Estates Update Paper

Report: 10
Date: 17 June 2010
By: Director of Resources on behalf of the Commissioner

Summary

This report provides members with an update in regard to the estates responsibilities covered by Property Services and the specific issues that have been addressed since the last report.

Members are asked to note the content of the report.

A. Recommendations

That Members note the Property Services’ update provided.

B. Supporting information

Introduction

1. At the Finance and Resources Committee on 19 December 2009, it was agreed that Property Services should continue to provide a report on real estate and Property Services’ related issues on a quarterly basis. Source documents can be found on previous relevant reports and also in the Members’ Library, the last paper was presented in February 2010.

2. In addition to the delivery of the current estate strategy, including maintaining the existing MPA estate; undertaking modernisation programmes and providing facilities to meet operational needs, and addressing environmental issues, the Property Services Department includes a specialist operational support team who provide advice and support for special events; logistical support at major incidents; physical target hardening of vulnerable buildings; crime scene forensic support; crime scene plan drawing and reconstruction; specialist methods of entry/protestor release; covert property management, and emergency planning in support of major incidents.

3. This report provides updates on specific work-streams and key areas of responsibility; where approvals are required for specific programmes or projects, proposals will be presented separately.

Market Overview

Residential

4. Despite a value drop in February, the first four months of 2010 have seen an overall continuation of the rises seen in 2009. The Nationwide House Price Index reports average UK house price rises of 1% in April and 10.5% since April 2009. There are however wide regional variations with data from the Land Registry showing year-on-year gains in London of 11.9%.

Some economists are putting the overall apparent buoyancy in the market down to a shortage of properties which is artificially boosting prices. 94% of sellers are still receiving the asking price for their property although April saw the end of a 13-month period in which this figure had increased month-on-month. Likewise the average time to sell a home has also steadied at 8.3 weeks. This levelling off is possibly as a result of more owners, encouraged by the rise in prices, putting their homes up for sale.

Key points on the current state of the market are set out below:

• The Nationwide House Price Index reports average UK house price rises of 1% in April and 10.5% since April 2009 although there are wide regional variations.
• Industry observers are now less confident of continued price rises in 2010 as the supply of homes on the market increases.
• There is still a considerable level of uncertainty in the market exacerbated by the uncertainty around the general election.
• Mortgage approvals are still relatively low and lending restricted. Requirements for large deposits remain high and the number of first time buyers is approaching a 20-year low.

5. Some industry observers consider it questionable whether house prices can make significant further gains over the coming months. Restricted lending remains a major factor. Mortgage approvals are still low and the Council of Mortgage Lenders cautioned that the jump “suggests little underlying change”. The continued constrained access to credit combined with the increasing supply of homes will put downward pressure on UK house prices. Economists also point to high unemployment and stagnant wage growth as factors that may affect the endurance of the house price recovery.

Commercial Property Market

6. The year to 31st March 2010 has seen severe volatility in commercial property values with very sharp increases in values, particularly in the last quarter of 2009. Much of the demand has been from foreign investors taking advantage of the relative weakness of sterling. The UK institutions are now moving back into the market.

7. Some banks are now providing new lending which is increasing market liquidity, but there is still a significant amount of property held by banks as a result of investors defaulting on their loans.

8. With increasing financial confidence speculative development is beginning again, especially in the central London office market, with a number of new large schemes started in recent months. Speculative development in the retail and industrial / warehousing markets is very limited at present.

Outlook for 2010

9. Most commentators are predicting that commercial property values will increase slowly through the year. Much of the growth is in the investment market where there is still competition for prime property of all types from both UK and foreign investors.

10. In the occupier market take up of office accommodation is predicted to continue to improve through the year. The retail and industrial/ warehousing markets show little sign of recovery yet.

Estate Strategy

11. A revised draft will be presented to the Estates Panel in June and MPA Finance and Resources Committee in July.

Corporate Real Estate and Delivery of Property Services

An update, in the form of a presentation, was provided to MPA Resources and Productivity sub-committee members on 10 May 2010.

Both strands are part of the Service Improvement Programme of work. A paper has been developed on standards for office accommodation to help provide a consistent standard of more flexible accommodation and thus make better use of the estate. Property Services are also supporting the work on Corporate Training which is seeking to streamline the delivery of training as well as provide more fit for purpose Regional Learning Centres.

