CIPFA’s Property team were invited to present an update on current property issues at the annual Association of Chief Estate Surveyors conference in York on 21 September 2023. The following is an extract from the presentation.
Property Update - Mark Poppy and Donna Best, CIPFA Property Team
Mark and Donna took the last conference session, highlighting some of the issues of the day. It feels like we are experiencing a pretty unprecedented period in the world of local government finance, which has seen Northampton, Croydon, Thurrock, Woking and Slough declare section 114 since 2018. Councils are unable to set a balanced budget and have been essentially borrowing money from the government to cover day-to-day costs (over 16 councils). The latest to fall victim is Birmingham City Council. The implications could be fire sales, difficulties of recruiting to failing organisations, and adverse public reaction. Ten percent of local authorities are under threat of the need to serve s114 notices in 2023/24, with more to follow in 2024/25; pressures are coming from children’s social care, inflation, energy costs, and salaries. Government is blaming local authority leadership and decisions.
The Levelling Up and Regeneration Bill
The Bill is now at the report stage in the House of Lords, with a view to get it passed ahead of the King’s speech in early November. An already huge bill, even early this month, there were additional policy areas being added by the Lords in relation to childcare and climate change duties.
The adoption of the 4-day week by local authorities is being challenged by central government on grounds that it means a failure of their duties. The benefits quoted are that it attracts quality staff at a time when advertised posts are unfilled and interims are costly. In 2022-23, nearly a quarter of the 27,619 full-time jobs advertised by local authorities went unfilled. In the meantime, civil servants could soon be presented with fresh guidance on the proportion of their working week that should be spent in their official workplace, with the suggestion that ministers could push for a one-day-a-week limit on remote working.
There is also a demand from staff and councillors to allow hybrid meetings. Under 50-year-old laws, councils are required to hold in person certain statutory meetings, such as for planning and full council. LGA is now warning that the recruitment and retention of councillors, particularly those balancing career or care commitments, will be hampered if powers are not given to councils to enable them to hold statutory meetings in a hybrid format. So we could see a move in the not too distant future for the existing laws to be amended. Another trend is for public sector staff to work from abroad. Space utilisation was measured in the most recent CIPFA poll. Often, buildings are still operating on the basis of 100% attendees when only a small proportion physically attend. Rationalisation is an objective to combine offices and save money, downsize, or move premises.
Poorly maintained buildings
There are pressures to divest, but there is often reliance on the income from non-operational buildings. The maintenance backlog is very high. Four district councils have spent over £290m on property investments, using short-term borrowing. While capital may be being lost, investment revenue is being sustained. Housing developments are being dashed in some councils, with a failure to deliver high quality development schemes due to high interest rates, rising construction costs, market uncertainty and the inability now to invest outside the authority boundary. However, it is worth investigating the gov.uk ‘Find a grant’ website, which brings together all government grant funding available and there may be a random pot!
A couple of documents from the Government Property Agency which may be useful are its ESG Report, 2023 and the Net Zero Estate Playbook, 2021.
And finally, reference was made to the joint CIPFA/ACES Diploma in Asset Management. This is a success story – 300 delegates have gone through the course, mainly from local authorities, but it is now broadening to other public sectors – health delegates are encouraged to attend. For a discount on the Diploma fee then ACES members should contact Trevor Bishop ACES secretary at email@example.com.