Property, Pressure and Policy: Navigating Change in Local Government FM

Local government is a sector in flux.  In December 2024 the Government published the English Devolution White Paper to set out their vision of a simpler structure of local government with the aim of creating better outcomes and more accessible services for residents. 

Although their property needs had been transforming in line with technological and social developments over the past 20 years, this will further accelerate the change to the way local government uses its property portfolios to provide these services.  However, despite increasing access to remote working and service delivery technologies, there remains a need for all tiers of local government to retain a physical presence in the communities they serve.

It remains to be seen whether the White Paper will translate to widespread and fundamental restructure but there is a very real and present conflict between the need of Councils to retain property holdings to support service access for their communities with the need to balance the books.  This is a challenge that is not going away any time soon.

Research recently undertaken shows that:

• Councils currently occupy c56.4m square metres of space from which they are delivering services to their communities (this does not include schools, housing stock or properties held for investment purposes) – a 0.5% increase in footprint since the 2020 exercise despite the fact that the number of local authorities has reduced from 396 to 371 in the corresponding period
• Councils spend an estimated £1.54bn per year on operational facilities management – a c12% (c£164m) increase since the 2020 exercise
• Of the estimated total sector spend of £134bn in 2024/2025, this represents 1.1% of the sector’s revenue budget – down from 1.6% in 2019/2020
• Councils consume an estimated 4.3bn KWh of energy – an estimated 33% reduction on a per square metre basis than in 2020
• Despite this reduction in consumption spend on utilities is an estimated £745m, £13.20 per square metre, a c49% increase since 2020
• 52% of local authorities have not provided any sort of response with only 42% able to provide the information asked for.

From the research undertaken it does appear that Councils continue to face significant challenges in terms of the data they hold about their estate.  Of the 371 Councils canvassed as part of this exercise, meaningful data was received from only 157 (42.3%).  This in itself demonstrates a significant problem.  How can Councils effectively manage their property portfolios and their liabilities around health and safety if they don’t comprehensively know what properties they own and what plant is within them.

From the data collected, analysed and estimated as part of this research a number of conclusions can, reasonably, be drawn.

• There is no consistency in the way that Councils hold information about their property portfolios and / or the services that keep them operational
• Despite the reduction from 396 to 371 Council’s (either as a result of, or pre-empting the Devolution White Paper), the space that Councils occupy has not shrunk commensurately…in fact it has grown very slightly.  This suggests that the some of the efficiency benefits of the simplified structure – especially in two tier Council areas – have yet to be realised.
• Spend on FM services have grown from c£1.37bn to £1.54bn – a 12.4% increase – which represents a 11.3% increase to costs on a £/sqm basis.
• Metropolitan – single tier urban based – Councils appear to have FM costs significantly above accepted benchmarks for costs in non-complex environments.
• Councils have – generally – made significant progress in reducing their utilities consumption on a KWh / sqm basis.  Due to high profile macro-economic factors, this has not translated into a commensurate reduction in costs.

Councils’ portfolios are wildly varied in terms of age, condition and location – and therefore operational cost and risk.  Their place in the communities they serve means that greater, demonstrable control over this risk, as well as clearer commercial probity is required to ensure that portfolios are fit for their future purpose and able to anticipate as well as react to changing demographic demands. https://cadaema.com/