Why the pen-pushers have to cut down and push off

Peter Bill
19 Jun 2010

One man's expenditure is another man's income: so news this week that billions can be saved on the cost of housing civil servants by giving the poor souls just 85 sq ft of desk space instead of 150 sq ft will not go down too well with landlords.

After all, they have long relied on a steady flow of rent from the public sector.

The calculation comes in a report from Telereal Trillium. This is a 1000-strong business owned by the reclusive Pears family from Hampstead. Their property outsourcing division owns and manages millions of square feet of property occupied by the Department for Work and Pensions as well as private clients such as BT, RBS, and Aviva.

“We do have a problem to solve,” says Telereal executive chairman Ian Ellis. “The £25 billion annual cost of government property has to be reduced to help cut the deficit. It must be better to take the money from property than frontline services.”

There are savings of £4.3 billion to be had over the next five years, says Ellis.One way is to cut the amount of space allocated to each worker.

At the Department for Work and Pensions, where Telereal has been running things for 12 years, the amount of floor space has been reduced from 81 million sq ft to 43 million.

Lots of people have been fired. But the big saving is squeezing those who remain into a space 44% smaller than before. The findings of the report have undoubtedly been discussed with the government's “property czar”, John McCready. The former Ernst & Young partner was appointed by Labour in December with the remit to squeeze some cash from the £370 billion public estate.

In April, McCready met with Telereal, which told him it had £1 billion to invest, and so can we try out our ideas in one or two more government departments please?

Telereal will have to tender for the work like anyone else. But there is only one serious contender — Mapley, the offshore firm that won a contentious bid to manage the taxman's office.

Meanwhile, the property czar has plans of his own, which will be helped by the merger this week of his office into the more powerful Office of Government Commerce.

The plan is to charge each government department rent for its office space, and then cut its annual budget each year to force it to move to cheaper or smaller space.

The intended effect of this move is to shift 15,000 expensively housed civil servants out of central London.

There have, of course, been countless attempts to do this in the past. But this time around the new government has more alluring options than Leeds, Manchester or Newcastle.

Thanks to the new high-speed rail link to Dover, millions of square feet of office space are already planned around the new stations at Stratford and Ebbsfleet in Kent.

Come on chaps, it's not far. It's for the good of the country, as is the shrunken size of your desk.