Ministry of Justice - Asset Management Strategy

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Ministry of Justice - Asset Management Strategy

  1. 1. Asset Management Strategy Contents Introduction 1. The asset portfolio - stock survey 2. Asset disposal plan 3. Investment plans 4. Asset management practices Introduction On its creation in May 2007 the Ministry of Justice became one of the largest government ministries bringing together agencies dealing with courts, tribunals, prisons and probation services, along with many smaller bodies. Those services involve some 80,000 employees and require use of a major property portfolio valued at almost £10bn. This document sets out our Asset Management Strategy. It explains how we intend to make best use of those assets, and of the investment of some £700m a year agreed as part of the 2007 Comprehensive Spending Review (for 2008/9 to 2010/11), to deliver improved services. It brings together the strategies developed in each of our major business areas: prisons, courts, tribunals, and probation service, as well as our requirement for HQ and other offices such as the Legal Services Commission. It also sets out how we intend to develop and maintain the portfolio, not only to better meet the evolving business need, but also exploiting opportunities for joint solutions. The prison estate is the most significant part of our portfolio and there has been much reporting of the increase in prisoner numbers and problems of capacity. A five year programme to add some 9500 places is already underway. In addition, the Justice Secretary has now announced agreement for an extended capacity programme increasing capacity up to 96,000 places by 2014. MoJ Asset Management Strategy 1
  2. 2. 1. The Portfolio - stock survey The MoJ portfolio brings together estates that were previously the responsibility of the Department for Constitutional Affairs (DCA) and parts of the Home Office. The estate comprises over 2000 property holdings and a book value of c£10bn. It includes both specialist freehold buildings such as prisons and courts as well as leasehold general office accommodation, and ranges in size from large prisons and multi-court centres to small local venues with a single hearing room or counter facility and local probation offices. The vast majority of properties are in England and Wales, but the Tribunals Service now has a few Tribunal properties in Scotland. Business Current holdings (2007) Prisons 128 Associated quarters, land etc 639 NOMS HQ (PFI prisons and land) 14 NOMS Probation 602 HM Courts Service 726 Tribunals (centres & offices) 129 Legal Services Commission 22 HQ and other offices 20 2280 Prisons The public sector prisons estate comprises • 128 prison buildings: 3.47m sq metres with a total gross current replacement cost of £10bn as at 01/04/07. 44 establishments have listings attached to them. • 639 associated sites and land: • 455 quarters remaining in the prison service, which historically have been used as accommodation for prison service staff and their families. The use of these quarters is currently being phased out, and this accommodation is being sold off as part of the disposal programme to raise funds for the capital programme, which forms part of the NOMS investment strategy. The existing use value at 01/04/2007 of the quarters is £68m. • 14 other buildings (4 training centres, 8 other buildings and the 2 administrative buildings, Cleland House and Abell House in London) • 170 land assets with a total gross current replacement cost at 01/04/07 of £710m: • 128 land assets linked to the prison buildings • 20 farms attached to prisons, used as part of the prisoner rehabilitation programme, enabling prisoners to learn new skills which they can use to gain employment and thus reduce the likelihood of re-offending. The existing use value at 01/04/2007 of the farm buildings and land is £12m. • 14 land assets which are attached to the 4 training centres, 8 other buildings and the 2 administrative buildings, which have a total gross replacement cost (including land) of £79m • 8 land assets which have either been purchased for new builds or are associated with prison establishments but are outside of the main prison wire. Probation Estate The National Probation Service is made up of 42 local Probation Boards which cover areas that have a regional structure which fits that of the Government Regional Offices and Wales. MoJ Asset Management Strategy 2
  3. 3. The Probation Service estate comprises residential premises, office premises/contact centres plus space/land/garages. The 87 residential premises and roughly half of the offices are freehold, with the remainder being leased. In addition the Service has use of 685 offices (one in most courthouses), but these are court assets and not assets of the probation estate. The total gross current replacement cost at 01/04/07 for the buildings of the Probation Estate is £147m, with annual running costs of £32m for rent, rates, service charges. National Offender Management Service (NOMS – Headquarters) NOMS is responsible for 11 private finance initiative prisons and their land, which have a gross current replacement cost of £748m, total gross external area of 353,204 sq m and rates of £3m per year. There are 3 other land and building sites are used by the Prospects programme, which