Source · Select Committees · Public Accounts Committee
Recommendation 3
3
HMRC’s estate strategy risks becoming woefully out of date.
Conclusion
HMRC’s estate strategy risks becoming woefully out of date. Our long-standing concerns about HMRC’s non-breakable long-term property leases have become all the more relevant, and prescient, given the COVID-19 pandemic. In April 2017, long before COVID-19, we raised our concerns about HMRC locking government into holding larger properties for longer than needed. We raised similar concerns again in January and April 2018. Yet HMRC persevered. HMRC’s view is that its regional centres are located in prime sites and it can, therefore, lease them out to the private sector and other government departments if they have spare capacity. We strongly believe this is an out of date assumption that needs urgent revision in light of changing economic conditions. It is commonly accepted that some significant changes in working practices, with more staff working flexibly and less need for traditional office space, are likely to be here to stay. Recommendation: In its Treasury Minute response, we expect HMRC to set out its future plans on how it will review its estate strategy in light of the impact of COVID-19 on the demand for commercial properties, to ensure it can demonstrate value for money from its considerable investment should demand remain suppressed.
Government Response
Acknowledged
HM Government
Acknowledged
3.1 The government agrees with the Committee’s recommendation. Target implementation date: July 2021 3.2 The department is satisfied that its estates strategy continues to offer value for money in the light of the likely short- and long-term impacts of the COVID-19 pandemic on the department’s requirement for office space and on office rents. 3.3 Before making contractual commitments for its regional centres, the department obtained independent qualified professional advice which confirmed that the flexible lease terms they negotiated offer the best balance of value when building modern offices in locations with a large long-term government presence. It also built in terms enabling the department to sublet space if needed and build in future flexibility. 3.4 While the experience of working during the COVID-19 pandemic is likely to have longer term implications for ways of working, the department expects to continue to be an office-based organisation, requiring high-quality workspaces where people can work together and develop their careers. The department will review what this means in terms of space requirements and work with the Government Property Agency to ensure space freed up by HMRC is made available to other departments who wish to secure long-term space, to support the government’s Places for Growth Programme. The high quality of the department’s regional centre office accommodation, and their prime location in Government Hubs, mean that they are eminently suitable for use by other government departments and there has already been demand from other departments for space in HMRC’s regional centres. 3.5 The lease terms negotiated by the department ensure optimum rental costs in the light of the expected long-term occupation of the offices by HMRC and other government departments.