Agenda I tem: Cabinet 11 Audit - Modern Mindsetdorset.moderngov.co.uk/Data/Cabinet/20131106/Agenda... · The locations within the baseline strategy have been identified ... that over

Page 1 – Asset Management – The Baseline Property Portfolio

Cabinet Audit & Scrutiny

Date of Meeting Cabinet – 6 November 2013 Audit & Scrutiny – 26 November 2013

Lead Cabinet Member Robert Gould – Deputy Leader Local Members All members Lead Director Miles Butler – Director for Environment

Subject of Report Transforming Services – The Baseline Property Portfolio

Executive Summary The County Council’s Corporate Asset Management Plan sets out an asset reduction strategy which aims to reduce the property portfolio by 25% by the end of 2014/15 as one strand of the work to ensure the portfolio is affordable and sustainable. This is a five year strategy and on a pro rata basis, 15% should have been achieved by 31 March 2013. Good progress has been made and disposals and surplus properties amount to 14.5%. However, the identification of surplus properties has slowed and further analysis has established that not all of the non-core properties are capable of outright disposal; as many are retained via long leases for wider estate management reasons, or to underpin alternative service delivery solutions and contracts (eg. by way of restrictive covenants or contractual clauses).

Agenda Item:

11


The County Council is committed to transforming services and how we work. A new and more radical approach to accelerate the release of revenue costs (and of capital) tied up in property assets has been developed, which will also ensure that the property portfolio is better able to support services for the communities in Dorset. This strategy for reform is not a ‘property project’ even though it sets a baseline for the property portfolio which assumes that the County Council was to be created now, in 2013. It identifies that conceptually the county council should be able to provide services from 13-15 locations around Dorset and, for most purposes, from two or three properties in each location (excluding schools). The locations within the baseline strategy have been identified using ‘heat maps’ that present a variety of population and community related data-sets in geographical form. This approach provides a conceptual benchmark in the form of a Baseline Property Portfolio against which all service transformation (including core and non-core property) decisions can be assessed. It has the potential to change the ‘25% reduction’ into a ‘25% retention’ (although this should not be seen as a specific target) and create a further stimulus in the modernisation and reform of County Council services. In doing so it assumes: that over time the County Council will commission more services and provide fewer directly; where services are provided they will be community focused not buildings based; and where buildings are required they will be co-located, multi-purpose joint public service facilities and not necessarily owned by the county council. The aim, in simple terms, is to move towards a much more flexible property portfolio and in doing so to take more money out of buildings to be available for services and service improvement.

Impact Assessment

Equalities Impact Assessment: This report proposes a new strategy, which because it relates to the whole property portfolio, may require equality impact assessments to be undertaken in respect of the specific services and properties as proposals for change are developed. At this stage it is not anticipated that the strategy will have an adverse or differential impact on people who share a protected characteristic or those who do not. The data sets used for the heat maps included population under 4 years and over 65 years of age, vulnerable groups, deprivation and public transport. As a consequence, the baseline concept seeks to improve accessibility and take into account rurality.


Use of Evidence: The geographic data sets and heat maps have been provided by the County Council’s Research and Information Team. The property portfolio analysis has been based upon the Corporate Property Database held by Dorset Property. The baseline locations were derived from this data analysis as part of a workshop of key officers. Further data sets are available on a more local level, which will be used as the plan for each location is developed.

Budget: The MFC Assets & Workstyle Programme has a target to reduce the running costs of the property estate by £1.5M per annum. Good progress is being made and the savings are collected through the service budgets from which the relevant properties are funded. At the same time, costs for planned repairs and maintenance are being avoided (£2.3M) and the maintenance backlog reduced in accordance with the previously approved ten-year strategy. The disposals of assets is also generating capital receipts (£11.2M), which is available for reinvestment and reduces the costs of borrowing. Part of these capital receipts will be required to invest in alternative property solutions to enable the consolidation, integration and improvement before existing assets can be released.