is a three year pilot project that offers a 12 week residential programme aimed at resettling offenders. These have a gross current replacement cost of £3m. NOMS Plant and Equipment, furniture and vehicles In addition to land and buildings, NOMS probation estates and NOMS headquarters also hold a number of other fixed assets, which fall into the groups: plant and equipment, furniture and vehicles (the fixed assets of NOMS prison service are all categorised as either land or buildings). At 01/04/2007 the gross current replacement costs of these assets was £15m. NOMS I.T. assets The value of I.T. equipment across the NOMS estate is broken down as follows: NOMS probation estate £0.6m NOMS Headquarters £12m Individual items over £5,000 and groupings of over £25,000 are capitalised. The I.T. assets for the prison services are owned by Electronic Data Services (EDS) under the PFI arrangement. There is a major software development project running for the creation of a single case management application, the National Offender Management Information System (NOMIS). The Work In Progress (WIP) Net Book Value (NPV) for NOMIS at 01/04/2007 is £79m. Office for Criminal Justice Reform (OCJR) The OCJR has no property holdings but is responsible for management of IT based assets as part of the Criminal Justice System IT (CJS IT) programme. At 2007/8 these were valued at £49m. Courts The courts estate forms a major part of the overall MoJ portfolio and houses the courts and their supporting administration across England and Wales. It comprises a large number of disparate buildings in a relatively dense spread with duplication or provision in many locations. This reflects the historic separation, prior to the creation of HMCS in 2005, of crown/county courts and magistrates courts and the different requirements of civil and criminal courts. Buildings comprise two elements: front office (hearing rooms and counter services) and back office (administration). Holdings as at April 2007 MoJ Asset Management Strategy 3
  4. 4. Tenure total Key features Courts Act 3 - alternative use (valuation office) value of Freehold 455 £1.4bn and book value of £2.5bn Agreement with other govt 26 - £290m annual resource DEL cost (excluding dept (MOTO) non-cash) PFI 17 - 1.29m sq m total building area including Operating lease 144 2,460 court rooms Finance lease 81 - backlog maintenance Total 726 - 144 listed buildings Tribunals The Tribunals Service (TS) was formed in April 2006 by bringing together 21 Tribunals from 6 Government Departments. The majority of the TS estate is either leasehold or held on MOTO terms with other Government Departments, with only 4 properties being freehold. Key features: • 129 permanent sites across England, Scotland and Wales. • 130,000 sq m • annual running costs: £46m (including rent, rates, maintenance, utilities, security, cleaning) • 4 freeholds have a book value of £3.4m • In financial-value terms, a third of the estate is in London and a further 24 locations have two or more TS properties. • The TS estate varies significantly in quality, size and cost although almost all sites have at least one hearing room/court. The Legal Services Commission The LSC HQ is supported by a small network of regional centres and Public Defender Service (PDS) offices, occupying general office accommodation and providing legal services to the public. All properties are leasehold and of varying quality. MoJ Headquarters and Other Offices Some 7500 office based staff are housed on the HQ estate. The HQ estate currently provides accommodation for MOJ HQ and 26 Arms Length Bodies (ALB) in London with some smaller outposts for both across the regions. MoJ currently manages 12 leasehold offices in London and a further 5 holdings are currently managed by the Home Office pending a planned transfer. In addition to the above the HQ estate also manages the leases for the Scotland Office and Wales Office in Whitehall (sister departments) Although leasehold, the MoJ balance sheet will show an asset in relation to the current refurbishment of the Petty France site which is to enable rationalisation of the 12 sites currently managed by MoJ down to 4. IT assets Although relying on PFI providers to deliver much of our IT, the IT assets are treated as Departmental assets. However, under current accounting treatment guidelines, individual items under £10,000 and software under £1m are not treated as capital items. Effectively this means that the majority of infrastructure development is not capitalised. The picture for software development is somewhat different with the possibility that major software work, such the planned rollout of SUPS to the civil and family courts and the re- platforming of Crest in the Crown Court, may have a significant capital investment. Libra is another example of this, although the bulk of the capital investment has been made in previous years. MoJ Asset Management Strategy 4
