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MOVING ON UP
Plans to relocate up to 20,000 civil servants from London could mean massive economic spin-offs for the Midlands. David Thame assesses where the jobs might go in our region
PoThe Midlands is already home to more than 50,000 civil servants, but hopes are high that it could win thousands more once Sir Michael Lyons' review of ways to spread government office jobs around the regions is completed in November.
The Food Standards Agency, the Land Registry, the Office of Fair Trading and the Charity Commission could all be heading in the Midlands' direction along with chunks of Whitehall giants like the department of health and the agriculture ministry.
In total the plan could mean creating up to three million sq ft of new office floorspace.
The Lyons review is the latest in a series of initiatives intended to help the regions, as unveiled by the chancellor Gordon Brown, and economic development chiefs in both the East and West Midlands haven't been slow to spot the opportunity. The East Midlands probably has most to gain. Indeed on the face of it, the region has a good chance of scooping something big. For instance it is owed something after it lost two vast relocation deals in the early 1990s. And the region's share of the civil service has shrunk over the last five years and is now just 4.2 per cent of the total.
Better still, thanks to its relatively small tally of civil service jobs - at just 20,600 civil servants, the region has fewer than any other except Merseyside. As such there is clearly room for expansion without the risk of stimulating a surge in local house prices or wages.
The region's claims also look strong when compared with neighbouring West Midlands where the number of civil service jobs has remained fairly constant at 6.5 per cent of the UK, with around 32,000 civil servants in post.
David Wallace, strategy director at the East Midlands Development Agency, says: "We'll be pointing out that we seem to be under-represented. But we're not alone in having had very few large scale public sector relocations in the last decade. But the major East Midlands cities can accommodate fairly large-scale requirements. We have the sites available and we have some of the lowest office rents in the UK.
"The simple fact is that one of the aims of the Lyons review, as well as doing something for regional economies, was to save money for the civil service. And if they come to the East Midlands they will save money."
However, with the Inland Revenue already employing 2,500 people in Nottingham, and the Driving Standards Agency a few hundred more, the regional capital will be lucky to see more public sector jobs come its way.
Instead insiders say that Leicester is more likely to be the destination if the East Midlands wins a major relocation. Indeed the city's regeneration masterplan, published in July, envisages creating city centre commercial space for around 9,000 new office jobs.
Its centrepiece is a proposal for a 540,000 sq ft office district around the city's station with the aim of boosting the number of high-paid service sector jobs.
So Leicester will have the space. It can also claim relatively low costs. Office rents are around £314 per sq ft, compared with £316 in Coventry, a little more in Nottingham and considerably more in Birmingham. That said, the high rents of Birmingham did little to put off the Office of the Deputy Prime Minister when it recently agreed to pay £326.50 per sq ft for new offices at 5 St Phillips Place, one of Birmingham's premier business addresses.
Besides, new development in Leicester - especially pre-lets from public sector tenants - would be sure to nudge rents up. But they would remain competitive by regional and national standards.
Even so, it could turn out to be a mistake to allow hopes to rise too high. The failed relocations of the Prison Service to Derby and English Heirtage to Nottingham suggest that winning a major government relocation needn't be a guarantee of success.
In the West Midlands expectations are more modest. Birmingham is probably too economically successful to warrant much help. Coventry and Wolverhampton might be in the running, but the real hope is Stoke-on-Trent.
A spokesman for Advantage West Midlands explained: "There's no active lobbying going on, and its too early to say who will get what, but we have heard some very sympathetic noises about the chances of the North Staffordshire area.
"Certainly we all hope that this time the Lyons review is more than just an exercise. And whether it brings the region hundreds or jobs or a few thousand, it will be good for us and very welcome."
Today Stoke-on-Trent City Council is said to be "gunning heavily" for a relocation, mostly by flaunting its claims as the major sub-regional centre. A submission to the Lyons enquiry has been prepared.
Stoke has a relatively small - but growing - office market and a substantial government relocation would be just the boost its reputation needs. Developer St. Modwen, which already has considerable interests across North Staffordshire, would be best placed to scoop a large requirement, perhaps at the Etruria Valley phase of Festival Park. St. Modwen's latest plans envisage a mixed use office, business and quality industrial development on nearly 24 acres of the former Corus site to provide more than 275,000 sq ft.