The two areas of work are governed through a monthly Property Services SIP Programme Board.

Acquisitions and Disposals

13. Schedules of Commercial and Residential disposals completed up to 31st March 2010 are contained in exempt Appendices 1 and 2.

14. The purchase of the freehold of Sovereign Gate, an office building in Richmond, approved at MPA Finance and Resources Committee in March 2010 has completed. The building is being refurbished to provide corporate training facilities and will be available for occupation in late 2011.

15. Residential properties surplus to MPA/MPS requirements were disposed by auction on 11th May 2010. The completion of these sales is ongoing at the time of writing. It is anticipated that £4.91m will be generated. Further details will be provided in the next update paper in September 2010.

Acquisitions/Disposals under consideration

16. Within the framework of the estates strategy and the service improvement programme, Property Services continue to consider other property opportunities. The proposed disposal plan of properties in 2010/11 was approved at the February Finance & Resources meeting. Marketing of some properties has now started; others are subject to “stress testing” as agreed by the MPA Estates Panel.

Imber Court Sports Club

17. An update on the progress of the arrangements between the MPA and the Sports Club is contained in exempt Appendix 3.

Town Planning Update

18. PPS5 - Planning and the Historic Environment was published on 23 March 2010 replacing PPG15 Planning and the Historic Environment and PPG16 Archaeology and Planning. It brings together the Government's policy on how the historic environment (built and buried) is dealt with in the planning process under a single unified system. The PPS is now a material planning consideration in the determination of planning applications. Its aim is that the historic environment should be "conserved and enjoyed for the quality of life they bring to this and future generations." The new PPS widens the scope of the historic environment to include places/features/landscapes that have significance due to their archaeological, historic, architectural and artistic interest. These are now called "heritage assets" defined as listed buildings, conservation areas, archaeology, historic landscapes and other aspects of the historic environment. It is anticipated there will be an emphasis on pre-application assessment and evaluation as well as a presumption in favour of conservation of designated historic assets. This could see more protection for locally listed building that have not previously been identified as of heritage interest prior to an application.

19. Draft PPS Planning for a Natural and Healthy Environment has been published for consultation and ends 1 June 2010. The draft PPS contains policies to maintain, and enhance, restore or add to biodiversity and geodiversity through the planning system. It includes policies to promote opportunities for the incorporation of beneficial biodiversity and geological features within the design of development, and to maintain networks of natural habitats by avoiding their fragmentation and isolation. It suggests this may be done as part of a wider strategy for the protection and extension of open space and access routes such as canals and rivers. Due to the anticipated limited impact to the overall MPA/MPS estate, no representations will be made. However, monitoring of the PPS will continue with particular regard to rural sites such as Tippets Hill, MPSTC Gravesend and Keston.

20. New Policy Document for Planning Obligations: Consultation by CLG on a new policy document required since the introduction of the Community Infrastructure Levy (CIL) 6 April 2010. As part of the introduction of the CIL, the Government has introduced new statutory restrictions upon the use of planning obligations to clarify their respective purposes and to ensure that the two mechanisms can work effectively and complement each other. Representations will be submitted on behalf of the MPS/MPA to protect future interests by the closing date for responses 21 June 2010.

21. GLA – Delivering London's Energy Future: Emerging Strategy. The GLA has published an emerging strategy regarding London's energy future (separate from the London Plan). Representations were made on behalf of MPS/MPA as part of the GLA group.

In terms of delivery the GLA note that they will in future propose a homes and buildings energy efficiency program, low carbon zones, supporting decentralised energy networks and making provision for electric vehicles. The Mayor is also keen to lead by example when reducing carbon emissions. Mindful of the above, future new development will be encouraged to provide energy efficient dwellings and buildings in line with the government requirement to ensure all new dwellings are carbon-neutral by 2016, and new commercial buildings are carbon-neutral by 2019. The Mayor proposes the introduction and promotion of 'Low Carbon Zones'. Of particular note, the Mayor is proposing that the GLA group (including the MPA) will take the lead on reducing carbon emissions in London by: -

1. Setting carbon reduction targets and publicly monitoring/reporting the results;
2. Reducing energy use and emissions from GLA group buildings;
3. Reducing GLA group transport emissions; and
4. Measuring the impact of this strategy upon the demand for low- carbon goods and services.