  5. 5. 2. Asset disposal plan We need our properties to fit our service delivery model. Those that represent poor value, do not fit the business and service delivery model or which are surplus to requirement, will be reviewed with a view to disposal and re-use of the receipt to provide facilities that are more efficient and better located. Strategic drivers The MoJ brings together several different business units with differing property needs. There are, however, several common themes driving our asset disposal plans: a) organisational integration is continuing following the creation of HMCS in 2005, bringing together the Crown, county and magistrates courts, and the Tribunals Service in 2006, bringing together a range of different tribunals previously managed by different government departments. Each had a highly dispersed local network of hearing centres and offices across England and Wales, plus some tribunals in Scotland. The presence of courts or tribunals in the same town offers scope for rationalisation; b) development of new business models that better match the customer distribution and support improved service delivery: this will drive investment in major hearing centres, matching prison capacity to demand and rationalising administrative work both in HQ and regional centres or back-offices; and c) Bringing the estate up-to-date and replacing properties that are no longer fit for purpose or economic to run. Both court and prison estates include many old properties that no longer fully meet current operational requirements, and are constrained by listed building status so they are unsuitable for adaptation or inefficient to run. NOMS Prisons Disposals flow from reducing the number of quarters premises, previously used for prison staff, and the identification of potentially surplus land and buildings (farm modernisation programme etc). In future, as the Titan prisons become available, we will close the most inefficient prison places and replace them on a new for old basis. Probation Service The Probation Service estate is currently managed by the Home Office. There is one surplus property (former custodial site) identified for disposal in 2007/8 with an estimated value of £5m. Courts The amalgamation of the former Court Service (Crown and county courts) and magistrates courts has resulted in many towns having two or more sites. This offers considerable scope for rationalisation without affecting the level of service. In addition, a number of existing sites are due to be replaced by new, improved, facilities. Such rationalisation is based on identified core sites and locations, consistent with the hub-and satellite model. There is a statutory requirement for public consultation before decisions can be made to close and dispose of existing sites where this would result in there no longer being a local presence. Specific disposal plans cannot therefore be produced until local consultation has occurred. Even then we recognise that objections may be received and plans cannot be guaranteed to come to fruition. Tribunals The move to a new multi-jurisdictional service delivery model with regional hearing centres and Administrative Support Centres will enable substantial rationalisation. MoJ Asset Management Strategy 5
  6. 6. 18 sites in England & Wales have been identified for closure by 2008 and a further 15 by 2009; in addition there are plans to dispose of 6 properties in Scotland. The majority of these are small and under-utilised SSCSA (Social Security and Child Support Appeals) sites which either do not merit permanent estate or which could be co-located with other estate, commonly Employment Tribunals (ETS) in the same location. It is proposed to dispose of 3 of the 4 Tribunal Service's freeholds (in Edinburgh (2) and Sheffield) and use the £4.2m proceeds towards multi-jurisdictional venues to TS standard. SSCSA properties in these locations will be released in accordance with MOTO agreements. These changes are subject to the outcome of consultation with stakeholders. Efficiencies will be realised from rationalising the current 40 jurisdictional processing centres and locating processing work outside London/SE in accordance with the Lyons review. The 120 current permanent hearing centres will be further rationalised to some 50 multi- jurisdictional venues of which around 10 will be Regional Hearing Centres in major locations which will support the venue network. Legal Services All properties on the LSC estate are leasehold. LSC's strategy envisages reducing to 6 sites including a London based HQ, a London based regional office (in Docklands), 3 regional processing centres and a small presence in Wales. Remaining offices would be subject to the Organisation and Transformation Programme which will involve a change to fewer staff supported by more electronic systems. HQ The short-medium term strategy involves rationalising the HQ estate. The refurbishment and occupation of the former Home office site in Petty France will enable the vacation of 9 sites with expiry or surrender of leases. All HQ properties are leasehold and there are no receipts. Receipts Receipts will be used to supplement available capital to meet service improvements. Freehold sites currently being marketed or which have already been identified as planned disposals are expected to generate £62m in 2007/8 and £16.5m over the 3 years 2008-11. The latter figure is likely to grow as firm plans are produced. Prospective receipts for individual sites are not published as doing so may hamper our ability to obtain best value. MoJ Asset Management Strategy 6