Risk Assessment: Current - HIGH Residual - MEDIUM The current risk rating reflects the likelihood that the plans in place will not deliver the 25% reduction in the portfolio by 31 March 2015, unless additional action is taken to identify and release further properties. The residual risk assumes that the Baseline Property Portfolio is adopted as a tool to accelerate the pace of change; to improve service delivery and accessibility; and release costs from the portfolio for the benefit of services. Implementing the revised strategy will remain a medium risk as it requires concerted effort across the whole authority and financial investment to enable the change.


Other Implications: This report includes references to the County Council’s property portfolio. The proposals will have significant implications for the reform of all services and therefore all properties. The outcome will be a more flexible and sustainable portfolio of properties, which are more accessible and better suited to serve the communities of Dorset.

That the Cabinet: Recommendation

(i) (ii) (iii) (iv) (v)

approves the Baseline Property Portfolio agrees to its implementation as a concept against which to assess the core and non-core properties requires Service Directorates to align their Service Asset Management Plans with the baseline and to identify significant surplus property to contribute to its implementation. considers how quickly to adopt a whole authority corporate landlord approach confirms the nomination of the Deputy Leader as the Cabinet member lead for this work as part of the wider transformation portfolio

Reason for Recommendation

Aim 5 of the Corporate Plan includes the pledge to reduce the county council’s property portfolio by 25% by April 2015. The approved Asset Management Plan identifies five key activities to reduce, rationalise and optimise the estate. The current plans are unlikely to deliver sufficient reduction in the timescale required. An alternative strategy is therefore required. The baseline approach offers significant potential to transform service delivery through the better utilisation of the property portfolio and, in doing so, to reduce the costs associated with it for the benefit of services for the people of Dorset.

Appendices Plan of locations

Background Papers • Corporate Plan and Budget

• Corporate Asset Management Plan

Report Originator and Contact

Name: Mike Harries, Head of Dorset Property Tel: 01305 225227 Email: [email protected]


1. Background

1.1 Aim 5 of the Corporate Plan (provide innovative and value for money services), includes the pledge to make progress towards reducing the size of the Council’s property estate by 25% by the end of 2014/15. Collaborative asset management of the public sector asset base, to achieve best provision of accommodation in support of the delivery of public services, is also an important component of delivering Forward Together and both the Meeting Future Challenges programme and joint asset management plans.

1.2 The County Council’s Asset Management Plan for buildings (at para 1.3) identifies five key activities focussed on reducing the size of the estate, rationalising and optimising the retained estate, as follows:

i) Reduction:

• Of the estate by 25% over a five year period by March 2015

• In the environmental impact of the estate

• In the costs of running of the estate ii) Improvement in the condition of the retained core estate iii) Sharing of premises and co-location of services iv) Full utilisation of individual properties within the estate v) Promoting a joint approach with other tiers of local government upon customer

access – aligning the provision of property to be more customer focussed and to support better service

1.3 The Asset Management and Capital Programme Update in June 2013 advised the Cabinet that the county council was approximately half way towards its target of reducing the non-schools estate by 25% over a five year period. The graph below demonstrates this progress over the same period. It can be seen that progress has slowed recently, due to a lack of properties being declared surplus by the directorates and it is important that if the county council is to achieve its target, more work will need to be done in bringing forward properties for disposal. To help address this, a baseline property portfolio approach has been developed, the outline of which is set out in this report.

Progress against Asset Reduction Target

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1.4 The progress reported to the Asset Management Group (AMG) on 15 July 2013 was:

(a) Floor area: 9% disposal; 5.5% surplus; 12.8% non-core (27.3%) (b) Core properties: 73% of current floor area (c) Property numbers: 76 disposed; 25 surplus; 98 non-core (d) Core properties 389 (excluding schools, Waste, Public Health) (e) Revenue savings (per annum): £1.48M achieved; £1.3M identified (f) Capital Receipts £6.9M achieved; £4.3M forecast

1.5 This represents good progress against what was initially a ten year programme. However,

the factors that led to the timescale being halved remain relevant and in reality more cost needs to be driven out of the property portfolio to help transform service delivery.