The option to reduce carbon emission from buildings will potentially include retro-fitting existing buildings and encouraging new GLA group development to plug in to decentralised energy supplies and to be constructed to a high environmental standard. It is also noted that the GLA group will be encouraged to share 'best-practice' regarding the implementation of energy efficient measures.

The London Plan - Current Position

22. The London Plan is currently under review and representations have been submitted which supported a number of policies, and requesting a number of alterations to reflect policing requirements.

These representations have been reviewed by GLA officers and minor alterations regarding agreed policy issues are expected to be published mid-2010. Where material amendments are proposed, an independent body will review the representations submitted during an 'Examination in Public' during June-October 2010.

At this stage, the GLA have suggested the majority of the MPA/MPS representations where alterations to the 2009 London Plan were sought, will be taken on board through the minor alterations process, thus: -

• Para 2.76 concerning development of Strategic Industrial Land will be amended to confirm policing uses will be considered appropriate in such areas, thereby potentially allowing development of policing facilities on protected land thus giving greater flexibility for the implementation of the Estate Strategy;
• Para 6A.7 concerning vehicle parking standards will be amended to state provision for parking for policing facilities will be assessed on their own merits, again ensuring flexibility for the evolution of the Estate Strategy.

However, the principal issue where both parties differ is that of the GLA's identified priorities for S106 contributions.

Notwithstanding representations made, the GLA are not including 'Policing' as an identified S106 Obligations priority.

Safer Neighbourhoods

23. The Safer Neighbourhoods programme is anticipated to complete in 2010/11. Following the establishment of 189 bases under SN 1, work is currently proceeding and 102 of the total 114 projects under SN 2 are in various stages of design and development, with 3 being delivered through other works programmes:

• 53 projects have been completed
• 10 projects are under construction
• 4 site starts planned imminently
• 9 sites in procurement
• 6 projects in detailed design
• 5 in feasibility
• 12 properties are still to be acquired; 2 of these are currently considered to be in areas where it is highly unlikely that any suitable leasehold space will become available. Other options to satisfy this requirement are being developed.

24. The next 6 month update paper for MPA Finance and Resources’ Committee is due in September 2010. This Paper will provide analysis of the success of the Programme and lessons learnt.

Contract Management: PFI Contracts

25. The PFI Contractor has completed the Benchmarking and Market Testing on the South East London (SEL) PFI Contract, covering Bromley Police Station (PS), Deptford PS, Lewisham PS and Sutton PS. The key outcome being implementation of the London Living wage across the PFI sites and an adjustment to the catering and cleaning services provided. All low paid contract staff will benefit financially in accordance with the MPA strategy, resulting in a more reliable service and improved staff recruitment, retention and sickness rates.

Negotiations are also complete with the PFI Contractor in regard to pay parity between former MPS personnel and their direct labour as previously agreed. The key outcome being pay parity across all staff and more harmonious working relationships.

Business Rates

26. Appeals

The 2005 Rating list closed on 31st March 2010. The appointed consultants Gerald Eve have made 346 appeals. 152 of these appeals have successfully settled, resulting in £8.3m in savings. There are 108 outstanding appeals including NSY. It is projected that 50% of these appeals will be concluded by October 2010 with the final 50% being completed by March 2011.

Property Services has lodged an appeal to the Lands Tribunal against the rateable value of NSY as it appeared in the 2000 Valuation List. A Statement of Case has been prepared and the parties are currently working on legal disclosure of supporting documentation which has to be served by 27th December 2010. The matter is expected to be heard by the Lands Tribunal in April 2011.

Rating Revaluation 2010

27. The 2010 Rating List was ratified on 2 April 2010 after a six month consultation period. The business rate liabilities for each of the MPA’s properties are calculated by reference to the Government set annual poundage (UBR), transitional relief scheme and the rateable value of properties as set down in Valuation List. The List is managed by the Valuation Office.