  7. 7. 3. Forward investment plans This section sets out how we intend to invest the capital funding of roughly £700m a year. £200m p.a. of this will be used for the courts and non-custodial estate, whilst some £500m p.a. will be invested in the NOMS estate (mainly in prisons). Offender Management The NOMS investment strategy is mainly focussed on expanding capacity, making the best use of technology and modernising the asset base and delivery structures. This is to be done through new builds and a major refurbishment and replacement programme of the prison estate. Revenue from asset disposals is used as part of this programme. There is a significant investment in new IT services, including the Offender Assessment System (OASys), the National Offender Management Information System (NOMIS) and innovative alternatives to the use of custodial sentences, such as the use of electronic monitoring. The main investment driver is the need to increase capacity to meet demand for prison places. As set out in Lord Carter’s review, managing both supply and demand for custodial places will provide an opportunity in to dispose of inefficient places which do not support the strategic objectives. The pressure to deliver early capacity within the programme means that it will involve a portfolio approach with 4 phases, essentially reflecting the scale, type and deliverability of the buildings (rapid build residential units and house blocks within existing sites, mini-prisons using house blocks attached to existing prisons, and new prisons in new locations). An extra 1,600 new places have come on stream this year (2007) as will a further 2,300 next (2008). In the light of Lord Carter's recommendations, in order to secure the long-term availability of prison places, a further and extended building programme has been agreed that will deliver net capacity of up to 96,000 by 2014. We will act on Lord Carter's recommendation to build up to three large 'Titan' prisons, housing around 2,500 prisoners each. The extra capacity will help modernise the prison estate, allow us to close the 5000 most inefficient prison places on a 'new-for-old' basis. This building and modernisation programme is aimed to deliver net capacity of up to 96,000 places by 2014. To provide additional capacity in the short to medium term we intend to convert a former Ministry of Defence site at Coltishall in Norfolk into a category C prison, provide further prison places through expansion on existing prison sites, convert HMP Whealstun into a closed prison, bring forward projects from the building reserve list, and look at securing a prison ship. Capital is also being invested in other building projects in the Youth Justice Board, HMPS and the National Probation Serviceand in IT, such as the roll out of NOMIS – the underlying technology that will electronically integrate HM Prison Service and the National Probation Service (NPS) information in real time, enabling staff in both services to work more effectively to deliver end-to end offender management. OCJR The Office for Criminal Justice Reform (OCJR) supports the Criminal Justice System (CJS) in England and Wales in particular by enhancing joint-working. 42 Local Criminal Justice Boards lead local action, and the Ministry of Justice, Home Office and Crown Prosecution Service lead the reform process jointly at national level, through the National Criminal Justice Board. Investment in the OCJR is focused on creating a more joined up criminal justice system (CJS), particularly making fuller use of IT. This contributes to our targets to improve the delivery of justice and to increase the level of confidence that the public have in the operation of the criminal justice system. MoJ Asset Management Strategy 7
  8. 8. The aim is to create a modern, joined-up IT infrastructure and software, and to gain business benefits from that investment. By April 2008 anyone involved in the CJS - users of it or people working within it - should have access, from any browser enabled device, to a seamless, coherent set of applications and information to cover the breadth of their dealings. Over the CSR07 period, investment will continue focused on IT-enabled business change overseen by a CJS Business Board representing the three CJS departments. OCJR's own investment has been mainly in central IT services to join up CJS agencies, in particular the CJS Exchange service joining up agency case management systems, and secure e-mail linking CJS allowing front-line practitioners to communicate securely. Other applications have included a management information system (CJ MIS) for providing performance information for the CJS. Around £1-2m is spent annually by OCJR's NDPBs on investment needed to maintain public services. Non-custodial estate As previously noted, there are four main themes to the development of our non-custodial portfolio: a) Rationalised headquarters for national, regional and area management b) Integrated, multi-functional back offices c) Rationalised, multi-jurisdictional hearing centres d) Providing more accessible services In the short to medium term, the focus is on continuing the integration and rationalisation of the properties within each of the main business units: HMCS, the Tribunals Service, the Legal Services Commission and the MoJ HQ Estate. In particular, HMCS will continue to consolidate following its creation in 2005, and the Tribunals Estate following its creation in 2006. The majority of the capital investment relates to HMCS's courts