Tuesday, 4 October 2022
Ceisteanna Eile - Other Questions
Office of Public Works
83. To ask the Minister for Public Expenditure and Reform the actions that have been taken or that are planned following the analysis and conclusions of the spending review 2022 report entitled An Assessment of the Balance of Current and Capital Expenditure - OPW Estate Management Portfolio; and if he will make a statement on the matter. [48285/22]
I draw the attention of the Minister to the spending review carried out by the Irish Government Economic and Evaluation Service, IGEES. What steps is the Government taking with regard to the recommendations in that review and the data?
I also point out to the Minister of State that there is a serious misunderstanding somewhere in the media reports on the downgrading of the north-west region. Will the Minister of State come back to me separately either with an email or a letter on that?
I thank Deputy Connolly for raising this question. The Office of Public Works, OPW, has a significant and diverse office accommodation portfolio distributed throughout the country, comprising 890,488 sq. m at the end of 2021 and including a range of differing types of office provision, from heritage buildings to brand new grade A office accommodation.
The issue, which Deputy Connolly has raised with me before, of whether to buy, build or lease properties is a complex one and is subject to various factors, including the availability of capital funding, the availability of suitable buildings or sites, the prevailing market conditions at the time, the urgency and scale attached to the accommodation request, and the duration of the requirement. Due to the range of accommodation requirements across Government, there are a variety of solutions depending on the circumstances, and it is important to keep a dynamic portfolio available to the Government. The OPW’s preference is that functions of infrastructural importance or those viewed as a long-term commitment should, where possible, be accommodated in State-owned properties. This would include headquarters for central Government Departments, State security services etc.
The overall conclusion that can be drawn from the recently published spending review paper is that when the State is acquiring significant property for office accommodation, the new build or purchase options should be considered on a case-by-case basis in accordance with the parameters of the public spending code, particularly if there is a long-term requirement, subject always to the prevailing market conditions and available funding.
To meet its strategic objectives of modernising the estate and making it more efficient, the Office of Public Works constantly looks to appraise the potential of the existing owned accommodation portfolio for future redevelopment of sites, refurbishment opportunities and potential asset recycling prospects. This is done in parallel and in conjunction with ongoing appraisal, monitoring and managing of opportunities which arise from within the leasehold estate. The extensive research undertaken for the review provides the Office of Public Works with an important evidence base on which to ground decisions on the overall development of the portfolio into the future.
Under the National Development Plan 2021-2030, the OPW has been successful in securing funding for a broad range of projects, which include a number of office developments that will further enhance the balance of leased and owned accommodation. One of the major capital projects that is being funded within the project through Ireland’s national recovery and resilience plan is a deep retrofit of Tom Johnson House in Dublin 4, which will reduce the buildings primary energy use by 75%.
Additional information not given on the floor of the House
This will become the new headquarters of the Department of the Environment, Climate and Communications. The OPW will continue to appraise development and redevelopment opportunities on existing State-owned sites with a view to seeking additional funding for investments that will meet the operational needs of client Departments and agencies in modern energy-efficient buildings.
In addition to this, the OPW has an ongoing programme of fabric upgrades and energy efficiency retrofit projects in central government buildings to enhance the overall condition and performance of our buildings. This will ensure the enhanced performance of existing buildings and avoid the need to replace these buildings through the commercial office market.
The blended working policy framework for Civil Service organisations was published in March 2022, and Departments and agencies are currently in the process of finalising their departmental blended working policies. Inevitably, the decisions currently being formulated across each Department and agency on patterns of attendance in the office will have a direct impact on how the physical office space will be utilised into the future. The chairman of the OPW has recently written to all Secretaries General across government asking them to consider the use of their existing accommodation in the context of long-term blended working. Departments are being asked to account for the full optimisation of existing accommodation in the context of their blended working policies.
The spending review paper published by the OPW provides an evidence base for long-term decision-making on the future direction of the office accommodation portfolio. Every requirement will continue to be assessed on a case-by-case basis in the context of the urgency and scale attached to the accommodation request, the overarching OPW estate strategy, the duration of the requirement, and the availability of capital funding.
The Minister of State has acknowledged my earlier interest in this matter as I have followed up on this before because my experience in Galway has been dreadful. The health executive of the time leased a property for almost €1 million per year on a 35-year lease, and in the end it was cheaper to break the lease with a €1 million penalty. I have a particular interest and it would seem to me to make more sense to have State owned properties.
