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ITEM EX7

EXECUTIVE – 29 OCTOBER 2002

COUNTY COUNCIL PROPERTY

Report by Director of Environmental Services

Introduction

  1. There have been several requests for reports on property related issues. The specific requests are dealt with in the Annexes. The main report seeks to focus on the key issues for the Council’s property portfolio and ways of addressing them.

  2. The Annexes are as follows:

    3. Annex 1 - A report on Options for Addressing the Repairs and Maintenance Backlog as requested by the Executive on 3 July 2002.

    Annex 2 - Audit of Staff Facilities as requested by the Executive on 3 July 2002.

    Annex 3 - The Pros and Cons of Leasing Accommodation as requested by the Executive on 3 July 2002.

    Annex 4 - The possibility of selling or transferring to a Housing Association the County Council’s staff houses as requested at the Member Officer Budget meeting for Corporate Governance on 15 July 2002.

    Annex 5 - Integrated Strategy for Accommodation/Workstyle/ICT/Records Management as requested by the Executive on 30 April 2002.

  3. The Executive on 30 April 2002 also requested a report identifying potential projects and/or packages of property/service areas which might be appropriate for procurement and funding from PFI, Priming and other potentially available sources. Projects which have been identified as potentially appropriate for PFI include: Education projects at Didcot, Banbury and Wantage; rationalisation of administrative offices providing accommodation and ICT appropriate for modern workstyle; the Waste Management facilities which will be required as part of the Waste Management strategy; the GTE; and replacement of libraries. Further work is required on the revenue consequences of PFI projects before any decision is taken as to whether a proposal should be taken forward. There is however reference to the possibility of a PFI project for rationalisation of offices/e-government etc below and in Annex 5.

    4. Key Issues

  4. It is clear from the various requests for reports and from the Asset Management Plan that there is a need to look fundamentally at the property the Council needs and the way it is used. It is important that the key issues are identified and agreed and that they are addressed in a focused and constructive way. The following seem to be the key issues.

  5. The Council owns and uses a substantial amount of property which has a high capital value and high revenue costs. Although the District Audit Report on Asset Management in 2001 implied that the Council has a larger than average property portfolio there is a lack of benchmarking data, and comparisons with County Councils in the same family group do not indicate that Oxfordshire is above average. However, we need to ensure that all of the property is necessary and appropriate for the achievement of the Council’s objectives and that the Council secures the best return from the value which is tied up in its property.

  6. For many years the funding available for repairs and maintenance has been inadequate and this has resulted in a substantial maintenance backlog and poor value for money spent on repairs and maintenance as a disproportionate amount is spent on urgent rather than planned works. So far there has not been any serious disruption of services but the current level of spend relative to the size of portfolio and backlog is not sustainable. It may be possible to use the value of the assets in some way to help deal with the backlog. (See Annex 1)

  7. The Council’s property does not generally provide a good working environment or appropriate facilities for most of its staff, and it can detract from the quality of services. Generally the Council’s property does not present a favourable image of the Council.

  8. The Council’s current accommodation and the way it is allocated and used does not help the move to new work-styles or shared/corporate use across service areas. There should be scope for rationalising the property used and providing accommodation which is more suitable for future needs and capable of being used flexibly.

  9. We already do much to realise the value of the Council’s assets and have a good record of identifying and releasing valuable sites. Examples of using the value of assets to provide new investment are: the Sandhills School scheme where by disposing of part of the site and re-providing the playing fields on adjoining land a new school and a substantial capital receipt were secured; and the new multi-purpose building at Kidlington which has been funded from the disposal of premises which will be re-provided on the site, again with a substantial net receipt.

  10. A review of Social Services Adult Training Centres is currently under way which is intended to look at the provision and use of the existing premises; this follows concerns about the level of use relative to the size of some of them.

  11. The total capital receipts for the last three years were:

    12. 1999/00 - £15.5 million 2000/01 - £6.49 million 2001/02 - £3.6 million

    The estimated receipt for 2002/03 is over £17 million. Capital receipts are generally retained by the Service which releases the property and used to help fund their capital programme. However, given the Council’s overall priorities and the urgent need to address the substantial repairs and maintenance backlog there is a case for allocating a proportion of capital receipts to the Repair and Maintenance budget so that they are used to re-invest in the Council’s existing property.

    The Way Forward

  12. There is a need for a clear and effective process with a realistic time scale. The next version of the Corporate Asset Management Plan will be submitted to the Executive in July 2003. It should be the corporate and comprehensive plan for ensuring that the Council’s property portfolio is appropriate for its purposes and is fully and effectively used. It should also be the basis for any proposals for rationalisation of property or reduction in the number of properties used. The plan should include comprehensive proposals for addressing the Asset Management issues relating to the Council’s strategic objectives and priorities and include targets for any reduction in the size of the portfolio which is achievable by a rationalisation.

  13. A Best Value Review of Property Services is currently being undertaken. The Review is examining the arrangements for how responsibility for property is allocated at member and Directorate level. At present the majority of the Council’s property is held by individual Services which may not be the most appropriate arrangement for securing shared or Corporate use of the Council’s assets. If more flexible workstyles are to be introduced across the Council then there is likely to be the need for more Corporate facilities. The Best Value Review is due to report to the Best Value Committee in January.