estate, reflecting the size and specialist nature and extent of freehold ownership. Other major capital investments include the balance sheet provision for the refurbishment of Queen Anne's Gate to replace existing HQ sites, and the refurbishment of Middlesex Guildhall to create the new Supreme Court. Provision for non-HMCS requirements has been set aside leaving a financial planning envelope for HMCS. Courts Service improvements will flow from the investment in the provision of new, fit-for-purpose, court buildings at prioritised locations. New investment includes 6 new courts. Four will be new magistrates courts in Birmingham, Liverpool, Bolton and Salford. Sunderland is to get a new combined court comprising Crown, County and magistrates' courts and Aylesbury will get a new Crown Court. It is expected that these new courts will be open for business around 2012. In addition to the new courts the capital maintenance budget for courts is being doubled to halt the growth of the sizeable historic maintenance backlog. The future direction of the HMCS estates strategy involves a hub-and satellite model for targeting delivery of service. The hub-and-satellite strategy establishes a network of core sites supported by satellites achieving an appropriate level of public access, reflecting current and future demand for services. A programme of new builds, integration and disposals over the period 2007/8-2010/11 is the first stage in delivery of that strategy. The hub and satellite model will be supplemented by a strategy of redirecting back-office work to non-specialised office sites. Modelling of this approach is being investigated but delivery is dependent on roll-out of IT and is not expected to commence until the end of the CSR period. The development of administration centres will not be limited to HMCS and a Department- wide office strategy will be developed. MoJ Asset Management Strategy 8
  9. 9. Tribunals The sale of unsuitable freeholds in Edinburgh is expected to fund a replacement modern multi-jurisdictional venue, and additional capital will be required in Sheffield for an enlarged multi-jurisdictional venue. In addition, TS will invest capital funding to realise rationalisation opportunities and to create back-office processing sites/Admin Service Centres (ASCs). This will also address problem buildings, especially where disable facilities for the public, including disabled users, are unsatisfactory. The investment on rationalisations will address under- utilised estate and realise consequent efficiencies and running cost savings. Legal Services A minor investment programme is in place to satisfy landlord/tenant obligations and to cope with the amalgamation of regional offices into more central business delivery centres. A strategy is being developed showing the opportunities, across the estate, to reduce or present options to share wider MoJ-family accommodation. MoJ HQ & Other Offices The scheme to occupy refurbished offices in Petty France is at the heart of plans to rationalise the HQ estate. The programme of rationalisation was a response to planned lease expiry across the estate. The nature of the Petty-France fit-out will enable MoJ to house a combination of its London based office staff working in HQ and arms length bodies. This is a short to medium term solution and provides flexibility to sublet in the event of a future reduction in the London based requirement. A further review is now underway to determine how best to utilise the properties transferring from the Home Office and amalgamate into current rationalisation plans. Whilst MoJ HQ properties are leasehold, the accounting treatment of the Petty France scheme requires balance sheet provision. There is also a much smaller capital investment for the fit-out, for which MoJ is responsible. IT Investment Both estates and IT are enablers of change. HMCS' plans for estates changes and rationalisation are shared regularly with e-Delivery Group who have ensured that our new IT (DISC) providers are aware of these plans and that functionality and roll out schedules align. Some examples of this work include: • early establishment of cross domain access to key business applications such as Possession Claims On-line. This will facilitate flexibility in the placement of staff and workload between sites in advance of the consolidation of our networks under DISC • network consolidation plans are in the process of being agreed and, through the Transition Change Board, HMCS and Tribunals business priorities are being addressed. An example of this is the prioritisation of Family Centres to support the implementation of the Adoption & Children and the Children & Adoption Act • work has commenced to scope the implementation of SUPS to provide further estates flexibility and to enable back office working • the phasing and implementation of the Libra application across the country is being jointly agreed with HMCS and eDG, taking into account estate changes and strategy The allocation of capital will be agreed and monitored by the Capital Investment Board as a sub-committee of the Management Board. CIB has agreed the principles and assumptions within the capital planning framework and variations to that will need to be referred to CIB for fresh agreement. MoJ Asset Management Strategy 9
