1.1 In April 1996, after a Cabinet Office Efficiency Scrutiny of the Civil Estate, the Department of Social Security inherited responsibility for over 700 buildings across Great Britain, managed before then by Property Holdings. The estate was the largest civil estate in Government and consisted mainly of traditional office buildings located in or close to the centre of all major towns and cities throughout Britain.
1.2 The Department of Social Security, DSS, recognised that this estate had major problems including:
■ a requirement for extensive refurbishment and maintenance. The Department expected to have insufficient resources to refurbish the estate and maintain it at a sustainable level;
■ some 158,000 square metres of vacant space, costing the taxpayer over £12 million each year; and
■ a complex and fragmented network of at least 160 service contracts, let mainly at local level and considered to be inefficient and costly to manage.
1.3 DSS took the view that it did not have the skills to manage a complex property portfolio and needed to concentrate on its core business of managing the social security system. A departmental feasibility study to assess whether the DSS could simply be an occupier of space and not involve itself in property ownership confirmed that the private sector was willing to take over the ownership and management of the estate. It, therefore, sought a private finance solution for the provision and management of the estate.
1.4 DSS transferred its estate under a PFI deal known as PRIME (Private Sector Resource Initiative for the Management of the Estate) to a private sector consortium known as Trillium in April 1998. Land Securities bought Trillium in November 2000, and the PRIME supplier is now Land Securities Trillium. Under the PRIME deal, Trillium acquired the ownership of the freehold premises, and responsibility for rental costs, dilapidation liabilities on leased buildings and the cost of upgrading the buildings. For a price of £2 billion in net present value terms, Land Securities Trillium operates the whole estate, providing services including cleaning, maintenance, catering and security for 20 years.
1.5 On 1 April 2002, the Government created the Department for Work and Pensions (the Department) through the amalgamation of the Department of Social Security, Employment Services and parts of the former Department for Education and Employment. The new Department was then in the position of providing services through two separate estates: the PRIME estate comprising 676 buildings with a total area of some 1.7 million square metres, and the additional estate, referred to as the PRIME expansion estate. This latter comprised 1,108 buildings with a total area of some 0.9 million square metres, which in combination with the PRIME estate accounted for 24 per cent of the total central government estate.
1.6 The Department retained asset ownership and full property risk, and directly managed the PRIME expansion estate, through a group of inherited facilities and property management contracts. The two estates had different accommodation and service standards, which was particularly noticeable in Jobcentre Plus districts where buildings could comprise both PRIME and PRIME expansion property.