I wish good afternoon to the Chairman and members of the committee. I am delighted to take up the invitation to talk to the committee members about the Government's decentralisation programme. The chairman of the decentralisation implementation committee, Mr. Phil Flynn, came here on 6 October and gave the committee a detailed update on the work of the group to date. On the same date the committee received a presentation on the position regarding the priority applications to the central applications facility from the chief executive of what was then the Civil Service Commission, Mr. Bryan Andrews.
I do not intend to go over that ground again but I reiterate my view that the level of applications to the central applications facility represents a very healthy base from which to drive forward the overall implementation of the programme. I accept that there are distinct differences in the level of applications from the Civil Service and the State agencies. Mr. Flynn sketched out for the committee why this difference in approach may arise and I do not propose to go over that ground again.
The programme was first mooted by the Minister for Finance in his Budget Statement in December 1999. This announcement was made in the light of the very positive experience the Government, staff and customers of the public service had of the previous phases of the decentralisation programme. Following the Government's announcement at the end of 1999 the Minister for Finance heard from a very wide spectrum of opinion ranging from trade unions and individuals to groups representing the towns seeking the relocation of staff to their areas. In all, representations were received on behalf of over 130 towns across the country, seeking the decentralisation of either sections or whole Departments to their areas. This response in itself showed a groundswell of support for the idea from all corners of the country. As well as the submissions, the Department of Finance faced a constant stream of parliamentary questions and representations from local representatives anxious for news of commencement of the programme.
The Government could not be accused of rushing to announce the programme. A long period of deliberation took place before the Minister made his announcement of the Government's programme on 3 December 2003. There were two major elements to the decision. The first related to the selection of the Department and agencies to be relocated. As announced on budget day, in selecting these, the Government was aware that customer services should not be affected by decentralisation. In addition, there was a need to look at the core business of the agency and the location of its customer base. Finally there was a need to ensure that the units transferring to each location would be of sufficient size to provide career opportunities for staff either at that location or in another organisation within a reasonable distance.
The locations were chosen on the basis of a number of criteria. These included the need to achieve a fit with the national spatial strategy and the location of existing decentralised offices. As stated earlier, it is preferable to cluster a Department's offices within a single region. From a wider viewpoint, there is a recognition of the importance of respecting the scale and character of locations in terms of their capacity to absorb the number of new jobs involved. The existence of good transport links and the general infrastructural capacity was also an issue in the Government's deliberations.
The Government has started this process, which I am satisfied is good for the whole country. However, it should not end there. I am hopeful that the private sector in its location and investment decisions will replicate what we have done and decide to invest in balanced regional development by locating its operations in the provinces. The Government has acted to facilitate the private sector in this regard, not only by its relocation decision but also by its actions under the national development plan. The constantly improved nature of infrastructure across the country means that the private sector can decide to locate in all provincial areas with total confidence.
The decentralised programme, as announced in the 2003 Budget Statement, involves the relocation of some 10,500 civil and public servants to 56 locations throughout the country. The Office of Public Works has been given primary responsibility for delivering the property aspects of the programme. These include the sourcing of property solutions at the various locations concerned, which mainly involves the acquisition of development sites; the procurement of accommodation solutions to the office and facility requirements of the Departments and agencies involved; the rationalisation and consolidation of the use of Dublin office space, both owned and leased, following decentralisation; and the management of the disposal of surplus Dublin office accommodation.
In late December 2003, the OPW placed advertisements in the national press seeking expressions of interest from those willing to provide suitable good quality modern offices, either existing or under construction, and suitable sites, with planning permission or appropriate planning zoning, which would facilitate the construction of new office buildings. Following the requests for property proposals, the Office of Public Works received in excess of 700 proposed property solutions in respect of the decentralisation programme scheduled for the various locations around the country. Detailed evaluation of these proposals has been undertaken and the Office of Public Works has made significant progress in sourcing possible sites at the locations concerned.
The evaluation process involves the following three-strand approach: an architectural assessment by OPW architects; a valuation process undertaken by both OPW and private sector valuers; and an assessment by reference to the business needs and staff requirements of each decentralising Department or agency. To date, eight property solutions have been agreed in principle and a further 20 are at an advanced stage in the acquisition process. The balance of the sites will be pursued during the coming months.
A broad range of factors will influence the cost of acquiring sites and these include the following: proximity of the site to commercial, leisure and educational facilities; proximity to public transport; access to and from a good quality road network; and zoning for development. The prevailing property market conditions in each geographical area will also have a significant bearing on the cost of acquiring sites. In the circumstances and taking into account that the acquisition process is still in progress, it is not possible at this stage to provide a precise estimate of the cost of the site acquisition programme. However, for working purposes only, an indicative figure of between €75 million and €100 million is being used by the OPW.
The next stage in the decentralisation process will focus on the construction of office accommodation on the sites being procured by OPW. As members are aware, the implementation committee has recommended that, where appropriate, a design, build, fit-out, maintain and finance approach should be considered as the preferred mechanism for procuring the construction of office accommodation. This does not rule out other procurement options and, in some cases, a design-build approach may be utilised.
It is estimated that the construction of circa 210,000 sq. m. of office space will be required to accommodate the total staff numbers involved in the programme. Based on current cost indicators and the assumption that current space norms are adhered to, the indicative broad cost estimate for construction and fit-out could be of the order of €815 million. This figure excludes the cost of information and communication technology and specialised equipment requirements.
The implementation committee will be reporting to the Cabinet sub-committee within the next few weeks with its views on the sequencing and timing of the relocation of Departments and offices, having regard to the CAF analysis, the business implications and the property solutions. The precise sequencing of moves will have an impact on how programme costs will develop over the coming years and the overall estimate for the cost of construction may need to be reviewed when this sequencing issue has been finalised. In the final analysis, a firmer scale of costs for the decentralisation programme will only emerge on foot of actual construction cost proposals being received from the market.
The decentralisation programme will have a considerable impact on the existing Dublin portfolio of Government occupied properties. As already stated, it is likely that in excess of 200,000 sq. m. of office accommodation will be required in the regions for staff moving out of Dublin. As a consequence, a broadly equivalent amount of space will no longer be required in the Dublin area and will fall to be disposed of. The space to be disposed of will consist of both leased and State-owned properties and the precise mix has yet to be established. However, at this stage, it is likely that several prominent State-owned properties in the city will fall to be sold. The process of disposing of State properties has already begun and so far this year some €85 million in proceeds have been secured from property sales.
It is ultimately estimated that upwards of €400 million can be generated from the sell off of surplus State properties post-decentralisation. This is very much a broad estimate and the precise figure will depend significantly on the prevailing property market conditions applying at the time of the property sales involved. A managed approach will be taken in scheduling the Dublin property disposals to avoid flooding of the property market, which, if it were to happen, could prove detrimental to the disposal values realised. Apart from the sell off of surplus State-owned properties, the disposal programme also will involve the early surrender of a number of leased properties which are currently occupied by Government Departments and offices earmarked for decentralisation.
It is clear that the delivery of the property element of the decentralisation programme amounts to a major challenge for the OPW. It will require a concentrated effort from all areas of the OPW in the months and years ahead. I am confident that this effort will be forthcoming and that progress to date, which has been significant, will be maintained.