1.6 Disposing of 25% of the property assets continues to be challenging and is unlikely to be achieved by the deadline of 1 April 2015. However, this may not pose too significant a risk because it is still expected to be close to the target (around 20%) by this time and there is the opportunity to act now to address it.

1.7 There is a strong commitment at a high level to deliver the necessary reduction and for asset disposal to be accelerated. Directorates have been working on service transformation proposals, including identifying the properties they needed to deliver services (so that other properties could be released) as part of the updating of Service Asset Management Plans (SAMPS) for September 2013.

1.8 The Cabinet and Audit & Scrutiny Committee have received regular updates on the Assets & Workstyle Programme. The disposal of non-core properties is proceeding, with 14.5% (disposed and surplus) to date, but it is not progressing with sufficient pace. Equally it is now clear that not all non-core property can actually be released or disposed of as, although properties may be deemed to be non-core, in many cases the services being provided from them are defined as essential and alternative premises would need to be provided.

1.9 It is imperative therefore that a more radical review of core properties in the SAMPS identifies those that could and/or should be released, and that the county council make up-front decisions, that will need to be executed initially by the services (working with the property professionals). This can be supported and facilitated in part by the workstyle change programme that will result in higher utilisation rates of main buildings eg. County Hall and area offices (eg. as piloted with Adults & Children’s Services in Christchurch).

1.10 A significant and rapid reduction in properties (provided it is combined with the appropriate reform of service delivery, working practice and use of buildings), can deliver the level of transformation needed, but only if driven by decisive action from service directorates, whose input is essential to free up property, with support corporately and from property to deliver solutions. The changes cannot be achieved if this is approached as simply a property project.

2.0 Looking Ahead

2.1 Having achieved the initial 25% reduction in property assets, the County Council will still have approximately 400 properties (excluding schools) in around 20 Principal Towns (ie. an average of 20 properties per town).

2.2 The property portfolio is commonly the second highest area of spend for any organisation. It is also often very difficult, costly and slow to change. There are significant sums tied up in rents, rates, running costs, repairs and maintenance that could (and should) be released to support transformed services by further rationalisation of the portfolio.


2.3 The MFC workstream OV29 (A&W) approached the issue from the need to reduce the portfolio to a sustainable size that we could afford to maintain. The programme currently therefore focuses on the poorer quality, under utilised assets and opportunities to share with other public bodies.

2.4 The alternative strategy proposed to reduce the core assets further is to identify what property assets the County Council would require if it were established now in 2013. That is, what would a Baseline Property Portfolio comprise? The portfolio of core properties has been divided into five functional types, for analysis, but these should be co-located wherever possible and appropriate.

• Democratic Core

• Strategic HQ

• Hub offices (Tiered eg. Area/Local Offices, if required)

• Service outlets (customer demand led locations)

• Depot bases (infrastructure or transport led locations)

2.5 The Democratic Core provides those functions that are part of being a local authority, such as a council chamber, committee rooms and members’ facilities. These should be widely utilised and not be allocated solely to a single purpose.

2.6 The Strategic HQ provides the ‘Head Office’ functions. It may be co-located with the Democratic Core to ensure better utilisation, but does not have to be. This comprises the Corporate Management Team’s base and support; ‘Head Office’ aspects of HR, ICT, Finance (but not necessarily their operational aspects) and those services that are not primarily located in Hubs.

2.7 Hub Offices provide the primary working base for most of the county council’s ‘office based and flexible’ workforce, within the communities we serve. These comprise workstations for a range of working styles (hot desks, quiet zones, teleconferencing and video conferencing); full access to all Dorset County council ICT, including wifi, and a range of meeting rooms of various sizes.

2.8 Service Outlets comprise a wide range of facilities from where our key customer/citizen facing services are provided eg. libraries, day centres, residential homes, children’s centres, youth centres. The focus for these is the customer demand (or sometimes the strategic intent) which will determine primary preferred location. However, actual location will be influenced by many factors, including co-location options and availability of alternative non-DCC premises (eg. sessional hire of community or partner facilities for day centres or youth centres). In some instances, relatively small investment by Dorset County Council (capital or revenue) in community assets may provide an effective solution at much reduced cost to the County Council and support community aspirations.

