Why collaboration is key to maintaining the public estate

COMMENT: The escalating affordable housing crisis is just one aspect of a public estate that is creaking under the weight of rising demand from an expanding and ageing population, exerting pressure on public buildings from housing to hospitals to schools. With land currently valued at £380bn, the public sector remains the UK’s largest landowner. A series of government initiatives in recent years, such as the Naylor Review, the Local Government Association’s One Public Estate programme and the Carter Review, have considered how to drive efficiencies across the public estate. The OPE programme alone has raised more than £25m in capital receipts and delivered £7.7m in running cost savings since its inception. In August this year, the government announced a £54m Land Release Fund to release public sector land for thousands of new homes. However, greater collaboration with private property companies could expedite the transformation of the public estate. Driven more by commercial considerations, used to implementing projects with financial rigour and disciplined when it comes to costs, the UK’s property companies are concerned with driving efficiency and value across the full life cycle of a development, from project implementation and construction through to operational efficiency. Partnering with the private sector would enable the public estate to benefit from this skill set, halting the demise of public sector buildings and accelerating the delivery of new, fit-for-purpose facilities. The supply of affordable housing, in particular, is at a crisis point. There is an urgent need to unlock land to boost new housing supply. The Land Release Fund will enable local councils to release some of their unused or surplus land for housing, contributing to a saving of £158m in running costs and sufficient land supply for 15,000 new homes. But funding alone is not enough. In order to deliver the rationalisation and cost savings needed across the public estate, public sector authorities are realising the benefits that can be achieved from working with private sector partners with the expertise and experience to deliver improved asset management. Strategies range from reducing operating costs and generating additional income, to selling surplus land and reinvesting capital funds into the estate. Acknowledging this, last year the government announced £2bn to deliver Accelerated Construction, which would lead to an increase in the pace of build by partnering with SME housebuilders and using off-site construction methods. The health service has been an early adopter of public/private collaboration for estate transformation, driven in part by need. According to the Naylor Review, nearly half of all trust buildings are more than 30 years old, leading to high levels of backlog maintenance work currently estimated to cost around £5bn. Following recommendations in the Carter Review, healthcare trusts are implementing strategic estates partnerships, partnering with private sector developers to unlock the value of their estates by driving efficiencies, generating savings, integrating services and identifying new ways to earn income from their land. Crucially, the SEP model offers the NHS access to much-needed resourcing and private finance. By sharing the responsibility and risk with the private sector partner, SEPs are enabling trusts to bring forward innovative developments while retaining strategic control of outcomes. The model – a 50:50 strategic partnership that requires both partners to agree on strategy, priorities and outcomes – retains inherent flexibility and gives the public sector access to private sector skills, finance and resources. Introduced in 2011, the first SEP was established in the Lancashire NHS Foundation Trust, and has already delivered £5m revenue savings resulting from a 40% reduction in space. Like housing and hospitals, schools are facing a critical shortfall in places, and occupy buildings in some of the worst physical condition in the country. The National Audit Office estimates the cost of returning all school buildings to satisfactory or better condition to be £6.7bn. Working with a select cohort of private developers, the government’s £4.4bn Priority Schools Building Programme has focused resources on the redevelopment of those schools in the worst state of repair, replacing creaking buildings with efficient, modern premises. The two-phased programme will improve a total of 537 schools, the majority of which will be completed by the end of this year. Once refurbished, schools are beginning to view their facilities as assets – generating revenue by hiring them out for community use, just one example of innovation that will need to be adopted across the public sector. Increased collaboration between the public and private sectors has delivered vital efficiencies that have fuelled the redevelopment of the public estate and opened up vital lines of funding. However, with a population that is projected to exceed 70 million by 2026, demand for public services will only escalate. The government will need to create the right conditions to ensure that public and private sectors can continue to work in close collaboration if a major shift towards a shared, flexible and integrated public estate is to be realised, and the UK is to effectively maintain one of its biggest assets: its public estate. Kirk Taylor, head of development, Kajima UK