1.1 The Department of Social Security's Newcastle Office was originally established in 1948 on a 64-acre site at Longbenton in the northern suburbs of the City. It was one of the main offices for administering the National Insurance and benefits system introduced after World War II. As the business of the Department expanded, additional accommodation was provided through the construction of three multi-storey buildings at Longbenton during the 1960s and 1970s, and by leasing or construction at 11 further sites within a 12 mile radius. By 1998, some 13,300 staff, mainly from four of the Department's Agencies, plus contractors' staff and some other civil servants, were housed in over 2.5 million square feet of accommodation in and around Newcastle.
1.2 By 1993, major problems arising from the age and condition of the estate prompted the Department to re-examine their accommodation needs and provision. The problems included:
a) roof leaks and heating system failures leading to loss of productivity;
b) increasing running costs and maintenance commitments;
c) substantial work needed to comply with disability legislation;
d) difficulties installing modern information technology in unsuitable premises; and
e) a lack of adaptability in existing buildings to cater for changes such as reductions in staff numbers.
1.3 These problems acquired greater significance when seen in the context of the overall Business Strategy of the Department of Social Security, which assumed:
a) reductions in staffing;
b) increased use of information technology;
c) greater emphasis on professionalism, valuing staff and providing modern, flexible and functional working environments to maximise productivity; and
d) constraints in capital and running cost allocations.
1.4 The estate's problems, and the Department's business strategy, led the Department in the mid-1990s to start seeking ways of redeveloping some or all of the properties on the estate. The Contributions Agency, as the largest occupier of the Longbenton site, had the responsibility for managing and delivering this estate development project. But all important decisions relating to the project were made by a project board which included representatives from other Agencies using the estate. The membership of the project board is described in greater detail in Part 2 of this report. Figure 1 shows the organisation structure of the Department as a whole, and the main functions and budgets of its Executive Agencies.
1.5 On 1 April 1999 the Contributions Agency transferred from the Department of Social Security to the Inland Revenue in order to achieve a closer alignment of the tax and National Insurance systems in the longer term. It is now called the National Insurance Contributions Office and no longer has its own Accounting Officer. At the time of writing, this change has not led to specific or immediate alterations to the Newcastle Estate Development project. Responsibility for the project and its contract management has transferred to the Inland Revenue under the merger.