29th Report - Condition of Government property

The poor condition of some property and the failure to maintain it is regularly affecting the provision of key public services. Risks relating to property condition have materialised, taking property out of use and impacting functionality of properties such as prison cells, law courts, schools, hospitals, defence estate and museums. Over 4,100 cells closed due to dilapidation and an average of 5,400 clinical service incidents occur in the NHS each year due to property and infrastructure failures. These are localised incidents where the level of disruption results in the organisation temporarily or permanently losing its ability to deliver services, which can include closing departments, suspending services and cancelling appointments. The government estate is potentially at further risk from issues that have yet to emerge, like the emergency repair works that needed to be carried out to address the presence of reinforced autoclaved aerated concrete (RAAC) and asbestos across the government estate. RAAC is less durable concrete that can seriously risk the safety of buildings where it is present, whereas asbestos poses a health risk. Departments are required to prepare Strategic Asset Management Plans (SAMPs) to document their planned approach to the maintenance of their estates, as well as the management of risks. At the moment, not all plans include comprehensive risk analysis and mitigation. These plans are expected to consider future risks, and the OGP is encouraging departments to take a longer view of their portfolio in their SAMPs going forward. recommendation a. The Cabinet Office should require departments to include explicit analysis of the risks across their portfolio in their updated SAMPs. b. The Cabinet Office should update the Committee by April 2026 on how it is supporting departments to minimise the risks posed by poor maintenance on their estate. 5

Many departments’ property plans lack the information necessary to manage and maintain their portfolios. Departments are required to prepare Strategic Asset Management Plans (SAMPs) to consider the totality of their assets and document their planned approach to managing maintenance and disposals in the longer term, including documenting any property risks and how they plan to manage and mitigate them. Departments’ SAMPs are currently of varying quality, and different levels of maturity. The Ministry of Defence needs to urgently create a long–term strategic plan to redevelop the service personnel housing estate as part of its SAMP. Departments are also expected to include data from their arm’s–length bodies (ALBs) in individual SAMPs, unless the ALB prepares a separate SAMP. Departments do not have sufficient oversight of some ALBs with large property portfolios and their information does not feed sufficiently into departmental SAMPs. The OGP requires ALBs that have a particular property focus to prepare their own SAMP, for example Homes England and the Government Property Agency. recommendation a. Cabinet Office should perform a regular assessment on the quality of the SAMPs of organisations with major property portfolios and explain what further actions it is taking to improve the quality and coverage of departmental SAMPs. b. The Ministry of Defence should report to the Committee its plan for redeveloping its housing estate and include long–term plans in the departmental SAMP. The plan should also include details on proposed disposals, redevelopment and maintenance.

Short–term funding for property maintenance is hindering longer–term planning. Departments typically bid for property maintenance funding on a yearly basis. This short–term funding cycle can be inefficient as it hinders departments’ ability to plan longer–term maintenance works. The contracting phase may take a long time and this can mean that property maintenance works may, for example, be concentrated close to the year end to avoid losing funding, despite likely less favourable weather conditions. HM Treasury is responsible for assessing departments’ bids for maintenance funding. The quality of these bids is variable and there is little clarity on whether departments consider alternatives to maintenance, such as whether moving to a new building would be better value for money in the long–term. The OGP is supporting departments through provision of guidance and tools on preparing maintenance bids, and supports HM Treasury with assessing the bids. Officials in the OGP also regularly engage with departments and ALBs on disposals. We specifically raised concerns about the delays in the disposal of the properties acquired 6 for the abandoned High Speed 2 extension. Not all departments and ALBs make use of what the OGP offers and the OGP does not currently mandate the use of any of its tools. The government has set out plans for longer– term, five–year, capital funding cycles, which should help departments’ plan better. recommendation a. The Cabinet Office should, in light of Spending Review 2025 and no later than October 2025, write to the Committee to update it on what has changed to support the longer–term planning of property maintenance. b. HM Treasury should mandate that business cases for maintenance funding consider the consequences of disposal and building new in addition to maintaining existing properties.

Many departments and arm’s length bodies do not have the skills and capabilities to manage their property portfolio effectively. There is a shortage of skilled property professionals across departments. Departments are finding it difficult to recruit and retain property professionals. The lack of capacity and capability in departments impacts their ability to maintain properties effectively, including both carrying out the work required and managing contractors. Government has recently made progress in recruiting and training staff, for example by initiating 302 new property apprenticeships and 61 new graduates recruited for property roles by September 2024. We understand that the government property function has the lowest proportion of women working in it of any of the government functions; an issue acknowledged by the Cabinet Office and which it says it is trying to address. We are also concerned that it may be very challenging to maintain existing property professional staff numbers across government, and certainly to recruit more, in the context of trying to reduce civil service expenditure. The Cabinet Office has itself announced recently that it intends to reduce its staff numbers by nearly a third. recommendation As part of its of strategic workforce planning review, the Cabinet Office should set out the reasons for difficulties recruiting and retaining property professionals and its plans to improve skills and diversity of property professionals across government.

