Tranche 1 report to the MPA on property aspects of its efficiency & effectiveness review

Report: 2
Date: 22 May 2002
By: Clerk

Summary

Knight Frank has prepared their final report on Tranche 1 of the Property Review for the tri-partite Efficiency and effectiveness Programme. Members' views are now requested on the report.

A. Recommendations

Members consider what comments they might wish to make on the review.

B. Supporting information

1. The Efficiency and Effectiveness Review Project Board on the 19 April 2002 received 'Phase I Report to the Metropolitan Police Authority on Property Aspects of its Efficiency & Effectiveness Review' by Knight Frank. (This was a review undertaken into the form and management of the property occupied by the Metropolitan Police Service (MPS)).

2. The report was commissioned as part of the tri-partite review programme, comprising representatives of the MPA, MPS and GLA. The programme is taking place over three years and this report is Tranche 1 of the Property Review. Tranche 2 of the Property Review is due to be undertaken in 2002/3. The contract specification has not yet been firmed up, while it awaited the outcome of the Tranche 1 review and the comments and guidance of Members.

3. It was felt the Phase 1 report provided insight into estate management. However, it was accepted it did not address estate issues in their entirety. A representative of the authors indicated that subsequent stages of the review would need to involve investigation of the whole estate. 

4. It was agreed that the Project Board should submit the report to the Estates Sub-Committee for observations and comment.

5. It was requested that Knight Frank should prepare an executive summary for the Estates Sub-Committee (this is attached as Appendix 1). A copy of the full report has been placed in the Members' Room, and representatives of Knight Frank will be available at the meeting to assist Members. 

C. Financial implications

None specific to this report.

D. Background papers

None.

E. Contact details

Report author: Ken hunt, MPA.

For information contact:

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

Appendix 1: MPA efficiency and effectiveness review - the property aspects

Synopsis

Introduction

Knight Frank were commissioned by the Metropolitan Police Authority to undertake the first phase of a three stage review of accommodation and property management within the Metropolitan Police Service.

The review is part of a major Efficiency and Effectiveness Review, which covers a number of issues to do with the operation of the Metropolitan Police.

The first phase of the Review is very much about fact finding and the report concentrates to a large extent on the findings of investigations’ carried out into the nature of the estate itself, and the way in which it is currently managed. Specifically we inspected a number of sample properties, met with various representatives from the Metropolitan Police Authority, the Police Service and the Property Services Department. We looked at existing databases and interviewed a Borough Finance and Resource Manager, as a representative of the occupiers. We also examined other reports and relevant documentation, including:

• The District Auditor’s report – Management of the Estate
• ‘Action Stations’ – Improving the Management of the Police Estate
• ‘Hot Property’ - Getting the best from Local Authority assets
• ISGC Report on the Headquarters Estate and Property Outsourcing

In order to make the first phase report rather more meaningful, however, we did seek to identify and summarily examine some of the options open to the Authority for the future management of the estate and ways in which efficiency and quality can be improved. 

Estate review

Property types

The estate can be split into a number of categories:

• Police Stations
• Police Offices
• Offices
• Garages
• Car Parks
• Other Support Facilities
• Headquarters Offices
• Welfare 
• Residential/Section Houses
• Training facilities

Condition and suitability

The properties vary considerably in terms of age and type. The estate has developed in a somewhat adhoc fashion over a period exceeding 100 years. A significant amount of the operational estate is now unsuited to modern policing and there is a significant maintenance backlog. A considerable capital investment is now required.

With regards to the residential estate, it is excepted that the provision of housing is necessary as an aid to recruitment, but clearly management of the estate is burdensome and there is a substantial maintenance backlog. The current policy is to maintain the residential estate therefore, but a programme of selective disposal is underway. 

Management of the estate

Organisation

The Metropolitan Police Authority are the title owners of the estate. The accommodation and accommodation services are managed entirely, however, by the Property Services Department, which sits within the Directorate of Resources in the Metropolitan Police Service. It outsources certain of its functions but is responsible for the provision of the accommodation and services to the individual OCUs.

Responsibilities and liaison is via a complex structure of committees and interested groups.

Functions of the property services department

PSD has many roles and responsibilities. It is accountable to the MPA as owners of the estate; to the MPS for the provision of accommodation and services; and to the general public in terms of Health and Safety matters.

It’s functions include the development of future strategies and their implementation, including future planning, budgeting and monitoring; setting and monitoring standards and procurements; data management and benchmarking; statutory inspections and day-to-day management matters. Carillion act as facilities managers while Interserve provide direct labour services, but report to Carillion. PSD are responsible for managing this contract and at the same time liasing with OCUs and establishing and monitoring Service Level Agreements. 

Occupational arrangement

A system of internal charging exists, although there is limited incentive for occupiers to reduce their cost of occupation.

Carillion are responsible for most maintenance matters and there is little for the individual OCUs to undertake directly themselves. There have, however, been a significant number of criticisms on the way that the contract operates, its specification and apparently the quality of work.

Alternative approaches to management

As a part of the report, we have tried to identify alternative ways in which the estate could be administered.

