I want to say at the outset, that as a Government we are determined to press ahead in overhauling the State’s property portfolio. It is a key part of our Public Service Reform Plan. The old ways of providing public sector office space - and indeed utilising that space – have to change.
So what have we done in the last 19 months since coming into office?
Firstly, we have stopped the madness of decentralisation which was a project dreamed up in a totally different time. It was bad for public administration, bad in inflating property prices and bad in dislocating the public sector throughout all parts of the country.
Secondly, we have continued to reduce the rental costs of leased buildings for the public sector, and I have asked that any new leases we take would have my approval as Minister. This is ensuring political accountability and proper scrutiny for the number and total cost of leased buildings.
Thirdly, we will shortly bring to Government new proposals to transform the way in which we manage the State’s property portfolio.
The new public sector will need a new approach to office accommodation. It will have to be led by a strong central organisation which has been given a mandate to efficiently use office space in a totally new way.
The state currently has about 2,200 buildings under its control. Of the office accommodation, about 60% of these are in the owned estate and the remainder are leased buildings. In a circumstance where the funding available to us is very limited, we have to look at new models of funding public buildings. Once you have buildings you have to maintain them. But equally we have buildings, which have real value, and I want to see how this value can be realised in terms of a public private partnership approach, which will be good for the private sector and good for us in the Public Sector.
Crucially we need also to have a whole of government approach to property across the entire public sector. This government is determined to bring to an end the vanity projects and empire building that became such a feature of the alleged Celtic Tiger economy.
With fewer public bodies, given our decision to rationalise state agencies, I am very confident that the entire property portfolio of the state can also be rationalised. This government is determined to bring to an end the silo mentality that has taken hold within the public sector for far too long. Never waste the opportunity of a good crisis – that’s the advice from all change management consultants. And that is the approach we are taking in bringing much greater efficiency and savings in this area.
After pay and pensions, the cost of office accommodation is the Government’s biggest administrative overhead.
The fall in Public Service numbers from a peak of 320,000 in 2008 to 282,500 by end 2014, coupled with organisational rationalisations such as shared services and the abolition of agencies, will facilitate a reduction over time of the amount of accommodation required by the Public Service.
I will shortly bring a new Property Management Plan to government. The Property Management Plan will review and recommend accommodation policies such as space norms and standardisation of office accommodation fit-out. I have asked the OPW Chairman to lead a working group of Public Service managers with expertise and responsibility in this area to drive this initiative forward and work in this area is progressing.
The Reform Plan also provides that we develop an incentive policy to encourage Departments and Offices to make the most efficient possible use of their accommodation, including the possibility of allowing them to re-invest a portion of the proceeds from any property disposals.
We are also working to improve our strategic decision-making capability in this area through the development of a map-based Public Service property inventory. This will enable users to see the locations of all State-owned property and provide access to all information on the property through a link to the property management system of the relevant owner.
Furthermore, I believe the public has a right to know what we own, what we lease, and
the use of that space which is enjoyed by the entire public sector.
We also need an asset management strategy across the public sector.
This strategy will look at greater use of open plan workspaces, more efficient use of office accommodation and greater energy conservation. These measures will yield further significant reductions in the cost of accommodation. In addition, my proposals will provide for the more efficient sharing of property assets across the public service.
A key element of this strategy is a draft Memorandum for Government which confirms OPW's role as the sole procurer of accommodation for the Civil Service, and most importantly, proposes to enhance the powers of OPW to manage the central Government property portfolio.
What powers should we have at our disposal?
to direct Departments to vacate and/or occupy accommodation on foot of decisions by OPW in the context of the management of the overall State property portfolio
to surrender, dispose of or re-allocate particular accommodation in order to achieve expenditure savings and efficiency gains
to set and enforce norms for the allocation of space, the rental and the fit-out price per square metre that may be paid for office accommodation, and
to develop formal reporting and accounting arrangements by which Government Departments will report annually on the use of the space allocated to them
There is a need for clear long-term policy on which Departmental functions and staff need to be exclusively located in central Dublin locations. I am referring here to Dublin 1, 2 and 4 specifically. Being blunt, there is much greater value on the outskirts of Dublin and if we are serious about saving money not all functions need to be city centre based.
My Department’s drive to reduce the cost of property services has been focused in the areas of rationalisation of the existing portfolio, rent reductions and disposals.
Let’s look at the facts. In 2009 we spent €131m leasing property - this year the figure is €112m. I want the State’s annual bill below €100m on by 2015. In the last two years the OPW has shed half a million square feet of office space and surrendered over 150 leases countrywide.
The programme of getting out of leases has sent a strong signal to the market that we as tenants are determined to pursue rent reductions.
Funding will be required in the coming years for the upgrade of properties to facilitate ongoing rationalisation. Leveraging value from the existing State portfolio for reinvestment in the owned portfolio is being examined. This may be by way of sale and leaseback, joint ventures or other structures which would allow for private sector investment. We need to exploit commercial opportunities, an obvious example being the creation of income streams from public property. This could include licensing of property for commercial purposes.
My Department is also in the process of disposing of assets that are surplus to requirements. This disposal programme will involve a number of approaches such as transferring assets to other State bodies that have specific requirements, e.g., Community Care Facilities, disposal on the open market or use by communities such as the recent provision of the former Finglas Garda Station to a Community Creche.
There is also great scope for maximising the potential for the sharing of accommodation between public bodies. At a practical level, these changes are already having an effect with HSE staff being allocated accommodation in two OPW-owned buildings (Tullamore and Tipperary) and it is expected that this interaction will grow into the future.
The reduction in the overall space requirement is a consequence of the ongoing programme to reduce public service numbers. Part of that process involves comprehensive surveys of all OPW's owned office portfolio to determine the exact capacities available to us in our larger office buildings and this programme of survey is well advanced.
OPW have a very successful energy conservation programme, working closely with the
building occupants. The programme targets the larger buildings, over 1000 sq.m. This
includes approximately 270 buildings at present and to date savings of 17% have been
achieved (€13.3m cumulative savings). The programme is based on encouraging
behavioural change and is low cost. The next step is to include water usage and also
smaller buildings in the campaign. Government policy is to achieve 33% energy savings
by 2020 and OPW envisages investment in the building stock to achieve this.