Future of The DWP’s Estate

Final plans have been published to update DWP’s property estate.

The Department for Work and Pensions' estate is to shrink by 20% over the next five years, the Treasury has announced, as part of a wider push to find fresh savings through the sell-off of government land.

Chancellor George Osborne's Spending Review confirmed that departments had agreed to sell £4.5bn of surplus land and property by the end of the decade, with the DWP asked to cut its estate by a fifth, including by seeking "greater co-operation with local authorities" and co-locating Jobcentres.

The DWP currently accounts for around 15% of the overall government estate, the largest footprint of any government department. The size of the department's estate was already reduced by 17% over the last parliament.

The move follows the announcement of a major programme of office closures at HM Revenue and Customs, with the tax authority planning to cut its network of 170 offices to just 13 regional centres. Part of HMRC's plans include sharing office space with the DWP.

As well as the contributions from DWP and HMRC, the Spending Review says the Department of Health will sell off some £1.95bn in land and property assets, with the Ministry of Defence contributing £1bn-worth, and £640m coming from the Ministry of Justice, which aims to sell off "ageing, inefficient prisons on prime real estate".

A further £410m in sales will come from the Department for Communities and Local Government, there will be a £200m contribution from the Department for Energy and Climate Change, and the the Department for Business, Innovation and Skills will sell off £120m worth of land and property assets.

The government has already said it will use land released by government departments for the construction of new homes, although a recent Public Accounts Committee report on earlier attempts at disposing of public land for house building raised questions over the actual number of homes that had been delivered. The Spending Review estimates that the latest public land sales will free up capacity for 161,000 homes by 2020. 

The Treasury has also added detail to its plan for further overhaul of the way the government manages its property and land assets. A centralised Government Property Unit was set up within the Cabinet Office during the last parliament, aiming to help departments use their estate more efficiently. 

The Spending Review goes a step further, confirming that ownership of the government estate will be now centralised, with departments charged market-level rents on the freehold assets they currently own in a bid to incentivise better use of land and buildings. The plans were previously sketched out in the March 2015 Budget.

The document states: "The new model will be operational by March 2017, subject to legislative requirements, and all relevant central government land and property will transfer to the new central body by the end of this parliament.

"The Spending Review announces that [former British Property Federation chief executive] Liz Peace has been appointed as shadow chair to lead the implementation of the new body. The first assets transferred into the body will include freehold office, warehouse, storage and depot properties (and leaseholds where appropriate). Similar charging regimes will be introduced to the same timescale for the MoD and the FCO overseas estate."

DWP’s plans include:

• merging 68 smaller jobcentres into larger ones nearby
• co-locating around 40 jobcentres with local authorities or community services to provide joined-up services
• moving staff from 22 back office buildings into larger, more efficient processing sites, including introducing 5 new service centres
• retaining almost 800 offices
• re-organising the corporate centre and making use of 7 regional corporate hubs, including establishing a new office in Manchester

DWP will be able to offer a more efficient service, while delivering good value for the taxpayer, saving over £140 million a year for the next 10 years.

Note: The DWP said the anticipated 750 redundancies from the programme equated to fewer than 1% of its total workforce, and were expected to be mainly covered by its voluntary redundancy scheme.

Union PCS said it was “highly likely” that compulsory redundancies would be required to deliver the headcount cuts of the magnitude DWP had indicated, and that staff working in the back-office and corporate centre functions earmarked to shut would be most vulnerable because of the difficulty of relocating to new bases.