More than 125,000 sq ft of office and business space has already been developed, including head offices for Royal Doulton plc and George S Hall, and an office complex for Consignia.
The latest moves have been encouraged by lettings at the park's Canal Arm office scheme, where another 50,000 sq ft is planned. A series of modest deals at rents around £313 per sq ft have confirmed the growing strength of the Stoke office market.
In such a small market a 40, 50 or 60,000 sq ft relocation - let alone anything larger - could seriously disturb the market's balance. Rents could rocket and supply run short.
However, on the strength of recent deals Jacqui Bayliss, director at Lambert Smith Hampton, suggests that a government relocation to Stoke would be unlikely to do much harm.
"We recently let 46,000 sq ft to the Immigration Appeals Service at Gladman's Communication Point scheme in Hanley, and they paid what was a good rent for the area, but it was still only £312 a sq ft which isn't bad compared with Birmingham or London," she explains.
"The government only risks forcing rents up in Stoke if they over-specify their buildings and insist on things like air conditioning. But the evidence from Hanley is that they won't. And even if they did, and rents crept up to £315 a sq ft, that is still low by national standards."
Of course, evidence exists which points the other way and suggests the government could end up driving rental inflation.
"There is no doubt that the government will pay a full price for a building if it finds the right one. They don't always take the least expensive option," says James Ross, associate director at DTZ Debenham Tie Leung, who points to the aforementioned letting at 5 St Phillips Place, Birmingham to Mr Prescott.
But despite that deal the chances of Birmingham winning a major relocation, however desirable, must be counted slim. Undaunted Ross argues that a substantial civil service relocation could do the regional office market a power of good.
"A relocation would be encouraging, especially if it came to Birmingham where we haven't seen any moves to the city from outside the region for the last ten or twelve years. The last were TSB and Vodafone, and they were a long time ago."
Relocation is the name of the game, but it seems that the odds on some locations are much shorter than others.
Been here before
Relocating civil servants out of London isn't a new idea - and it has a poor record of success.
Recently the Flemming Review, the Hardman Review - and now the Lyons Review - have all attempted to find ways to move civil servants out of London and into the regions.
Although the Hardman Review is said to have lead to 10,000 jobs moving outside London and the South East, the historical record is not encouraging. In the nineteenth century Gladstone suggested moving the entire civil service to Manchester - but it stayed put in London.
In the late 1980s and early 90s a spate of relocations were planned - but few reached completion and others pulled out a few years after their move. Two of the biggest disappointments came in the East Midlands.
In October 1990 English Heritage revealed plans to move 650 staff from its headquarters in London's Saville Row to Nottingham. Two sites were considered and the new offices were due to open in 1994 - the Adams warehouse on Stoney Street and a 195,000 sq ft warehouse on Station Street. But English Heirtage had second thoughts. They are still planning a move - but the latest speculation to surface this summer suggests the South West or another London address.
The Prison Service had been expected to move to Derby as part of a £373m relocation. They agreed to occupy a new 450,000-sq ft headquarters building at St Mary's Wharf, paying landowners Hyperion more than £34m for the 14 acre-site.
But in September 1992 the idea was dumped after a spending review. The government ended up paying £39m compensation to Hyperion as compensation for breach of contract.
The Lyons review has already acknowledged that "some past relocations in the public sector were less than successful for various reasons" and says it hopes to avoid repeating earlier mistakes.
The plan
The Lyons report is part of a wider strategy to promote a more flexible regional economy in England. It is part of a package of measures announced by the Chancellor of the Exchequer, Gordon Brown, to tackle weaknesses in the regions. These include changes to regional pay structures, changes to regional development agencies and a new emphasis on regional policy making.
The end result will be a more balanced English economy, with London counting for less and the regions for more.
However, previous efforts at relocating civil servants have rarely been a success. Major relocations of the National Health Service to Leeds and the British Council to Manchester have both been scaled down.
Trade unions and Whitehall watchers suggest the Lyons review will find it hard to identify the 20,000 jobs that the chancellor suggested could be moved from London. So long as relocation is voluntary for most staff, they say finding even 10,000 could be difficult.
Some observers have suggested the review is part of a cynical plan to satisfy Labour backbenchers from the North and Midlands.
