The Case for Internal Property Charging in Government

Martin Read, the author of the Operational Efficiency Programme and a member of the Conservatives’ Public Sector Productivity Panel suggested in the run up to the 2010 General Election that the new government should aim to vacate 10% of government office space within its first year office. He confirmed that Central Government uses 30% more office space per head than dictated by best practice and that “this inefficiency needs to be addressed much more urgently. Property assets should be managed separately and user departments charged for the space they use. This would focus minds on the efficient use of resources”.

My own experience confirms the principle of centralised corporate management of property in large organisations supported by an “internal property charging” regime based on use of space which appears on Departmental “below the line” P&L  (profit and loss) accounts is definitely the right direction to take.

Internal charging will not only create understanding that property is not a “free resource” but also help  Departmental silos focus on their corporate cost base, helping with de-duplication, portfolio rationalisation, “Total Place” and shared service issues. More importantly it will also ensure that management at all levels across the Organisation understand not just the cost but the value of property and space to their business or service offering. It will therefore better inform business cases and decision-making in terms of accommodation needs, utilisation, costs in use, and investment. This cost awareness will provide the impetus and “benefits & value clarity” to occupiers and teams implementing workstyle, agile working and property related change and new service initiatives.

Although internal rent or accommodation charging regimes are not always straightforward to set up, once established they will provide an indispensable strategic tool to control the direction, focus and provide encouragement to the organisation to create the major property cost savings that are required in the search for “more with less” both in immediate plans and longer term strategy.

I have recent experience of managing the Property Strategy and supporting internal property charging regime for one of the largest building portfolios in the UK. If you are interested in the practical aspects of development, set up and running of a Property Charging regime contact me for more information.

Paul Allsopp, The Agile Organisation.

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