The Cabinet Office’s oversight of government property risks being ineffective due to duplication of roles. The OGP is responsible for the overall strategy for non–office property across government, whereas the Government Property Agency (GPA) is responsible for office related strategy. 7 The OGP sits within the Cabinet Office and the GPA is one of the Cabinet Office’s Executive Agencies, and we are not convinced of the need for two separate organisations, given both sit within the Cabinet Office departmental group. The new National Infrastructure and Service Transformation Authority, responsible for infrastructure strategy, jointly reports to the Cabinet Office and HM Treasury. Strategy implementation and operational management are split across departments and their ALBs. For example, NHS Property Services is responsible for the primary care estate (initial points of contact for patients, such as GP practices, pharmacies and dental clinics), while currently NHS England is responsible for the secondary care estate (for example, hospitals and specialist clinics). The existence of these various organisations across government risks duplication of effort and inefficiencies. Additionally, while the OGP has responsibility for overseeing property strategy, it does not have the levers to support improvements, which raises the concern that it cannot gain sufficient traction. The Cabinet Office says it is carrying out a review of its structure to remove duplication and inefficiency. recommendation The Cabinet Office should write to the Committee, as soon as practicable, to provide an update on its review of the effectiveness of its oversight of government property. The update should include any actions it is taking to strip out duplicate roles, and give specific consideration to the need for two property organisations within the Cabinet Office departmental group. 8 1 The property maintenance backlog and its impact Introduction

On the basis of a report by the Comptroller and Auditor General, we took evidence from Cabinet Office and the Defence Infrastructure Organisation (DIO) on the condition of government property.1

There is no standard definition for the calculation of the total maintenance backlog across government. Government organisations include different costs in their individual calculations. The lack of consistent and complete data impacts government’s ability to make well–informed, strategic choices in the prioritisation of funding.9 We questioned whether departments are complying with the OGP’s data collection standards. The OGP told us that while departments are increasingly co–operating, data quality varies across government.10 In response, the Cabinet Office has stated that it plans to release a common definition and calculation methodology for the government’s maintenance backlog in the second quarter of the financial year 2025–26.11 4 C&AG’s Report, paras 3, 11, 1.12 5 C&AG’s Report, paras 2.2, 2.3, 2.6 6 C&AG’s Report, para 1.13 7 C&AG’s Report, para 2.7 8 Qq 7, 28 9 C&AG’s Report, paras 2.4, 2.5 10 Q 14 11 Letter from the Cabinet Office, dated 11 April 2025 10

The Cabinet Office aims to improve data consistency through its new InSite programme, enabling the implementation of the government property data standard across the central government property portfolio.12 It told us that the Insite was going live and would be fully functional on 1 April 2025, the day after we took evidence.13 Poor condition of property affecting public services

Well–maintained government properties are more cost–effective than poorly maintained buildings. They contribute to a better experience for the public and higher levels of wellbeing and productivity for staff. Poor property maintenance can result in water leaks, collapsing ceilings, fire alarm faults and other building failures.14 These risks have already materialised across government property and resulted, for instance, in the closure of prison cells, law courts and museums. On average, in the period 2019–20 to 2023–24, approximately 5,400 clinical service incidents occurred in the NHS every year due to property and infrastructure failures.15 We recently reported on the prison estate backlog which has doubled to £1.8 billion in the last four years and its Spending Review allocation of £220 million in 2024–25 which is not sufficient to reverse this trend.16

The government has identified poor property condition as a significant risk. The Civil Service Board, which supports the strategic leadership of the civil service, considers unsafe property to be one of the risks to the civil service’s ability to deliver the government’s objectives, and assesses it to be outside of its appetite, that is, beyond the level of risk that the government can accept.17

The NAO reported that civil service resources for other initiatives have been diverted to deal with risks relating to reinforced autoclaved aerated concrete (RAAC) across government.18 We asked the Cabinet Office about RAAC and how it has impacted the delivery of the work. The OGP told us that resources were diverted as it needed to coordinate efforts across governments to identify issues and put in place mitigation plans.19 We further questioned the Cabinet Office about the extent of knowledge 12 C&AG’s Report, para 2.9 13 Q 23 14 C&AG’s Report, paras 1.4, 1.5 15 C&AG’s Report, para 1.7, Figure 3 16 Committee of Public Accounts, Prison estate capacity, Fifteenth Report of Session 2024–25, HC 366 17 C&AG’s Report, para 1.6 18 C&AG’s Report, para 2.14 19 Q 29 11 of RAAC issues in hospitals, given the poor state of hospitals in the past. The OGP told us that seven hospitals in the poorest condition were rebuilt through the New Hospital Programme, while RAAC has largely been repaired in the other less significant instances.20