  14. A further Best Value Review on the use of the Council’s Assets is planned for 2003. This will be a major contribution to the development of the AMP

  15. In the meantime it is proposed that there should be feasibility work done for a rationalisation of administrative offices. This should be part of an integrated strategy for Accommodation/Workstyle/ICT/Records Management. (See Annex 5). If there is a move towards more flexible working, with provision of corporate accommodation, ICT and records management facilities then it should be possible for the amount of administrative offices to be reduced. This should reduce the amount of leasehold premises with a subsequent reduction in revenue costs for rents. It should also help to achieve the Council’s priorities of improving the condition of its buildings and providing better working environments. Although the disposal of surplus offices would provide some capital funding it is likely that PFI or some other form of Public Private Partnership would be the most appropriate, and possibly the only, way of proceeding. A report on the IEG2 Programme, including the possibility of funding from a Public/Private partnership was submitted to the Executive on 15 October.

  16. The Office of the Deputy Prime Minister has advised local authorities that PFI credits are available for Joint Service Centres. Rationalised offices possibly including re-provision of libraries and/or shared accommodation with Districts could be eligible. An outline proposal would need to be submitted by 3 January 2003. It will be difficult to meet that timescale but consideration should be given to submission of a proposal. Members will be kept informed and consulted.

  17. Such a strategy would have significant implications for all directorates and would need the support of the Executive, Strategic Directors, Heads of Service and staff. Developing proposals would be a major project with resource implications. The current arrangements for the responsibility for property within the Council’s organisation do not facilitate the development of such a Corporate strategy and the resources available in the Property Client Section would not be able to deal with it. The proposals for reorganisation and the outcome of the Best Value Review for Property Services are likely to give a more appropriate organisational structure.

    18. Environmental Implications

  18. The condition of the Councils buildings can have an adverse effect on their appearance and on the local environment. Failure to repair/replace boilers and heating installations can result in poor energy efficiency.

    19. Financial Implications

  19. A very substantial capital value and revenue costs are tied to the Council’s property. The amount of funding currently available for repairs and maintenance is well below the proportion of capital value which is normally acccepted as being required and this has resulted in a large maintenance back log and poor value for money from the high expenditure on urgent works. Even if the amount of property used by the Council can be reduced it is likely to take some time to achieve that, and in the meantime there is a risk that the condition (and value) will deteriorate unless priority is given to increasing the spend on the repairs and maintenance, in particular planned maintenance. An additional £500,000 per year for Repairs and Maintenance from 2003/04 was included in the Medium Term Financial Plan. However, the Executive on 1 October agreed the process for setting the 2003/04 budget which uses 2002/03 as a base and required bids for everything other than certain unavoidable pressures. The need for the additional funding will therefore be reconsidered during the budget setting process..

  20. Rationalisation of the Council’s property including the introduction of more flexible working arrangements is likely to involve investment, not only in new accommodation but also in ICT, records management systems and other facilities. The disposal of some of the current properties would provide capital funding to contribute to the costs but PFI or some other form of partnership is likely to be the most feasible (or possibly the only) way of securing the amount of investment needed. Rationalisation of the Council’s administrative offices could reduce the number of leasehold premises used by the Council with consequent savings in the rent and other revenue costs for those premises. Initially there will be costs involved in undertaking the feasibility and preparing proposals for rationalisation. It would involve staff from corporate and service directorates and would be dependent on data which is not yet included on the Council’s corporate property database. It may be necessary or helpful to secure consultancy advice.

  21. It is intended that full option appraisals will be carried out for capital projects with a value of over £200,000. A format for the appraisals has been prepared by a sub group working to the Capital Programme and Asset Management Group. In each case the most appropriate form of procurement is to be considered and this will involve consideration of PFI. Details of the proposals for option appraisals will be reported to the Executive in January 2003.

    22. Staff Implications

  22. The condition of the Council’s buildings and the lack of staff facilities can have direct effects on performance and recruitment and retention. If the Council is to achieve its objectives and priorities it will be important to provide staff with the appropriate standard and range of accommodation and facilities.

  23. As stated above, rationalisation of the Councils property would involve a substantial amount of work for staff from the corporate and strategic directorates and would also need the support and co-operation of all of the staff involved. The introduction of more flexible work styles can have a wide range of benefits for staff but again is dependent upon their support and co-operation.

    24. RECOMMENDATIONS

  24. The Executive is RECOMMENDED to:

          1. note that it will be necessary to give appropriate priority to funding for repairs and maintenance in the medium term financial plan as part of the measures to address the maintenance backlog;

          2. agree that costed proposals for making more effective use of the central buildings (including Albion House and Cricket Road), including the extension of more flexible working arrangements, the provision of corporate facilities to assist such arrangements, and general improvement in working conditions. be reported to the Executive in February 2003;

          3. agree that a strategy for the rationalisation of the non-central administrative offices, including the introduction of more flexible working arrangements, provision of corporate facilities, ICT and records management arrangements with targets for any achievable reduction in the overall office space, be included in the Asset Management Plan to be submitted for approval in July 2003 and that consideration be given to submission of an outline proposal for a PFI scheme subject further consultation with members and a report to the Executive if appropriate;

          4. note that a report on the introduction of a system of option appraisals will be brought to the Executive in January 2003.

DAVID YOUNG
Director of Environmental Services

Background papers: Nil

Contact Officer: Neil Monaghan Tel: Oxford 815712

October 2002


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