28. The MPA’s rates liabilities for 2010/11 were reviewed in December 2009 as part of the budget planning process. With the MPA’s portfolio rating valuation increasing by £26.3m (38% overall) and with the introduction of the new cross rail supplement, the 2010/11 rates liabilities have increased by 10.5% on the previous year. The effects of the revaluation on the MPA portfolio as a whole follow the statistics published by the Government. With the exception of two properties, all the MPA properties fall within London, which as a region has experienced the highest increase in liabilities. This budget review is being revisited now that the list has been ratified and the results of the review will need to be reflected in future MPS budgets.

29. Lambert Smith Hampton were awarded the new contract for rating Consultants to cover the period April 2010 to March 2015. They have undertaken a detailed analysis of the new rating list and are currently formulating the MPA’s appeal strategy. The strategy report will be submitted in June for approval by the team and will be implemented in the Summer.

Facilities Management Contracts

Facilities Management Supplier (FMS) North

30. This year has seen significant improvement in the performance of the Facilities Management Supplier’s performance. The supplier has achieved threshold levels in completing reactive maintenance requests and are regularly performing above target levels. The number of complaints and service failures have also reduced considerably to approximately 1% and 2% respectively on the c6,000 orders that are received every month. This is a reduction from approximately 2.5% and 4% during the year.

Facilities Management Supplier (FMS) South

31. The performance of the Facilities Management Supplier’s Performance has continued to improve in terms of planned preventative maintenance and reactive maintenance. In addition, there has been a continued focus on critical and significant buildings which predominately sit in the ‘South’ area. With regard to service failures, complaints and recalls (total), a concerted effort has been undertaken in the last quarter to reduce these numbers. It is currently sitting at 5% from previous figures of between 8 and 12%. A third party audit of the suppliers head office was undertaken. This covered areas such as compliance and process and results are above target level (99%)

FMS and MPIC key performance indicators

32. Attached are the high level statistics for the two Facilities Management suppliers (FMS) and the Help desk (MPIC) This gives an overview of progress from the first year of the contract through to 2009/10. Although customer perception has only risen 5% the overall completion of jobs has jumped from a very poor 53% in 2007/08 to a respectable 82% and rising. Complaints have stayed level.

Most satisfying is the increase in statutory and planned compliance. These are the jobs that need to be done to ensure the safety of people and to try and ensure the continued working of our plant.

The MPIC figures show consistently high statistics with over 90% of calls answered by an operator within 20 seconds. This is well above industry standard. The number of calls received is still way above expected at the start of the contract and this is a function of the age of the estate.

33. Exempt Appendix 4 provides further details in regard to the contractual position of the Facilities Management contracts.

Business Continuity testing/accreditation

34. Formal testing processes for our current contracts include ascertaining the effectiveness of the business continuity processes of our principal facilities management providers. This is to ensure Property Services can continue to provide its services to the police business irrespective of significant technical or logistical difficulties caused by unplanned events. A formal test of these processes is due to be held in mid-May with the full cooperation and support of Resilience staff within PSD, the principal contractors, DoI and CO3 Emergency Preparedness staff.

Key Construction Projects

35 Greenwich Patrol Base (Warspite Road) has been completed and the new power supply is now installed. Occupation by the BOCU is now planned to commence during the first week of June 2010.

36. Completion of the project at Waltham Forest BBCC (Leyton) is anticipated in October 2010; progress continues to be in line with expectations.

37. Works commenced in December 2010 on the site of the planned project at Lillie Road, London SW6; following formal discharge of the planning conditions by the London Borough of Hammersmith and Fulham. Works are progressing in line with expectations towards completion in October 2010.

38. Works to fit-out the property at Polar Park, Heathrow, commenced in January 2010 and are proceeding in line with plans to complete in March 2011.

39 The works at Barking and Dagenham (Fresh Wharf) Combined BBCC and Patrol Base commenced in November 2009, and is proceeding on programme currently. Proposals by the BOCU for additional accommodation are currently being assessed and this may impact on the programmed completion date of October 2010.

40. Works to upgrade 3 floors of open-plan office accommodation at Marlowe House will be completed by June 2010.

41. Following the approval of the paper detailing proposals for construction of Strategic Command Centre within ESB to support London Resilience by the MPA in January 2010, construction will now commence in May 5 2010.

42. Following approval by the MPA in April 2010, several projects at New Scotland Yard are due to commence on site in June, including works to the 2nd, 6th, 7th and 17th floors.

