1.21 It is widely recognised that government departments should consider building into their property Private Finance deals the flexibility to vacate surplus space without further payment. Whether or not a department accepts bids offering flexibility should depend on the risks and benefits of each individual case. The Department regarded flexibility as mandatory in this case in view of the risk of possible staff reductions arising from the Departmental change programme and other initiatives. These included the possible greater use of outsourcing (Child Benefit work, for example, which accounted for some 1,850 staff on the Newcastle estate) and the introduction of major IT systems. The Agency also saw flexibility as inherent to the Private Finance Initiative. Figure 6 illustrates the flexibility available under the deal in terms of square metres of office space.
1.22 If their accommodation needs change, the Department can hand space back to NEP with a resulting reduction in the availability charges. And unlike a conventional lease, they do not have to pay a charge when doing so. The Department can surrender around two per cent of space each year from 2004, up to a maximum representing a 20 per cent reduction in availability charges. If they do not exercise this right they will receive a discount of 20 per cent of charges for any area available for surrender which they continue to occupy, and a 40 per cent discount should they relinquish their right to hand back the space. They may also request construction of an additional building if they require more space than currently expected, or cancel one building prior to construction if they require less.