Public Sector Push
Amid the plans for levelling up regions of the UK is the relocation of the civil service estate. The pledge is to move 22,000 civil service jobs out of London by the end of the decade, but what will be the impact of this shift on regional office markets?
4 minutes to read
As attention turns to the recovery from the Covid-19 pandemic, the UK Government continues to reiterate its commitment to levelling up the UK and reducing geographical inequalities.
At the time of writing, how this is to be achieved is unclear, with the ‘Levelling Up’ white paper still outstanding. The UK Government has restated however, a plan to move 22,000 civil service jobs out of London and the South East by the end of the decade. This means that roughly one in four civil service positions in London and the South East are to be re-distributed across the UK, a strategy that could have major implications for the prosperity of UK regional cities.
A greater distribution of the civil service footprint is aimed at drawing on employee talent outside London. While only 13% of UK residents live in London, two thirds of policy and senior roles are based in the capital. By relocating some of these jobs – particularly to other major UK cities with a strong labour resource – it will be able to draw on a wider talent pool. The labour markets of the principal UK cities capture at least a third of the UK’s workforce and most have a higher-than-average proportion of residents in managerial and professional jobs, so offer a large base of well-qualified workers.
What has been announced so far?
The leading relocation announcements include bringing 200 – 300 treasury roles to Darlington. The Economic campus in Darlington will eventually house 750 officials from departments including business, transport and homes and communities. In December 2021, HMRC selected Pilgrims Quarter in Newcastle to consolidate operations for up to 9,000 employees. Staff will move from Longbenton and Washington into the new site by 2027.
Launched in June 2021, Leeds is home to the newly formed UK Infrastructure Bank. The bank is tasked with accelerating investment into ambitious infrastructure projects, cutting emissions and supporting the levelling up agenda.
The Department for Business, Energy & Industrial Strategy (BEIS) has opened a new office at Trinity Bridge House in Salford. The new site will become the base for 420 civil servants by 2025, with plans to increase headcount to 570 by 2030. The department is in the process of relocating over 800 roles to regions across the UK. The BEIS workforce is also being grown in Birmingham and Cardiff, and expanding to new locations in Belfast, Edinburgh and Darlington. These plans will see up to 1,350 department roles housed outside London by 2025. The Home Office will develop 1,950 roles, including to a new Innovation Centre in Stoke-On-Trent, which will accommodate more than 500 roles by 2025.
What is the potential impact for the UK cities?
While the full complement of departmental relocation will develop over many years, the impact on office demand is already being felt, and the scale of future office requirements could be significant. Simple calculation using the average space per person required as stated in the latest ‘State of the Estate report’, the shifting of 22,000 roles across the UK could necessitate up to 2.1m sq ft of office space when fully realised.
The space impact on the markets of the regional cities however, is not as simple as a one-to-one calculation. The reason?
Some of the intended locations are recognised targets for the creation of government hubs, with the Government Property Agency (GPA) actively acquiring new space. This could mean that whilst jobs are new or subject to relocation, roles could be co-located in office space already acquired.
Even so, the relocation programme is sure to generate new requirements for office space. Principally, the target locations chosen may not be able to accommodate an influx of key civil service jobs without newly built offices. Availability of high-quality stock is limited in many major UK cities, and with the GPA public in a commitment to reduce carbon footprint of estates by 50% before 2027, accommodations will need to meet the highest standards of EPC and BREEAM as well as offer superior digital and physical connectivity.
Conclusion
While relocating civil servants out of London and the South East has been an ambition of various governments over many years, the ‘levelling up’ agenda means it now has real priority. Real estate aside, the departmental moves will not just broaden the range of talent on offer to the civil service, but will serve to secure major employers in the subject cities. This means that the attraction and retention of talent on a regional basis will show improvement, boosted by new employment opportunities arriving, and as career pathways are established.
This will have a significant impact for real estate and present an opportunity for the UK regional office markets. Foremost, occupiers deriving from the Public Sector typically require long-term leases and are supportive of anchoring new development schemes. The influx of government jobs and departments therefore, will mean viability for some schemes. A secondary implication will be the attraction of support organisations from the third sector and the private sector. Close proximity to principal clients will mean a second wave of requirements could be generated.
It will be interesting to see how plans progress over the coming twelve months and beyond. The UK Government are clearly keen to cement the foundations of economic equality and subsequently, the development of central workplaces located across the UK regions will be the product of ambitions.
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