There is an acknowledgement of that on page 9 of this review in respect of the important structures and facilities for the Government, but this is a fascinating subject. The Office Public Works has 2,500 properties valued at €3.3 billion. Some 61% of the office space is owned and 39% is leased. The review looked at five properties and case studies. In every single case, the review found it was significantly cheaper to build. That was over a 40-year period and the cost of building accommodation in the five locations reviewed was between 29% and 38% lower than leasing. That is the context of my question.
As I said to the Deputy, on the previous occasion when we discussed this matter, I did not, nor does the Office of Public Works, disagree with her. We agree, in fact, but there are circumstances where we will have urgent needs. For example, if a tribunal is to be established and there is a requirement in the here and now for office accommodation, the OPW will not have the benefit of going through a rigorous planning process, dealing with all objections, judicial reviews, public procurement, the public spending code etc. because the tribunal will need to get up and running. There are occasions when we actually need to move.
The Deputy is correct in that the Office of Public Works accommodation portfolio is 60% to 40%, owned versus leased, which is quite different from the position in 1998. At the end of 1998, for instance, the OPW’s office accommodation portfolio comprised 960,000 sq. m, 56% of which was owned and 44% of which was leased. While this estate is 7.5% smaller now than it was in 1998, the number of people we are accommodating is 40,000 greater, which is an increase of 27%. On pound for pound delivery, I think the Deputy will find the OPW is actually doing quite a good job in this field for the Government.
As the Minister of State may know, I have the greatest respect for the Office Public Works and it does great work. There is a bigger policy decision here for every government as to the type of policy they will adopt in encouraging important entities of the State to rent or purchase. A clear message has been given here that it is cheaper to build in capital terms over a period.
Of course, I agree with the Minister of State that in the short term one sometimes needs to lease or rent. I have no problem with that but not when it is lost, like it was in Galway, where, as I mentioned, the property was rented for €1 million a year. I can think of many other buildings that are rented across the board. Perhaps the Office Public Works is doing better. I do not know, because I do not have the profile of all of the other buildings. For instance, in Galway, the city library is rented for as long as I can remember. That is completely daft. I am talking here about a policy. The OPW now has less space now with more staff, as I understand it, but we also have the blended work environment.
The Deputy is correct in that this will change even more in the next six, 12, or 18 months where we have a new blended working environment. We will now have situations, which we all have had already through the OPW-led campaign on energy consumption in public buildings, including this very building, where on some days we may have 10% to 15% occupancy. We will need to have very difficult conversations across our whole estate on whether everybody who works for the Civil Service, for instance, can continue to have the same sort of desk and office accommodation space they previously had while they are working 20% to 30% of the time in a remote location or at home and where in the meantime the State is keeping the lights on.
The Deputy is correct that this is an opportune time to have a discussion on this, but she is also correct in the context of what the Office of Public Works does. I would contend that, since 1830, when this office was established, the OPW's role has actually shrunk. Now I would say to my colleague, the Minister for Public Expenditure and Reform, that it is time to widen that remit in respect of the other State-owned Ireland Inc. buildings for which we are not responsible but for which we should be.
As the Minister of State may know, I also put in, before the summer, a whole series of detailed questions on this area of the OPW’s property portfolio. Since we returned to the House, frankly, I think we need to take a serious look at the management of that portfolio.
Another thing to add to this debate is that in one of the answers the Minister of State gave me before the summer recess, we discovered that the OPW has 108 unoccupied properties, most of which have been vacant since 2013, and a small number are empty for almost half a century. Some 70 of these are buildings and 38 are unused sites. Some 47 of these are Garda stations that were closed in 2012 and 2013 and still lie empty, including two in my own area: Kill of the Grange, Deans Grange and Dalkey Garda stations, and many other such stations litter the place. As to the question as to whether we should lease, buy or build, I ask what we are doing with all of this empty property and why are we not putting it to public use?
I presume the Deputy, as a great proponent of the public service, is not suggesting we would do anything else other than what Deputy Connolly said a while ago and that the Deputy is in fact on our side. I presume from his political and philosophical background that he is a great-----
-----proponent of the Office Public Works. I will say, however, that in respect of disused Garda stations, the Office Public Works has written, rung and engaged with local authorities throughout the country on umpteen occasions to take these buildings off us. In many cases they are perfectly suitable for either local authority accommodation itself or for housing accommodation. Some of them have been taken and we have some very proactive local authorities, such as Leitrim County Council and Roscommon County Council, but I cannot say the same about many more. One would not think that there is a housing crisis in the country from the response of some of the local authorities. If there are specific properties where the Deputy believes we can offload it to a local authority, I would be delighted to hear about it, and for market value.