2.9 Depot bases are operational assets utilised by the Council’s workforce, mainly within Environment, Transport and Highways functions (eg. vehicles and equipment, salt stores, Countryside and Grounds bases and the workshops). A large proportion of these depots are bare land, located around the network for the storage of top dressing chippings or road planning materials. The Dorset Waste Partnership also has a range of depots and the development of ‘super-depots’ has been explored, but is excluded for this baseline analysis. Co-location of county council users within depots will be included.


There are also a number of central storage facilities, (such as the book store, toy library, SEN/Adult equipment stores, music service) as well as the specialist archive(s), that are currently outside the baseline.

2.10 This top down portfolio driven concept is relatively simple to articulate in theory. The agreement of key locations and of services offered is inevitably complex. This could comprise grouping services within a locality, by consolidating to fewer key sites or by re-provision. However, this ‘idealistic minimum’ provides a base against which any specific proposal can be compared and assessed.

2.11 In Autumn 2012, the Corporate Management Team agreed that the outline proposal for the Baseline Property Portfolio should be further developed and presented to the Cabinet as a structured way to accelerate the identification of essential long-term assets and, as a consequence, to speed up the disposal of non-essential property assets.

3. The Baseline Property Portfolio – Assumptions

3.1 The model developed uses data in the form of geographical/demographic ‘heat maps’, to identify a baseline of locations from which services would be delivered if the county council were to be established now. The approach makes assumptions about population being a key driver for both service users/customer locations and service provider/staff locations. The data used in this analysis was provided by the county council’s Research & Information Team.

3.2 The Baseline Property Portfolio will:

• Support the transformation and delivery of priority services

• Provide services from the minimum number of locations (and buildings)

• Support services being delivered in a different way: o More efficiently (financially and sustainably) o Transformed, needs-led, re-provision (eg. personalisation) o Suited to our more flexible ways of working, incorporating the workstyle

principles

• Encourage a more radical approach whereby a building will only be provided where service delivery cannot readily be achieved without a building

• Provide buildings that are multi purpose, flexible, ‘owned’ and managed as one estate on behalf of the whole Authority. (Single purpose, separate buildings will not be provided.)

These underlying principles provide a framework for good asset and estate management and allow a conceptual baseline portfolio to be identified.

3.3 The priority services (at a high level and based upon current property type descriptors) identified to be included in the baseline are:

• Adult learning

• Children’s Centres

• Day Centres

• Early Years

• Family Centres

• Libraries

• Residential Homes

• Youth & Community


In addition to the offices and administrative buildings needed for staff, these services currently utilise 253 different properties; a number of which are already under review as part of services’ plans and some changes are in progress.

3.4 Excluded from the Baseline Model at this stage are:

• Schools, learning centres, pupil referral units and outdoor centres

• Economic development, depots and waste sites

• Gypsy sites, leisure centres, museums, county farms and country parks/picnic sites

• Houses (34 caretakers houses are included with schools), garages

4. The Baseline

4.1 Taking the five functional property types identified (para 2.4), it is logical for the Democratic Core and Strategic HQ to be co-located in one building. Furthermore, as hub offices will be provided in (say) two tiers, it is also logical that one of the main hubs will be co-located with the Democratic Core and Strategic Headquarters as a Core Centre.

4.2 Based on analysis of the heat maps, there are two main options for the county council’s core centres: 2 centres – Dorchester and Ferndown/Verwood/Wimborne or Blandford 62% of the population within 10 miles (radius) if 2 centres are used 84% within 15 miles 4 centres – Dorchester, Blandford, Bridport and Ferndown/Verwood/Wimborne 80% of the population within 10 miles if 4 centres are used 97% within 15 miles.