We questioned whether government is adequately prepared to prevent future risks, similar to the sudden emergence of RAAC and asbestos, from affecting property unexpectedly. The OGP stated that it has a clear picture of RAAC and asbestos across all of government. It is now bringing together knowledge and expertise in order to better support departments in identifying risks, and that it is important to identify how new methods of construction bring future risks into the estate.21 Property plans

Departments are required to prepare Strategic Asset Management Plans (SAMPs) to document their approach to the maintenance of their estates, as well as the management of risks. SAMPs provide an opportunity for departments to consider the totality of their assets and plan how to manage maintenance and disposals in the longer term.22

While SAMPs are mandatory and of high strategic importance, not all departments prepare comprehensive plans.23 The OGP is asking departments for a more forward–looking approach in their plans, including consideration of future risks.24 The Cabinet Office explained that almost all departments have now either produced a SAMP, or have plans to produce one.25

We raised concerns about the Ministry of Defence housing estate.26 The Chief Executive of the DIO told us that the Ministry is undertaking a review of the housing estate in order to address poor condition. As part of the review, it is considering maintenance, private funding, disposals and redevelopment.27 Prioritising this review will be important for addressing ongoing wider recruitment and retention issues in the Ministry of Defence. 20 Q 21 21 Q 58 22 C&AG’s Report, para 1.10 23 C&AG’s Report, para 1.10 24 Q 30 25 Q 13 26 Q 84 27 Q 86 12

Responsibilities for property management vary across departments. Some manage the property of their ALBs, which includes acquisitions, disposals, maintenance, improvement works and facilities management. Others delegate management responsibilities to their ALBs.28 We questioned the OGP as to how much knowledge it had of ALBs’s property management plans, to which it responded that departments are responsible for including ALB properties within their own SAMPs. It also stated that it has required some particular ALBs with a focus on property management to prepare separate SAMPs. These include the Government Property Agency, and as of this year, Homes England (previously included within the Ministry of Housing, Communities and Local Government’s SAMP).29

We followed up on whether the OGP knows if departments are preparing comprehensive SAMPs that cover ALBs. It assured us that it carried out a review on SAMPs to ensure that they were covering the whole property portfolio. The OGP also noted that SAMPs were on a journey of improvement and that the plans submitted to the OGP improve every year.30 28 C&AG’s Report, para 1.10 29 Q 16 30 Q 17 13 2 Funding, skills and oversight Short–term funding

Government organisations operate with annual maintenance budgets. Transferring unspent funds to the following year is often not easy and requires HM Treasury’s permission. Departments respond to annual budgets by planning on a yearly basis. They may split contracts into smaller chunks, rather than longer, better value contracts. This allows departments to spend allocated funds before the year end, at which point any remaining money would be lost.31 The Cabinet Office noted that there is nothing stopping departments from planning for the longer term.32 Additionally, the NAO report includes the example of HM Revenue and Customs planning over two years for property related projects.33 There are also examples of departments making longer–term asset management plans, such as HM Courts and Tribunals Service’s estates strategy over the next 5 and 10 years.34

We challenged the Cabinet Office as to whether this is a good way for government to operate, or whether a longer–term funding settlement would encourage better practice. The Cabinet Office replied that annual budgets are common. It also noted that the Spending Review 2025 will be multi–year. The DIO agreed that managing a building that is expected to last 60 years with yearly spending settlements is very challenging, and that management of infrastructure needs to be long–term. We asked further on whether HM Treasury plans to give greater certainty to departments on maintenance funding, to which Cabinet Office replied that HM Treasury intends to create a 10–year infrastructure strategy, and provide five–year capital funding cycles.35

Departments may reduce their maintenance cost and backlog by disposing of existing properties that they no longer need. However, they may decide not to move because the proceeds from the sale of an old building would 31 C&AG’s Report, para 3.14 32 Q 35 33 C&AG’s Report, para 3.14 34 C&AG’s Report, paras 3.14–3.15 35 Q 33 14 be low and the cost of acquiring a new building high.36 We queried whether departments are sufficiently interested in disposing of old buildings. The Cabinet Office replied that departments want modern buildings, though it also acknowledged that the estate is vast, and a lot will depend on property experts within individual departments.37 The NAO report noted that departments may be culturally attached to older buildings that are more expensive to maintain.38 The Cabinet Office added that it provides guidance and support to departments on disposals, and in written evidence provided after the evidence session, it elaborated on the guidance documents provided to departments.39 We raised in particular the disposal of the land and property that was originally acquired to extend High Speed 2 (HS2).40 The Cabinet Office told us that the approach to property disposals and asset management of these assets is under the auspices of the Department for Transport (DfT) but property experts in Cabinet Office and the OGP regularly engage with departments and ALBs on disposals. OGP officials will specifically ensure High Speed 2 are invited to discuss disposals at OGP’s next regular engagement point with DfT.41 Skills and capacity