London 2012 Olympics

43. The accommodation and Estates issues arising out of the policing requirement for the Olympic Games are being considered as part of the development of the Business Cases for the various individual projects that comprise the five Olympic Programmes.

44. Issues arising out of the accommodation requirements are raised via an Accommodation meeting prior to being formally considered as part of the Business Case submitted to the Olympic and Paralympics Strategic Co-ordination meeting and the onward approval chain via the appropriate MPA arrangements (Olympic sub-committee) and finally the Home Office.

45. There is a continuing demand within the Business Cases for accommodation close in proximity to NSY that is requiring careful management to ensure that only those activities / functions that need to be located close to the core Olympic Policing functions are accommodated within NSY.

46. The principle other Estates issue in relation to the Olympics is the development of the plans for the three muster Brief and Deployment Centres. These sites located to the West, North East and South East of London are critical to the policing of the Games but all have planning, Land Ownership and restrictions currently affecting their use. Progress has been made on all of the three sites with detailed layout plans at or nearing completion. Issues still remain on all of the sites but dependent on the resolution of Legislative amendment to enable use of one of the sites formal consultation and a full planning application will be made on the rest of these sites shortly.

47. Special Events are currently planning for the FA Cup Finals, State Opening of Parliament (post-elections), All England Lawn Tennis Championships, Trooping the Colour / Beating the Retreat Ceremonies and VE65 anniversary.

48. Kathryn Mannooch (Head of Surveying) has joined the Board of Directors on the International Association of Forensic and Security Metrology (IAFSM). This honour reflects the high esteem that CAMB's specialist skills are held in the international law enforcement and security community. This is the only association concerned with the accurate measurement of crime scenes and security and has an international lead to co-ordinate best practice and techniques.

49. Further details of events are highlighted in exempt Appendix 5.

Environmental Management Programme

50. The CSR (Corporate Social Responsibility) Strategy 2010 - 2013 will be presented to the MPA Communities, Equalities and People Committee in July for consideration. Strategic objectives have been developed, as shaped by three inputs: prioritised environmental, social and economic issues from extensive stakeholder workshops; benchmarking leading organisations' issues coverage and strategic themes, and MPS subject matter/technical experts. Delivery, performance monitoring and reporting will be driven through annual Implementation Plans that detail targets and KPIs mapped to each objective.

51. Objectives and targets are currently being developed as part of a sustainable Event Management System which will be trialled at Operational events during 2010. This is in line with LOCOG’s aspiration to manage sustainability with a proposed management system approach (based on BS8901) for managing, measuring and reporting sustainability performance. Recommendations for enhancing existing MPS processes and procedures have been presented to the Olympics Directorate to demonstrate how sustainability can be managed in a more strategic and integrated manner across all business cases including consideration on how to mitigate any environmental impacts on the estate. In this way, the MPS can manage its sustainability risks, but also capture ‘good news’ stories that reflect achievements in reducing impacts.

52. The Climate Change Action Plan Programme (CCAP) continues. A key mechanism for the Building Energy Efficiency Programme (BEEP) project. has been implemented. A number of energy efficiency technologies have been implemented including lighting upgrades, voltage stabilisation units, boiler replacements, CHP, intelligent controls for kitchen extracts, solar film on windows and photovoltaics. The CCAP Programme is currently on target to save 8,343 tonnes of CO2 and £1.45m per annum. With Carbon Reduction Commitment (CRC) avoided costs of £100,116. The Energy Efficiency Revolving Fund (EERF) has revolved £438,978 since the programme begun and has forecast savings of £1.4m in 2010/11, £2.4m in 2011/12 and £3.6m in 2012/13. The savings will be reinvested in further CO2 reduction projects in-line with best value investment.

53. The development and delivery of the MPS environmental awareness campaign continues in 2010, and aims to change the behaviour of MPS employees to manage the environmental impacts of the organisation as well as reduce resource consumption across the estate. A pilot campaign is currently being developed for roll out in early 2010/11 at a large police station and HQ from the top 45 list.. The pilot will be monitored through a number of methods including comparing energy consumption data and building energy surveys.

54. Without further expansion of the corporate recycling scheme the FMS suppliers are not expected to meet their contractual recycling target of 45% by the end of 2010. Both suppliers will be undertaking an exercise to rationalise the waste containers across the estate to ensure their use is optimised. This should result in cost savings for the FMSs and improved waste figures. However, for non-office operational waste schemes the MPS has recently received positive press coverage regarding the use of seized weapons which are being recycled and turned into reinforcement for the building of the Olympic Stadium.

