State of the State….and the estate

Having spent much of my career working with clients in the public sector, I always await the launch of Deloitte’s State of the State report with keen anticipation.

The report’s conclusions, which are based on interviews with public sector leaders and a survey of over 5,000 UK citizens, offer a fascinating insight to the challenges and opportunities facing the public sector. As a property professional, I am particularly interested in what this might mean for occupiers of the public sector estate. Here are a few of my own perspectives:

The long and winding road to net zero

The report concludes that the public sector faces substantial challenges in meeting its net zero targets by 2050, including the need for long-term planning, securing funding and the role of the supply chain. The roadmap to achieving net zero targets is undergoing a ‘recalibration’, with responses suggesting a more joined up approach is needed across Whitehall.

From experience, estate sustainability strategies are typically comprehensive and well-thought through. The challenge lies in how they will be implemented. Public sector occupiers need to develop robust delivery models which compliment wider estates activity and corporate strategies. There will continue to be significant competition for skilled resource as multiple sectors implement their sustainability strategies at a similar time. Existing resources (particularly leadership) will need to be upskilled in green methodologies and financing major transformation within the estate will continue to place barriers to achieving green outcomes.

It is an increasingly complex landscape and comprehensive programme planning needs to begin now (if it hasn’t already) to meet the 2050 targets.

The role of the estate in digital transformation

The report finds that the public sector is continuing its digital transformation, but further progress is needed to improve data architectures if the journey is to be successful. It suggests that more direct leadership and joined up working might help drive a more central approach to transformation, setting digital strategies up for success in the long term.

Estates teams have been grappling with data challenges for as long as I have worked in the industry. Significant progress has been made, particularly over the last five years as antiquated systems have been modernised. Estates teams should focus on the interface between the estate and wider digital landscape to help build a cross-organisational, integrated data architecture which can help drive wider benefits. An example I often see is the use of occupancy data to drive insights into the return to the workplace, which can help inform a greater understanding of the effectiveness of people strategies.

Aligning footprint and agile working

The report finds that senior leaders have heralded the positive impact of changes to the central London office portfolio in recent years, which has been reduced by a half.

The question for public sector occupiers now is what the shape and size of their future property portfolios should be. I have seen a growing trend for days working from office locations becoming mandated, typically for two to three days a week (but often more), suggesting that occupiers will need to consider whether there is the correct mix and availability of workspaces to support the delivery of people strategies.

The future of procurement is a source of optimism

An area of optimism within the report’s conclusions is the future of procurement. The implementation of the Procurement Act 2023 later this year in England, Wales and Northern Ireland is heralded as a significant opportunity. Survey results suggest that the Act will enable further improvements through driving more innovation in commercial management, increased flexibility in the approach to procurement and instilling more rigour in managing contracts.

I agree with this sentiment and think that this could present significant opportunities for the sourcing and management of estates contracts, especially those relating to Facilities Management. Occupiers embarking on sourcing programmes should be considering the potential impacts of the Act later this year and identifying how to leverage the benefits arising within their procurement pipelines. The Government Commercial Function has published guidance for senior leaders as well as for prospective suppliers. I would encourage anyone associated with estates sourcing to read these and begin forming conclusions as to how the benefits might be delivered.

Estates strategies – a catalyst for change

It is clear from the report that whilst there are clear messages on the challenges facing the public sector estate over the coming years, there is also cause for optimism. Estates strategies are often impacted by decisions made centrally and by changes to corporate strategies. But they can influence them too.

Data and digital, net zero, procurement and footprint to name a few are all areas that occupiers should be considering proactively as estates strategies are developed, refined and delivered. Estates leaders should be continuing to build strong relationships centrally to ensure that the benefits that can be driven from the estate are complimenting and enabling wider strategic outcomes within public sector organisations.