The Government Property Unit is scaling back its ambitious 8.5m sq ft hubs programme after the projected cost of the first phase grew by close to £600m.
The concept has started to unravel as the reality of the cost and practicalities of co-ordinating different departments are realised.
In Manchester, the requirement has been cut by 150,000 sq ft to 220,000 sq ft for its first phase. The total size of the hub was due to be 800,000 sq ft.
The GPU is now considering whether to scale back other regional hubs.
The bold vision, first mooted in 2014, was to co-locate departments in 18-22 strategic hubs of up to 850,000 sq ft, cutting the number of government office buildings from 800 to 200 by 2023. It was hoped the plan would spearhead the regeneration of city centres, promote greater collaboration and working conditions for civil servants, and help recruit talented staff.
However, in December last year a National Audit Office report raised concerns about the cost of the first phase of the programme, which aims to consolidate HM Revenue & Customs’ 170 offices into 13 regional centres.
The report also questioned whether adequate risk assessment had been carried out regarding the GPU’s commitment to 25-year leases with no breaks at its first two regional centres – Stanhope and Schroder’s Ruskin Square in Croydon and Salmon Harvester Properties’ 3 Glass Wharf in Bristol.
The scaling back in Manchester comes on the back of the quashing of the city council’s vision for a “civil servant campus of the North” to anchor the £850m regeneration of the Mayfield area of Piccadilly.
U+I was selected as preferred development partner for the mixed-use project last year, with 807,300 sq ft of offices planned. However, the scheme has now been ruled out for the first phase as it would not be completed in time. Instead, around 2,000 staff from HMRC will stay on at Trinity Bridge House, a 250,000 sq ft office building in Salford with a lease expiring in 2028.
Meanwhile, the Department for Work and Pensions is close to taking 70,000 sq ft in one of Manchester’s most expensive offices, Deutsche Asset Management’s Two St Peter’s Square, where quoted rents are £33 per sq ft.
While the GPU oversees the government estate, each department still has its own property team, which has the final say on occupancy. The government is setting up the Government Property Agency, a central body that will manage a large portion of the central government estate and bring civil servants together from the disparate property teams.
In some cities there is not enough space available to co-locate. This has been a factor in Bristol, where the GPU launched a 250,000 sq ft requirement for a DWP-led office this month.
A Cabinet Office spokesman said: “Our hubs programme will help to transform the way the civil service works. By reforming how government uses property, we will remove artificial barriers between departments and work in ways that minimise the need for office space.”