EXECUTIVE SUMMARY

1  In 1998, the then Department of Social Security transferred the ownership and management of its estate to a private sector company, Trillium, now Land Securities Trillium (LST) in a PFI deal, the Private Sector Resource Initiative for the Management of the Estate, known as PRIME.1

2  The creation of the Department for Work and Pension (the Department) in June 2001 brought together the PRIME estate (private sector) and the former Employment Services estate (public sector). In December 2003, the Department for Work and Pensions transferred the former Employment Services estate to Land Securities Trillium, under an expansion of the PRIME contract that had been agreed by negotiation rather than through a competitive process.

3  The main elements of the new contract are:

■  Land Securities Trillium has paid the Department £140 million in net present value terms to buy the former Employment Service estate;

■  as owner of the former Employment Services estate Land Securities Trillium will provide serviced offices until 2018 for the Department in return for payment of some £1.2 billion in net present value terms; and

■  at the end of the contract, the Department will retain the right to occupy the buildings it then wishes to continue to occupy with leases based on market terms then current.

4  We found (for methodology see Appendix 1) that:

a  it was reasonable for the Department to expand PRIME rather than go to competition;

b  the deal gives the Department what it wants; and

c  does so at a reasonable price.

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1  We reported on the transaction in our report The PRIME Project: The transfer of the Department of Social Security estate to the private sector, HC 370 Session 1998-99.