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Councils to slash maintenance budgets

Evidence is emerging of councils front-loading cuts to facilities management and building maintenance budgets.

Councils are currently finalising spending plans for an April deadline, and consultants close to the negotiations believe hundreds of millions of pounds could be taken out of the sector over the next two years.

The cuts may be compounded by councils holding on to their FM and maintenance budgets until the end of each period in case they need to divert funds elsewhere.

EC Harris head of local government Bill Green said: “Most councils are targeting savings of around 20 per cent this year in maintenance of their corporate estate, with a similar impact in wider estate, including schools, flowing through next year.”

EC Harris data suggests the average annual expenditure on repairs and maintenance is in excess of £20 million for a large metropolitan borough, noting that devolved housing and schools budgets can cause this to vary widely.

In England alone there are 36 metropolitan districts and 32 London boroughs, plus the City of London.

Cuts of 20 per cent to each of their budgets would total in excess of £340 million, with £165m being cut from London. With cuts from the country’s 55 unitary authorities and 27 two-tier shire counties factored in, the overall reduction could soar further.

Mr Green believes the areas are seen as “readily addressable targets” because they don’t involve redundancies or cuts to front-line services.

He added that tighter budgetary controls could see “significant sums held back as a precaution and only released in the final part of the year”.

PwC director in real estate advisory Guy Brett agreed the cuts to maintenance budgets could run to the hundreds of millions of pounds as local authorities sought to avoid property closures.

“They might be cutting maintenance budgets more because they are trying to keep facilities open. So you might find you get a 10 per cent reduction in floor space but a 40 per cent reduction in maintenance.”

Electrical Contractors’ Association commercial advisor Ken Tracey agreed the cuts posed a major threat. “This is doubly bad because in a recession our members are usually deprived of new build and so they start going for maintenance and refurbishment instead.

“The longer you fail to properly maintain a building the worse it gets; it’s putting off the fateful day and at the same time it’s rolling up the long-term costs.”

Willmott Dixon chief executive for support services Chris Durkin said he was not surprised.

“It is easier to directly impact on maintenance budgets than it is on others so there is definitely front-loading going on because you can take the benefit of that more quickly.

“But over time we are not expecting it to continue to be penalised because the fact is there are compliance standards that apply to public property.”

The Comprehensive Spending Review introduced cuts of 26 per cent in funding from central to local government over the next four years, with councils’ budgets cut by up to 8.9 per cent in 2011.

According to the recent Delivering Effective Estate Management report, the public sector owns £250bn of property assets which cost about £25bn to run every year.

 

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