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Department for International Development ends lease on its Palace Street HQ
A deal enabling the Department for International Development (DFID) to vacate offices on Palace Street, next to Buckingham Palace, and move to a freehold block owned by the government will save tax payers £62.5million Francis Maude, Minister for the Cabinet Office, announced recently.
The Government Property Unit – part of the Cabinet Office’s Efficiency and Reform Group – worked with DFID to secure an early exit from a lease on the 160,000 sq. ft. office at 1 Palace Street. The office will be vacated next year and the department will move into freehold space at 22/26 Whitehall. 22/26 Whitehall was used by the Cabinet Office but from 2010 staff were moved into space shared with HM Treasury on 1 Horse Guards Road.
This move is another example of the work of the Efficiency and Reform Group to drive savings from the civil estate by consolidating departments into the government’s freehold space, selling unnecessary buildings and where possible breaking leases on underused offices. Since May 2010 the government has reduced the running cost of its estate by over £350 million, exiting over 1,070 buildings across the country. Just last month the iconic Admiralty Arch was leased raising £60 million and saving the running costs for what was a vacant building.
Francis Maude said:
For too long government departments were allowed to lease properties at taxpayers’ expense with absolutely no central coordination. In May 2010 government departments occupied 115 different properties just in Bristol.
“The Efficiency and Reform Group is making sure government works as one to use the freehold property it already owns more efficiently rather than leasing expensive vanity offices. We’re sharing space, drawing on the best-practice of the private sector, and we now publish information on how departments use their property so armchair auditors everywhere can scrutinise what we are doing and hold us to account.
“Since May 2010 we’ve saved over £640 million for taxpayers through our property reforms but there’s much more we can do to drive further savings. Last month we leased Admiralty Arch raising another £60 million and DFID leaving 1 Palace Street will save a further £62.5 million. It’s this non-stop commitment to saving money that puts us on track to save £8 billion this year.”
Commenting on her department's move, Justine Greening, Secretary of State for International Development, said:
Moving to a smaller government-owned building will save DFID £62.5m by 2020.
"As well as saving money, the move will use space more efficiently and put us at the forefront of the government's plan to reduce the cost of delivering public services. Moving to the heart of Whitehall will mean we can work much more closely with the Foreign Office and other departments to deliver UK policy around the world."
Eyal Rabinovitz of Delek Global Real Estate said:
This is one of a number of exciting projects we are currently working on and we are delighted to have reached an agreement that enables the Government to extricate itself from considerable lease obligations. The deal also sets up the possibility of a major project in a prime location.
“In anticipation of gaining vacant possession, we are now looking at plans for 1-3 Buckingham Gate, with a view to submitting a planning application in due course. Because of the property’s superb location, all options are being considered."
Delek Global Real Estate report that they are considering redevelopment of 1 Palace Street to create residential property with one of the most prestigious addresses in the World. This project would boost London’s construction industry and generate revenue for Westminster Council through planning payments, none of which could happen had government sat on the property.
Notes to editors
1. Francis Maude, Minister for the Cabinet Office, announced the latest overall efficiency savings on 30 October 2012. Further detail is available: http://www.cabinetoffice.gov.uk/news/government-track-save-8-bn-year
2. Sale of a 99 year lease on Admiralty Arch was announced on 26 October 2012. Further detail is available at: http://www.cabinetoffice.gov.uk/news/government-leases-historic-admiralty-arch