Ownership and management

At present whilst the MPA are the estate owner, they effectively have no control over its management. There is a case for splitting the management functions, such that an Estates Manager responsible for operational strategies and for the provision of accommodation direct to the OCUs, sits within the MPA. Responsibility for the provision of maintenance and other services would remain with the Property Services Department within the Metropolitan Police Service. At the same time formal occupational agreements between the MPA and individual OCUs would incentivise the efficient use of accommodation. 

Service provision options

We identified a number of options for the provision of accommodation services to the occupiers. These options are as follows:

• Option A - Full in-house provision
• Option B – Contractual arrangements
• Option C – Partnering/Prime Contracting
• Option D – Sales and Lease backs
• Option E – PFI and Real Estate Partnerships

No conclusions have been drawn at this stage as to the appropriateness of any of these options, although, it may be that Sale and Leaseback arrangements are unacceptable because of the capital finance regulations affecting local authorities and the fact that the annual cost of new leases may have to be capitalised and set against the capital allocation. Similarly, if the requirement is for significant Capital commitment, this will either have to be funded through receipts obtained from disposals, or through a PFI or Real Estate Partnership.

The residential estate

We have similarly identified options for dealing with the residential estate with a view to lessening the maintenance burden, improving quality and/or realising some of the value inherent within it.

Apart from the “do nothing” option there are three principal approaches, although, with scope for tailoring any option to suit your specific needs. 

• Option A – Outsource management responsibilities
• Option B - A packaged sale to an investor or registered social landlord as part of a PFI project with retained nomination rights
• Option C – Sale with vacant possession where obtainable and staff compensated through housing allowances or proper salary weighting.

The future need

The purpose of an estate strategy

The principal purpose of an Estate Strategy is to define the principles under which accommodation will be provided and serviced for the future and to ensure that it meets the operational need. At present there is a Corporate Strategy in the course of preparation, the problem is that this is not drafted in such a way as to be able to properly interpret the future space need. We have stressed that there needs to be a stronger link between the Corporate Strategy and the Estate Strategy, and we believe that the two documents must be developed hand in hand, or alternatively, the current Corporate Strategy needs to be regarded as a high level document with greater detail provided in a secondary study, which provides the link to the Estates Strategy.

Emerging principles

Notwithstanding the uncertainty surrounding the future accommodation needs, there are certain principles that have emerged during the course of our investigations.

There are a number of factors, which could lead to an overall reduction in space and in particular the amount of accommodation provided at the police stations. Improved communications through C3i will reduce the amount of time needed to be spent at desks. Similarly the introduction of flat screen computers and a move to “hot desking” will further reduce the space requirement. More vehicle-based policing and also more community policing through the use of satellite offices will also reduce the requirement.

Similarly there are trends which can lead to increased standardisation and less specialist buildings. Custody clusters could remove the need for cells in police stations, and the centralisation of other specialist facilities, such as, communication centres, would again move the specification closer to that of a standard office building. Changing facilities and recreational facilities can still be provided within the context of a standard office shell.

Whilst these general principles apply to the type of accommodation it is apparent that there is still considerable uncertainty as to the amount of space that will be required for the future. Total police numbers and the type of officers required for the future are unclear. Similarly there is uncertainty surrounding the extent of the proposed sharing with CPS and also the scope for co-locations with local authorities and other compatible bodies.

Easy wins

We were asked to consider at this stage whether there were any ‘easy wins’. In general we believe that the Property Services Department would probably have identified them already. We did, however, make two or three suggestions of avenues that could be explored further for ‘easy win’ potential.

1. There is the possibility of redeveloping at Cobalt Square to a higher density. This may be used to accommodate functions, which could then be relocated from more valuable space else- where.
2. We believe that it is worth investigated marriage value potential at New Scotland Yard. The property is obviously held on an historic lease with long review periods. It may well be that you could switch to a standard five year pattern, significantly increasing the landlord’s investment value, and sharing in the proceeds without falling foul of the finance regulations. Similarly there may be scope for a discrete fully serviced package on New Scotland Yard given that the landlord’s are Land Securities Trillium, specialists in this area.
3. On a more general level, it is worth exploring the scope for amalgamation of units to release whole buildings, concentrating on those that are freehold and in high value areas. The case of the DPG was specifically mentioned to us with the possibility of releasing space at Walton Street.

Future actions

The next phase of the review will be a comprehensive audit of the existing estate, analysing costs, opportunity costs and utilisation. Subsequently or ideally, simultaneously, a comprehensive view needs to be developed as to the optimum future space need in terms of:

• Location
• Type and Size
• Quality
• Flexibility and Liability

The final stage of the review exercise will then concentrate on the optimum means of providing this requirement having regards to what currently exists and the availability of funding. Specifically it will be necessary to look at:

• How Capital Projects will be funded
• Procurement procedures
• The way in which the Estate will be managed
• The way in which the accommodation will be held internally

Once appropriate policies have been formulated, an implementation plan has to be developed, targets set and a practical guide provided by OCU and by property type, as to how the estate will develop over time.

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