  10. 10. 4. Asset management practices With such a significant asset base and investment programme it is vital that we have appropriate expertise and governance to ensure we can deliver the strategy. Investment Boards • The Capital Investment Board (CIB) was established in 2006 as a sub-committee of the Departmental Management Board. It is chaired by the Director General, Finance and Commercial, who is also the Board level property champion. CIB includes the Chief Executives of both HMCS and the Tribunals Service as well as representation from MOJ HQ and the Legal Services Commission. CIB has delegated responsibility for the Management Board to direct and monitor the investment and asset management including estates and IT, promoting cross-cutting opportunities. • The capital funding framework provides an agreed baseline against which estate investment activity will be monitored, with any variations approved by CIB. • The NOMS Investment and Approvals Board, supported by the NOMS property Board continue to oversee NOMS investment pending the outcome of the MoJ organisational review. • HMCS has its own asset management committee operating within the CIB funding framework and chaired by the Resources Director. • Strong and effective Governance and audit teams assess and check all financial activity within the Department and its agencies. Delegation and accountability • The CIB ensures the appropriate management of capital investment, including its agencies to ensure the maximum return for the Department; • Mission critical projects and programmes are also reviewed for strategic fit and delivery by the Change Executive • The future management of estates is currently under review as part of the Organisational Review. At present, each part of the MoJ family is responsible for managing its estate though probation estate and some NOMS HQ property currently remains under Home Office property management arrangements. HQ provides a property management service for a number of MoJ's smaller organisations. The main estate based businesses are represented on the CIB (or NOMS IAB) where they are accountable for use of capital. • Operating rules for capital budgets have been agreed by CIB with reference to the capital planning framework. An annual allocation includes delegation of responsibility for categories of spend such as maintenance, but with the requirement for approval of business cases for major schemes and variance reporting on expenditure approvals and receipts; • The Department’s agencies are responsible for ensuring that the assets chosen for development and/or retention deliver the required service; • HMCS operates a subsidiary board, which ensures the suitability of assets and reviews investment cases, prior to CIB approval. Project delivery • Major projects are sponsored by central teams with project experience. • All teams follow OGC gateway process in full , as the primary source of assurance for project delivery; • CIB and NOMS IAB approve capital investment plans, and sign off major projects at the key stages. • A system of designated Finance Responsible Officers ensures that each major project receives financial advice. • Projects above certain thresholds are subject to Treasury approval. Those thresholds are currently under review. MoJ Asset Management Strategy 10
  11. 11. • Full HMT Green book option and investment appraisal is carried out on all relevant projects. Performance monitoring • HMCS has developed an extensive and sophisticated planning tool (developed with assistance from Morgan Stanley) that evaluates estate performance and models strategic change • The e-PIMS database is used by HMCS, TS, LSC and MoJ HQ to record property data. • MoJ HQ has additionally participated in an OGC office benchmarking exercise. • A working group is currently reviewing data availability across MoJ and developing a high performing property plan. Maintenance • Estates managers set maintenance standards but employ managing agents for estate management and maintenance. • requirements. • Utilisation of assets and wider markets activity • HMCS exploits interest in the specialised nature of its courtrooms and the historic setting of some sites for wider markets opportunities, including filing and events, though security considerations prevent more widespread usage. • A marketing team are engaged in identifying, evaluating and, where appropriate, exploiting commercial opportunities within the portfolio. These range from promoting courts as locations for film and television productions, earning £146k since April 2004. • The Royal Courts of Justice is used as a venue for corporate entertainment, generating almost £1.5m since April 2004. Other initiatives include generating revenue streams from posting data on the internet and available either by subscription or pay per view. Income has been generated by holding several civil wedding ceremonies at Newcastle Moot Hall and in addition, Parole Board panels regularly hire rooms in court buildings around England and Wales to hold recall panels. A recent initiative has been to charge a usage fee to a commercial organisation who take court lists and publish them on their web-site. • Future projects involve proposals to licence future developments of the Statute Law Database and Courts of Appeal judgements. MoJ Asset Management Strategy 11

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