UK ministers look to sell state buildings worth £1.5bn

Ministers have set out plans to sell £1.5bn of government buildings, reflecting plans to shrink the civil service and move more officials out of London, as well as the increase in remote working since the Covid-19 pandemic.

Jacob Rees-Mogg, minister for government efficiency, on Wednesday announced a new “government property strategy” designed to raise £1.5bn through the sale of property and a further £500mn by making buildings more efficient and negotiating cheaper leases.

In a document outlining the strategy, Rees-Mogg said all spending on government property needed to be justified, adding: “We are cutting the cost of the public estate so that we can return money to the taxpayer.”

In reality, however, the sales will represent only 1 per cent of the central government’s estate — which is valued at £150bn and covers 150mn square metres. Ministers sold off £5bn of property between 2015 and 2020.

Rees-Mogg has urged civil servants to return to the office following the removal of coronavirus restrictions and expressed his frustration with those who have continued to work from home.

Earlier this year, he was criticised for leaving notes saying “I look forward to seeing you in the office very soon” on officials’ desks.

Rees-Mogg last week told the Sunday Telegraph that the sale of government properties reflected the fact that taxpayers should not have to “fork out for half-empty buildings”, adding that “expensive office space in central London has been underutilised” over the past year.

According to property analysts Remit Consulting, average occupancy levels across the UK are down from about 60 per cent before the pandemic to 30 per cent now.

The document issued on Wednesday did not reference the rise in working from home, but Rees-Mogg stressed the need for greater efficiencies from the Whitehall estate.

“It is always important that every property held by the Government is efficient, functional and well-utilised,” he said in its foreword.

The property shake-up comes against the backdrop of a broader attempt to shrink the civil service, which has grown rapidly in recent years to address the challenges of Brexit and the pandemic.

Ministers are also seeking to reverse a trend under successive Conservative administrations to centralise the civil service in London.

Despite rhetoric about “levelling up” more remote parts of the country, there was a net increase between 2010 and 2021 of 15,401 civil servants in the capital and a net decrease of 58,005 in other regions.

That trend continued despite the launch in 2018 of the “Places for Growth” programme, aimed at shifting 22,000 officials out of London by 2030.

Rees-Mogg on Wednesday claimed that movement away from the south east had started, with the dispersal of 7,000 civil service roles in recent months — including 500 to Leeds and 250 to Sheffield.

The government is selling off its property holdings into a challenging market, as rising interest rates dampen investors’ appetite to spend on commercial real estate.

The office sector has been particularly hard hit as employers ditch space or defer signing new leases while they consider their approach to flexible working.

The amount of office space in London available to let has increased by more than 50 per cent since the start of the pandemic to 31mn sq ft, above the level reached during the 2008-09 financial crisis, according to property data provider CoStar.