55. The Waste and Resources Action Programme (WRAP) has a commitment of halving construction waste to landfill, the MPS have built waste reduction, reuse and recycling targets into procurement documentation for all construction projects.

56. The MPS is one of the originators and the current chair National Police Environmental Advisory Group (NPEAG). This forum was set up for environmental representatives from UK police forces to meet to share best practice on environmental issues and sustainability. The group is now a working group of the Police Property Services Managers Group (PPSMG) of which benchmarking against other UK Police Forces is a key theme. A new ACPO lead has recently been appointed for both Property and Environment.

CRC Energy Efficiency Scheme (CRC)

57. The MPS has mandatory membership to the CRC Scheme due to the volume of annual carbon emissions and will shortly register for the Scheme. The MPS is currently undertaking work in preparation for joining including work to ensure that Early Action Metrics can be met.

This includes being in a position to review 2009/10 static and transport emissions in order to determine the potential to gain Certification under the Carbon Trust Standard. An additional gas Automatic Meter Readers (AMR) programme is being developed for 2010/11. These actions should result in better positioning on the League Table and improve the potential for additional recycling payments to the MPS. The MPS is currently in the process of, or about to commence:

• Cleansing of energy records, including consumption
• Registration by the end of September 2010
• Carbon reduction investment analysis based on varying costs of carbon

Environmental implications

58. These are contained in the body of the report.

C. Race and equality impact

Any equality and diversity implications arising from the matters referred to in this report are being assessed as part of the individual project or item and will be reported separately to the Committee at the appropriate time.

D. Financial implications

1. The costs associated with the activities set out above are contained within existing budgets as agreed within the 2010/13 Business Plan by the MPA on 1 April 2010 or in earmarked reserves.

2. Provision for the mandatory purchase of carbon credits in April 2011 of £1.5m has been set aside in earmarked reserves.

• Recycling payments will be made in October 2011, the value being dependent on the MPS’s performance against that of other participating organisations.
• The potential maximum financial risk or reward in the Scheme’s first year is £150k - MPS f/y 2011/12.
• The MPS is taking action to maximise potential financial reward during the recycling process and to minimise exposure to potential financial risk.

E. Legal implications

1. Contract or other documentation in regard to the items referred to under the appendices will contain all the usual commercial terms and provisions, and no unduly onerous or unusual terms – except where reported otherwise.

2. Significant risks have been evaluated and considered and steps taken to minimise or manage such risks.

3. All reported matters are considered to be within the powers of the Authority.

4. All/any disposal represents the best consideration that can reasonably be obtained – save where stated otherwise.

E. Background papers

• None

F. Contact details

Report author(s): Jane Bond, Director Property Services, MPS

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

List of Abbreviations

BOCU

Borough Operational Command Unit

CAMB

Computer Aided Modelling Bureau

CBRN

Chemical, Biological, Radiological Nuclear

CCC

Command, Centre, Communication

CCSA

Climate Change Action Plan

CO

Central Operations

CPS

Crime Prosecution Service

CT

Counter Terrorism

CTC

Counter Terrorism Command

DoI

Directorate of Information

DoR

Directorate of Resources

DPA

Directorate of Public Affairs

DVI

Disaster Victim Identification

EPBD

Energy Performance Buildings Directive

ESP

Estates Strategic Plan

FMS

Facilities Management Suppliers (from 2007)

GLA

Greater London Authority

IESE

Improved and Efficiency South East

LB

London Borough

MoE

Method of Entry

MPA

Metropolitan Police Authority

MPS

Metropolitan Police Service

MPSTC

Metropolitan Police Service Training Centre

NPIA

National Police Improvement Agency

ODA

Olympic Delivery Authority

OFT

Office of Fair Trading

OJEU

Office Journal of the European Union

OSG

Operational Support Group

PFI

Private Finance Initiative

PS

Procurement Services

PSD

Property Services Department

SCD

Serious Crime Directive

SLA

Service Level Agreement

SEL

South East London

SN

Safer Neighbourhoods

SN2

Safer Neighbourhoods Stage 2

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