There is a shortage of skilled property management professionals across departments. If the perceived value of working in the public sector property profession has declined, or levels of pay are no longer considered attractive, his would be a matter of concern for the long term health of the profession. The NAO reported that the government set the ambitions in its property strategy for 2022 to 2030 to achieve 90% accreditation of property professionals at grade 7 and above by 2030 and to grow and approve early talent programmes. The strategy does not address future skills resilience or how property professionals should be placed across the civil service to ensure all departments are able to strategically manage their assets.42 The Cabinet Office has hit its recruitment targets by recruiting 302 apprentices, 61 graduates and 60 property surveyors by September 2024, and is on track to meet its accreditation rate ambitions.43 The OGP stated that it is providing cross–training programmes for professionals to update their skills, abilities and capabilities, in addition to holding regular forums to share best practice and fill gaps.44 36 C&AG’s Report, paras 3.11–3.12 37 Q 67 38 C&AG’s Report, para 3.12 39 Letter from the Cabinet Office, dated 11 April 2025 40 Q 53 41 Letter from the Cabinet Office, dated 11 April 2025 42 C&AG’s Report, para 4.2 43 Qq 30, 76; C&AG’s Report, Figure 11 44 Q 30 15

We asked the OGP how it plans to address fluctuations in property professionals. The OGP told us it is working with departments to adjust their workforce plans. The Cabinet Office is also producing its first strategic workforce plan in summer 2025, alongside maintaining oversight of supply and demand trends.45

The OGP told us that the Government Property Function has the lowest proportion of females compared to all other functions. We asked the OGP how it plans to recruit and retain more female property professionals. The OGP told us that it has a successful governance group, the Property Leaders Group, who promote diversity and inclusion on protected characteristics, including gender. The DIO commented that the executive committee at DIO is 50:50 male to female, but that it is continuing to address these issues.46

We questioned the Cabinet Office about how the planned cost reductions in the Civil Service will impact the number of property professional staff. It explained that there will not be any broad exemptions, including for property professionals, and that the Cabinet Office will look at consultants, contingent labour and cost overall, not just the number of civil servants, and adjust to achieve best value for money.47 We further questioned the Cabinet Office and the DIO on whether they can offer the necessary renumeration for these specialist roles. They responded that, although the Civil Service pay framework is often restrictive, many property organisations within government are on separate frameworks that better reflect specialist skills.48 Cabinet Office oversight

The OGP sets the overall strategic direction for the management of government property overall, split across 15 portfolios.49 The OGP told us that the Government Property Agency (GPA), which is an executive agency of Cabinet Office, sets and delivers the strategy for the office portfolio, representing about 2% of the whole estate.50 A new body, the National Infrastructure and Service Transformation Authority, has been established to oversee the infrastructure strategy.51 We asked the Cabinet Office whether 45 Q 78; C&AG’s Report, para 18 46 Qq 74–75 47 Q 79 48 Q 73 49 C&AG’s Report, para 4 50 Qq 2–3 51 C&AG’s Report, para 3.18 16 the OGP and GPA should be merged to avoid overlap. It responded that the Cabinet Office is undertaking a review of its structures, and intends to strip out duplication and inefficiency.52

The Cabinet Office has attempted to improve oversight of departments’ management of property, and to increase the guidance available to assist them. It did this through the Better Buildings Programme, launched in 2022, which aimed to share best practice and to establish a consistent backlog calculation methodology across departments. However, the NAO report noted that the OGP lacked sufficient leverage to encourage change in departments.53

Responsibilities for property management vary across departments. Some manage their property directly, and others delegate this to ALBs. The Department for Education is not legally responsible for the maintenance of the school estate, though it does provide funding, with other responsible bodies (depending on the type of school) having legal responsibility.54 The OGP noted other examples of responsibility being dispersed across departments and ALBs. For instance, NHS Property Services is responsible for primary care buildings, whereas NHS England focuses on secondary care buildings.55

We asked the OGP about ALB’s lack of awareness of the OGP’s guidance, to which it agreed it needed to do more, calling the NAO report a wake–up call to engage more with stakeholders.56 After further challenge on whether it is the responsibility of departments to pass on tools from the OGP down to their ALBs, the OGP acknowledged that departments should be communicating themselves with ALBs to make them aware of the help that OGP could provide. But OGP also said it would itself be doing more direct communication to provide extra coverage.57 52 Q 1 53 C&AG’s Report, paras 2.12–2.14, Figure 7 54 C&AG’s Report, paras 1.9, 1.11 55 Q 44 56 Q 62 57 Qq 64–65 17