Conclusion 2

In its haste to purchase the Northeye site, the Home Office ignored opportunities to properly understand the risks and costs of developing it, leading to poor value for money for the taxpayer. The Home Office asserts it did a “fair amount” of due diligence before acquiring the Northeye 4 site, but the NAO highlighted significant shortcomings. The Home Office rejected offers of expert property advice within government, ignored valid criticisms of contract terms that increased its costs, and failed to act on recommendations from the due diligence reports it had commissioned. Furthermore, the Home Office overlooked the value of fully engaging with local stakeholders, which could have provided critical insight into the site’s condition. The decision to proceed was based on an incomplete Accounting Officer assessment, filled with uncertainties and overly optimistic assumptions. Despite this, the Home Office assured the Cabinet Office it could manage the risks and proceeded with the purchase - only now acknowledging that the risks were unacceptable and that it should in fact have done much more due diligence. Indeed, the Home Office did not even commission a proper ‘red book’ valuation, so it did not know whether it was paying a fair market price for the property. We have previously warned that working at pace does not absolve the Home Office of its responsibility to manage projects effectively and safeguard value for money. The Home Office has since accepted it did not strike the right balance between due diligence and operating at pace. However, even with assurances about lessons learnt, it remains unclear to us how the Home Office plans to strengthen its processes to avoid similar failings in future acquisitions. recommendation The Home Office should, as part of its Treasury Minute response, set out what changes it has made to ensure future investment decisions are made on a comprehensive range of information, following a full and transparent consultation with a range