Public sector property Pt 2

As delegates attended this years’ Government Property conference at the QEII Centre yesterday, acrossParliament Squareteachers were lobbying MPs over cuts to the Building Schools for the Future programme.

Inside the conference centre tensions were just as apparent. Cuts versus investment, speed versus thoroughness, frontline versus back office, central control versus localism.

Andrew Smith, chief executive of Hampshire County Council, suggested we might be witnessing a “perfect storm” as national fiscal priorities combine with local pressures on facilities and services. The book value of local government property is £128bn. Hampshire occupies property equivalent to twice the national sales area of M&S. Smith asked the not entirely rhetorically question: “Do we really need that much space?”

But will this perfect storm drive collaboration and green initiatives or lead to retrenchment and across-the-board percentage cuts? As more than one speaker said, collaboration between local government and with other public agencies is very difficult to crack.

In the big scheme of things it may all be “public money” but who pays the cost and who makes the savings are not entirely academic questions.

The shape of the coalition’s plans for central Government property are becoming a little clearer, as it targets £5bn running cost savings and £20bn in cash receipts from disposals, both by 2020. The relocation of OGC to the Efficiency & Reform Group within the Cabinet Office signals intentions pretty clearly.

The new Government Property Unit, created from OGC’s property team and John McCready’s team in the Shareholder Executive, is finding its feet and planning to harness private sector knowhow, whilst ensuring public sector negotiators remain commercially astute.

Speaking at the conference, McCready said the Government had introduced a moratorium on lease extensions and would extend “national property controls” by the end of this financial year.

In London, Government will rationalise its presence in the five central postcodes aroundWhitehall, maximise freehold and exit leasehold property. McCready also reasserted his view that “ownership of property must be clearly distinguished from use of property.”

“Property vehicles” appear to be the chosen model for achieving this separation and later in the day KPMG helpfully offered a view of what a Government Asset Management Company or GAMCo might look like.

KPMG aren’t predicting widespread sale and leaseback deals or property outsourcing. They see it more in terms of reducing fragmentation of ownership, bringing in skills and making revenue savings.

One thing’s for sure, the Government won’t be lacking in advice on how it can make savings.

Building schools

The decision by the coalition government to halt the Building Schools for the Future programme has catapulted investment in infrastructure into the headlines. The impact on education but also the consequences for the construction industry – and by extension large parts of the FM sector – have been front page news.

The focus has naturally been on the 730-plus projects stopped and the slice of the £55bn cost of the 20-year BSF programme this will save the public purse. There were clearly problems with the programme, an NAO report last year found cost overruns and major delays.

However, it will be education authorities, school governors, headteachers and yes facilities managers, that will have to deal with the consequences of stopping development plans in their tracks.

It is almost certain that, where a major refurbishment or new build was planned, spending on all but essential maintenance will have been scaled back. There is likely to be a substantial backlog of maintenance, repairs and upgrades to schools across the country. A chunk of the savings will have to find its way back into prolonging the life of these buildings for a few more years.

—————————————————————————————

Do better school buildings produce better students? The question of causal links between facilities and performance is no easier to answer in education than in any other sectors.

But (credit to the Guardian here) there is some research to guide us. A report from KPMG last year found that the rate of improvement in student attainment was 44% higher in PFI schools than conventional ones. Cause and effect?

From 2002 comes a study entitled “Do school facilities affect academic outcomes?” by the wonderfully named National Clearinghouse for Educational Facilities, in theUS. Not surprisingly, this concluded that spatial configurations, noise, heat, cold, light and air quality obviously bear on students’ and teachers’ ability to perform.

The dean of faculty at the UK’s Institute of Education is circumspect: “We do know that bad school buildings impact negatively on learning: what we don’t know is just how much good buildings improve the quality of learning.”

So, it’s probably three quarters commonsense to one quarter empirical research that bringing the education estate up to standard over time will improve theUK’s performance.

A session at the BIFM’s recent Members’ Day offered an insight into how this might be achieved. BIFM Award winners Kajima Community, part of the $15bn Kajima construction conglomerate, explained how they worked with teaching staff to expand the community use of schools.

Perhaps the way to get the most out of scarce resources is not to build schools but general purpose facilities which can meet a number of needs – social, health, leisure and education.

It would require different funding models and a less compartmentalised approach. It would also be a great opportunity for active FM.

European communications

It was appropriate that a meeting of European communications professionals opened on the day that mobile roaming charges across Europewere cut. Of course technology, and particularly social networking, featured strongly at the EACD’s European Communication Summit (1st/2nd July,Brussels) – almost as much as the World Cup.

