15
Accepted
We questioned whether the GPA used long-term leases for its government hubs, which might commit...
Conclusion
We questioned whether the GPA used long-term leases for its government hubs, which might commit the government to paying above-market rents in the years to come.39 The GPA told us that the hubs programme relies on a mix of freeholds, short-term leases and long-term leases. The GPA made the case that long-term leases often achieve significantly lower rents, which can be passed on to departments who sub-let from the GPA, while allowing the government to make long-term plans. However, it is possible that the GPA will be stuck with long-term leases at above-market rates, passing on those higher rates to departments that sub-let space in the hubs. We were interested to hear the Cabinet Office discuss opportunities that might exist in the current market to generate better value by buying the freehold of some properties that are currently on long-term leases.40
Government Response Summary
The government agrees, aiming for £500 million annual operating cost savings primarily by reducing the government leasehold estate, and will report on savings in the 2023 State of the Estate Report.
Government Response
Accepted
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Target Implementation Date: end March 2023 The government already collects and reports aggregated running costs from departments that are published annually in the State of the Estate Report. The Government Property Strategy 2022 sets a target of £500 million operating cost savings per annum by the end of the Spending Review period. It is expected that this target will be achieved primarily from reducing the size of the government leasehold estate, including through the government Hubs programme, greater sharing of space across the public sector and exploiting the benefits of smarter working. The 2023 State of the Estate Report will set out what savings have been made in the first six months of the Strategy (from September 2022 to March 2023).
Source
Committee
Public Accounts Committee
Report
Thirty-First Report - Managing central government property
21 Dec 2022
HC 48
Addressee Bodies
HM Treasury
Timeline
Recommendation age
3.6 yrs
Report published
21 Dec 2022