resulting from lower net public spending of around £6bn.”
Today, the Treasury also announced its plan to reduce ringfencing in local government, allowing local authorities to be more flexible with how they spend their money.
The ringfencing of funds is widely understood to prevent effective joining up of different departmental budgets, projects, and property, and would help councils implement the Total Place agenda, which was trialled by the government last year.
Today’s announcement will reassure concerns we reported on Friday that the new government would fail to pursue Total Place.
Tim Johnson, director in development consulting at global real estate adviser DTZ, said: “The greater flexibility being given to local authorities in removing ring fences on grants will help local government to achieve spending efficiencies in regeneration areas, in line with the Total Place agenda.
“The Durham Total Place pilot, for example, showed the benefits that can be gained from aligning different funding streams focusing on housing and economic development through co-ordinating timescales and management of funds. These efficiencies will be critical given the economic pressures currently facing the public sector.”
Jonathan Thompson, KPMG’s global head of real estate, said: “The decision to put the management of its property portfolio under scrutiny and to drastically cut the government’s occupational costs is long overdue.”
“The government is the largest owner, occupier and renter of property in the UK, but for years it has managed its property needs on a fragmented local basis. A coordinated and centralised approach, including alternative ways of doing business and relocating to lower cost locations, should deliver substantial cost savings.”
“The announced savings of £170m against a total operating cost of currently about £3.5bn look therefore eminently achievable.”
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