4.3 To provide the best coverage and access for communities, the preferred locations for core centres are:

• Dorchester

• Blandford

• Bridport

• Ferndown/Wimborne/Verwood (see para 5.5)

These will be supported by hubs in a number of (suggested) locations to ensure appropriate access to services across the County.

• Christchurch

• Gillingham

• Lyme Regis

• Portland

• Shaftesbury

• Sherborne

• Sturminster Newton

• Swanage

• Wareham

• Weymouth

Plus potentially one of Ferndown/Wimborne/Verwood not included as a core centre. Not all of these hubs will be of the same size or offer the same range of services.

4.4 There are a range of other services that operate in a fully mobile way already eg. mobile library service, home care, reablement, and gypsy & traveller education support. These types of service need a base, which would be provided within either the four core centres or the hubs, as appropriate, alongside most other staff, utilising flexible working and hot desks, according to the county council's workstyle principles set out in ‘Spaces for Work’.


4.5 This analysis suggests that the County Council could base its services on 13-15 locations and look to consolidate its current property portfolio in those locations. In doing so, communities would be better served by services either operating out in the community or located where they are most accessible.

5. Portfolio Analysis

5.1 The County Council has made progress in reducing the property portfolio from in excess of 800 properties when the asset reduction strategy was initially proposed. The TechForge property data base is constantly updated and the data we have used was extracted in July 2013.

5.2 At the date of extract, the database held 752 properties, which after excluding 15 academy schools and 1 pre-school (located on an academy site), leaves 736 county council properties. The baseline approach focuses on offices and priority services which currently use 253 properties and excludes the property types identified in para 3.4.

5.3 The Baseline Property Portfolio identifies that around 14 locations are needed for the County Council to deliver its services. By providing most of these through the hub locations, it would be possible to consolidate on two (or three) multi-purpose buildings in each location. This suggests that the baseline against which the existing relevant portfolio (253) be compared is between 28 and 42 properties.

5.4 The Baseline approach is deliberately a simple analysis to provide a minimum comparison against which decisions upon the current portfolio can be made. However, the analysis at Bridport supports the view that following community consultation, significant change can be achieved, albeit with the necessary investments (see para 5.7). At Bridport, Wimborne and Weymouth, the Principal Town Reviews have already identified significant reductions are possible.

5.5 Discussions have been held with East Dorset District Council about their proposals for an East Dorset Civic Centre in Wimborne and how this could be developed as a joint public service ‘hub’, including the county council. This project has the potential to significantly reduce the county council’s property portfolio in and around Ferndown/Wimborne/ Verwood. It also has the potential to enable other economic development opportunities to help stimulate growth.

5.6 In Weymouth, the County Council has had discussions with Weymouth & Portland Borough Council around the possibility to incorporate the library, the Mulberry Centre and the adjacent CAB functions into an integrated public sector facility.

5.7 The Cabinet will also be aware of the community consultation and analysis taking place in Bridport to identify community needs and how best these can be provided within the portfolio of properties and sites that the county council has in the town. This proposal arose directly as a result of the Principal Town Review.

5.8 Other opportunities are continuing to be considered and assessed by officers with public sector partners through the Joint Asset Management Board and with the Dorset Development Partnership.


5.9 In addition to the above, thematic reviews of the excluded properties (para 3.4) may provide further opportunities. A basic analysis of the headline figures shows:

County Farms

• Centenary Management Plan 2011 – Approved by the Cabinet

• (84) 53 core holdings, 13 non-core, 19 allotments Depots (reviewed 2010) A review, in association with other public bodies, including Emergency Services is in progress. (This also links with DWP below.)

• (41) 10 main depots; 3 workshops, 28 chippings stores

• 5 surplus, 27 buildings Dorset Waste Partnership

• Partnership documents include outline property proposals, prepared in 2011. The Asset Management and Capital Programme Update report (to the Cabinet 2 October 2013) includes the current position.

Garages and houses

• 26, excluding school caretakers

• Disposals/transfers are currently being assessed

6. Implementation

6.1 Some of this work may overlap with, or anticipate the outcome of the MFC2 ‘How we Work’ project. This is currently managed through the Assets & Workstyle programme lead.