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Plans to relocate up to 20,000 civil servants from London could mean massive economic spin-offs for the Midlands. David Thame assesses where the jobs might go in our region
PoThe Midlands is already home to more than 50,000 civil servants, but hopes are high that it could win thousands more once Sir Michael Lyons' review of ways to spread government office jobs around the regions is completed in November.
The Food Standards Agency, the Land Registry, the Office of Fair Trading and the Charity Commission could all be heading in the Midlands' direction along with chunks of Whitehall giants like the department of health and the agriculture ministry.
In total the plan could mean creating up to three million sq ft of new office floorspace.
The Lyons review is the latest in a series of initiatives intended to help the regions, as unveiled by the chancellor Gordon Brown, and economic development chiefs in both the East and West Midlands haven't been slow to spot the opportunity. The East Midlands probably has most to gain. Indeed on the face of it, the region has a good chance of scooping something big. For instance it is owed something after it lost two vast relocation deals in the early 1990s. And the region's share of the civil service has shrunk over the last five years and is now just 4.2 per cent of the total.
Better still, thanks to its relatively small tally of civil service jobs - at just 20,600 civil servants, the region has fewer than any other except Merseyside. As such there is clearly room for expansion without the risk of stimulating a surge in local house prices or wages.
The region's claims also look strong when compared with neighbouring West Midlands where the number of civil service jobs has remained fairly constant at 6.5 per cent of the UK, with around 32,000 civil servants in post.
David Wallace, strategy director at the East Midlands Development Agency, says: "We'll be pointing out that we seem to be under-represented. But we're not alone in having had very few large scale public sector relocations in the last decade. But the major East Midlands cities can accommodate fairly large-scale requirements. We have the sites available and we have some of the lowest office rents in the UK.
"The simple fact is that one of the aims of the Lyons review, as well as doing something for regional economies, was to save money for the civil service. And if they come to the East Midlands they will save money."
However, with the Inland Revenue already employing 2,500 people in Nottingham, and the Driving Standards Agency a few hundred more, the regional capital will be lucky to see more public sector jobs come its way.
Instead insiders say that Leicester is more likely to be the destination if the East Midlands wins a major relocation. Indeed the city's regeneration masterplan, published in July, envisages creating city centre commercial space for around 9,000 new office jobs.
Its centrepiece is a proposal for a 540,000 sq ft office district around the city's station with the aim of boosting the number of high-paid service sector jobs.
So Leicester will have the space. It can also claim relatively low costs. Office rents are around £314 per sq ft, compared with £316 in Coventry, a little more in Nottingham and considerably more in Birmingham. That said, the high rents of Birmingham did little to put off the Office of the Deputy Prime Minister when it recently agreed to pay £326.50 per sq ft for new offices at 5 St Phillips Place, one of Birmingham's premier business addresses.
Besides, new development in Leicester - especially pre-lets from public sector tenants - would be sure to nudge rents up. But they would remain competitive by regional and national standards.
Even so, it could turn out to be a mistake to allow hopes to rise too high. The failed relocations of the Prison Service to Derby and English Heirtage to Nottingham suggest that winning a major government relocation needn't be a guarantee of success.
In the West Midlands expectations are more modest. Birmingham is probably too economically successful to warrant much help. Coventry and Wolverhampton might be in the running, but the real hope is Stoke-on-Trent.
A spokesman for Advantage West Midlands explained: "There's no active lobbying going on, and its too early to say who will get what, but we have heard some very sympathetic noises about the chances of the North Staffordshire area.
"Certainly we all hope that this time the Lyons review is more than just an exercise. And whether it brings the region hundreds or jobs or a few thousand, it will be good for us and very welcome."
Today Stoke-on-Trent City Council is said to be "gunning heavily" for a relocation, mostly by flaunting its claims as the major sub-regional centre. A submission to the Lyons enquiry has been prepared.
Stoke has a relatively small - but growing - office market and a substantial government relocation would be just the boost its reputation needs. Developer St. Modwen, which already has considerable interests across North Staffordshire, would be best placed to scoop a large requirement, perhaps at the Etruria Valley phase of Festival Park. St. Modwen's latest plans envisage a mixed use office, business and quality industrial development on nearly 24 acres of the former Corus site to provide more than 275,000 sq ft.
