Guardian News and Media/London
A project launched by David Cameron to place small businesses in disused government buildings is on the verge of failure, the Treasury’s most senior civil servant has disclosed.
A year after the prime minister announced he would make 300 empty state-owned properties available to entrepreneurs, a leaked letter has revealed that not a single building has been occupied.
Nick Macpherson, the Treasury’s permanent secretary, wrote that many of the buildings that Cameron claimed would become bustling offices were too small, in poor condition or had restrictive leases preventing their use by anyone outside government.
Only four properties out of the original 300 could be used by small businesses soon but those deals have yet to be finalised, he added.
Labour said the disclosure was proof that the scheme was ill-conceived and expensive.
Chukka Umunna, the shadow business secretary, said: “Sadly this idea seems to have gone the same way as so many of the government’s schemes supposed to be helping businesses which have been beset by chaos, delay and ministers’ failure to deliver.”
Cameron launched the scheme in January 2012 during a visit to north-east England.
Beforehand, Downing Street press officers briefed journalists that he would be making a major announcement about disused government properties.
“The first priority for the ones we aren’t using is to sell them off, but in the meantime, many are going to be sitting idle. So let’s match the capacity we’ve got with the need that’s out there. Let’s provide office space where we can to those who can use it,” the prime minister said.
Some of these buildings had become empty because of cuts to the public payroll, he said. As well as helping entrepreneurs, the initiative would give a much-needed boost to Treasury finances, officials claimed.
“Enterprise is what we do in Britain. This is the year that, more than ever, we’ve got to go for it,” Cameron added.
Macpherson’s letter, which was sent to the public accounts committee two weeks ago, details the efforts made by Cabinet Office and Treasury civil servants to make the scheme work over the last year. Macpherson wrote that a number of early problems were identified.
“As expected, not all of the government’s property was suitable for this initiative. During the past year some of those spaces from the original headline figure have been handed back to landlords or sold.”
Macpherson said the government had been running a pilot scheme that has reviewed 145 surplus government properties in 95 locations and tried to identify suitable providers to manage the buildings.
“Of the spaces that remain, there are a variety of reasons for not being able to use them. Reasons for this include: being very small; poor condition; security considerations; restrictive leases terms preventing their use outside government; and some not being available long enough to make them viable or worthwhile for potential providers to manage,” he said.
After another three months the pilot project had identified just 20 suitable properties, Macpherson said. These were in Birmingham, Bolton, Bristol, Colchester, Rugby, Crewe, Blackpool, Berkeley, Beverley, Leeds, Bedford, Nottingham, Northampton, Oxford, Peterborough, Waterlooville, Wimbledon and Runcorn.
Between May and July, the department for business, innovation and skills ran a procurement study for these projects, and added four more possible properties.
Macpherson said the response to the procurement process was encouraging with expressions of interest from 60 people. But just eight properties received bids.
“Of the eight spaces, two properties were subsequently withdrawn pending disposal; two were considered unviable by the bidders after further consideration; and four are currently in contract negotiation,” Macpherson said.
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