6.2 Service Directorates need to map their service delivery model for the future using customer demand information and trends to enable it to be overlaid onto the Core Centres and Hubs model to see how well it aligns (Dorset Property could help facilitate this work).

6.3 The review of core properties that should be released needs to be brought forward and accelerated now that the Service Asset Management Plans (SAMPs) have been updated.

6.4 A capital budget needs to be identified to enable the changes. This would be based upon ‘Invest to Save’ principles, with the initial upfront costs being recovered from the later Capital Receipts.

6.5 The Estate & Assets team (within Dorset Property) are mostly deployed on the Assets & Workstyle workstream and asset disposals. This is creating tensions with other workloads, such as compensation claims for the Weymouth Relief Road and Asset Valuations. Accelerating the disposal programme via the Baseline concept will require more (external) resource and Dorset Development Partnership may be an appropriate source.

6.6 Similarly, legal services (property conveyance and contracts) team is already overstretched and will need further support.

6.7 The workstyle changes to staff working practices, use of buildings and infrastructure need to be applied universally, with rapid roll-out following the current group of pilots. This has implications for both the HR and ICT capacity to support authority-wide roll-out.

6.8 The co-ordination of the implementation is a significant programme management role being provided by the Business Change & Efficiency Team. Accelerating and broadening the transformation approach will require further support. This will need to be incorporated into the wider corporate transformation approach.


6.9 A decision is needed as to when is the most appropriate time to adopt a whole authority corporate landlord model for the property portfolio, whereby all (non-school) property assets are held and managed by one property team.

7. Conclusions

7.1 The Baseline Property Portfolio identifies that as few as 14 locations are needed from which the County Council could deliver its services. By providing most of these through the hub locations, it would be possible to consolidate on two or three multi-purpose buildings in each location. This suggests that the baseline against which the existing relevant portfolio (253) be compared is between 28 and 42 properties. Many of these can and should be co-located, joint use and/or accessible by all our public sector partners.

7.2 This approach, in simple terms, will provide a more flexible property portfolio, enable service transformation and help the County Council to take more money out of buildings to be available for services and service improvement.

7.3 Clearly, moving from the present configuration to that implied by the Baseline Property Portfolio is not simple to achieve, not least because our existing property holdings may not be in the right place, or be the right size, or type; or have the right facilities to accommodate the hub approach. Nevertheless, the suggestion that we might in fact only need between 10-15% of our currently number of relevant non-school buildings is a powerful incentive to change.

7.4 The progress to date in the Assets & Workstyle Programme has produced property disposals, but a more radical approach is needed to reach the overall targets in a timescale to support the budget requirements. The proposed approach aims to achieve this by providing a framework that allows the decision making to be more objective and rapid.

7.5 Using this conceptual framework, decisions can be made based on the overall Dorset-wide requirements as opposed to a building-specific or a service-specific perspective.

7.6 It is proposed that the Corporate Management Team continues to direct this work, whilst it is overseen by the Cabinet member lead and the Asset Management Group. Progress will continue to be monitored through the quarterly asset management reports to the Cabinet.

Miles Butler Director for Environment November 2013

Dorchester

Sherborne

Gillingham

Shaftesbury

Christchurch

Sturminster Newton

Lyme Regis

Bridport

Weymouth

Portland

Wareham

Swanage

Wimborne

Verwood

Blandford

Scale

Drawing NumberUPRN

Date Drawn

Drawing TitleSite/Property

A4

Dorset Property

Estate and Assets Group

© Crown Copyright. All rights reserved.

Dorset County Council, LA100019790. 2013 PD2999

DORSET PREFERRED LOCATIONS FOR TIER 1 CORE

CENTRES AND TIER 2 HUBS

NTS @ A4AUG 2013 MLS

Documents

Agenda I tem: Cabinet 11 Audit - Modern Mindsetdorset.moderngov.co.uk/Data/Cabinet/20131106/Agenda... · The locations within the baseline strategy have been identified ... that over