More than 125,000 sq ft of office and business space has already been developed, including head offices for Royal Doulton plc and George S Hall, and an office complex for Consignia.
The latest moves have been encouraged by lettings at the park's Canal Arm office scheme, where another 50,000 sq ft is planned. A series of modest deals at rents around £313 per sq ft have confirmed the growing strength of the Stoke office market.
In such a small market a 40, 50 or 60,000 sq ft relocation - let alone anything larger - could seriously disturb the market's balance. Rents could rocket and supply run short.
However, on the strength of recent deals Jacqui Bayliss, director at Lambert Smith Hampton, suggests that a government relocation to Stoke would be unlikely to do much harm.
"We recently let 46,000 sq ft to the Immigration Appeals Service at Gladman's Communication Point scheme in Hanley, and they paid what was a good rent for the area, but it was still only £312 a sq ft which isn't bad compared with Birmingham or London," she explains.
"The government only risks forcing rents up in Stoke if they over-specify their buildings and insist on things like air conditioning. But the evidence from Hanley is that they won't. And even if they did, and rents crept up to £315 a sq ft, that is still low by national standards."
Of course, evidence exists which points the other way and suggests the government could end up driving rental inflation.
"There is no doubt that the government will pay a full price for a building if it finds the right one. They don't always take the least expensive option," says James Ross, associate director at DTZ Debenham Tie Leung, who points to the aforementioned letting at 5 St Phillips Place, Birmingham to Mr Prescott.
But despite that deal the chances of Birmingham winning a major relocation, however desirable, must be counted slim. Undaunted Ross argues that a substantial civil service relocation could do the regional office market a power of good.
"A relocation would be encouraging, especially if it came to Birmingham where we haven't seen any moves to the city from outside the region for the last ten or twelve years. The last were TSB and Vodafone, and they were a long time ago."
Relocation is the name of the game, but it seems that the odds on some locations are much shorter than others.
Been here before
Relocating civil servants out of London isn't a new idea - and it has a poor record of success.
Recently the Flemming Review, the Hardman Review - and now the Lyons Review - have all attempted to find ways to move civil servants out of London and into the regions.
Although the Hardman Review is said to have lead to 10,000 jobs moving outside London and the South East, the historical record is not encouraging. In the nineteenth century Gladstone suggested moving the entire civil service to Manchester - but it stayed put in London.
In the late 1980s and early 90s a spate of relocations were planned - but few reached completion and others pulled out a few years after their move. Two of the biggest disappointments came in the East Midlands.
In October 1990 English Heritage revealed plans to move 650 staff from its headquarters in London's Saville Row to Nottingham. Two sites were considered and the new offices were due to open in 1994 - the Adams warehouse on Stoney Street and a 195,000 sq ft warehouse on Station Street. But English Heirtage had second thoughts. They are still planning a move - but the latest speculation to surface this summer suggests the South West or another London address.
The Prison Service had been expected to move to Derby as part of a £373m relocation. They agreed to occupy a new 450,000-sq ft headquarters building at St Mary's Wharf, paying landowners Hyperion more than £34m for the 14 acre-site.
But in September 1992 the idea was dumped after a spending review. The government ended up paying £39m compensation to Hyperion as compensation for breach of contract.
The Lyons review has already acknowledged that "some past relocations in the public sector were less than successful for various reasons" and says it hopes to avoid repeating earlier mistakes.
The plan
The Lyons report is part of a wider strategy to promote a more flexible regional economy in England. It is part of a package of measures announced by the Chancellor of the Exchequer, Gordon Brown, to tackle weaknesses in the regions. These include changes to regional pay structures, changes to regional development agencies and a new emphasis on regional policy making.
The end result will be a more balanced English economy, with London counting for less and the regions for more.
However, previous efforts at relocating civil servants have rarely been a success. Major relocations of the National Health Service to Leeds and the British Council to Manchester have both been scaled down.
Trade unions and Whitehall watchers suggest the Lyons review will find it hard to identify the 20,000 jobs that the chancellor suggested could be moved from London. So long as relocation is voluntary for most staff, they say finding even 10,000 could be difficult.
Some observers have suggested the review is part of a cynical plan to satisfy Labour backbenchers from the North and Midlands.
For the fuller picture,
subscribe to Insider
every month.
Close