However, it was the basics of effective communication that speakers returned to again and again. These apply as much to a UKpolitical party trying to win power as to an international logistics firm; to a luxury car brand as to the world’s most famous soft drink – all of which featured in presentations.

They also hold good for those trying to communicate the benefits of FM.

Viviane Reding, European Commissioner for Justice, Fundamental Rights and Citizenship, set the tone for the 500-strong audience, from more than 25 countries, with a plea to communicate “values”, with real passion, not just theatre, which is easily seen through. Of the European project she said: “We are building a continent where everyone feels at home.”

Talking of theatre, there was palpable anticipation in the hall as Alastair Campbell took the stage, billed as the Strategic Mastermind. Communications has to be integrated across the organisation, he argued. It must be connected to policy. What some saw as control freakery in Labour’s successful 1997 election campaign, was just the single-minded determination to stick to the core message of “New Labour New Britain”. Anything which didn’t fall within that frame was seen as a distraction.

UnderCampbell’s direction, Labour’s communications aimed to put “dots on the map”, over time to build up a positive picture of the party in voters’ minds which could survive the inevitable gaffes and onslaughts – goodwill in the bank. BP,Toyotaand Fabio Capello may all be overdrawn; Apple probably has such a good image with its fanbase that it can survive the glitch with the latest iPhone.

In a crisis, talk to the media as soon as you can, rather than wait for them to call, was the advice from a workshop on public affairs run by Grayling.

“Sure we can” is the new(ish) strapline for logistics firm TNT. It is supposed to reflect the firm’s “can do” attitude but as Group Director Communications Robin Boon, explained it only works if TNT delivers on the promise. So a company-wide campaign, at every level, asks staff to “be sure you are sure” when they tell a customer they can make that deadline.

“We need to spend more time finding out what people want to hear, rather than deciding what we want to say.” This advice came from Christof Ehrhart, Head of Corporate Communications at Deutsche Post World Net.

———————————————————————————————

The leader as conductor is a common metaphor but it was brought to life in an engaging interactive session with the Brussels Philharmonic Orchestra. Unconventionally, the audience surrounded the orchestra and faced the conductor, Gernot Schulz.

Schulz explained how the conductor must persuade the musicians, each of whom has his or her own interpretation of the piece, that his concept is worth pursuing.

Listening to the orchestra work on pieces by Brahms and Mendelssohn, we heard how the conductor can shape the music and the importance of communication within and between teams. Finally, four members of the audience got to wave the baton and feel the awesome power of controlling over 60 professional musicians.

European Association of Communications Directors www.eacd-online.eu

Public sector property & facilities management

It was always clear that the cuts regime to reduce the deficit would require savings in public sector property and facilities management. An indication of the scale of those savings became evident at the launch of central government’s Property Asset Management “profession” at the Department for Business Innovation and Skills yesterday.

“We need to save £5bn on annual operating costs of £25bn,” said John McCready as he officially took over from Tim Laurence (former Head of Defence Estates) as “head of profession”. Additionally, when the property market returns (possibly more of an if than a when), the Treasury will be looking for capital receipts of £20bn. To indicate the challenge, McCready compared this figure with the market capitalisation of Land Securities, around £45bn.

So, is there still the will and as importantly, the money, to develop the PAM profession acrossWhitehall? Tim Laurence spoke of “a significant milestone”, “massive challenge”, the need to “respond with agility”.

The Office of Government Commerce team behind the initiative has analysed the 4,000 plus people within the footprint and concluded that about 50% are “practitioners”, 34% are “qualified professionals”, 15% belong to the “wider PAM community” in finance, ICT and HR and just 1% are senior leaders, most of whom have no professional property qualifications.

BIFM, RICS and the National School of Government all supported the launch with information on education programmes and qualifications which can help to bridge the skills gap.

The diversity of backgrounds and roles across central government property management (neatly illustrated by a video featuring FMs and others describing their jobs) prompted Laurence to talk about a “community of professions” rather than a profession.

McCready, Head of the new Government Property Unit and an accountant by training, paid tribute to the work done so far but there was a shift in emphasis. OGC has been brought within the Efficiency & Reform Group of the Cabinet Office and McCready said public sector property professionals will need to reduce their footprint, cut costs and be much more commercial in their dealings with the private sector.

Citing corporate real estate practice, he recommended divorcing asset management from the underlying business. This might sound like a return to the short-lived Property Holdings model of the early 1990s but McCready rejected this interpretation.

What it may mean though, is a more rational management of government property, turning valuable assets into cash and more co-location. Occasionally, the inexorable logic of the property market may trump departmental preference.