(Updates with efforts to reduce real estate spending starting in third paragraph.)
Nov. 2 (Bloomberg) -- The U.K. saved 90 million pounds ($144 million) over the last 16 months by letting leases expire and making other real-estate cuts, according to the government’s internal business advisor.
“This figure will double by the end of the fiscal year,” Stephen Lovegrove, chief executive officer of the Shareholder Executive, said at a conference in London today. His department advises ministries on private businesses and oversees more the 20 government businesses.
The savings come from a drive by Prime Minister David Cameron’s coalition government to reduce the 25 billion-pound annual cost of owning or renting real estate. Last year, the government stopped automatic lease renewals for rented buildings, imposed controls on new property acquisitions and introduced higher standards for workspace and refurbished space.
Facing a record peacetime deficit, the government is seeking to lower the annual cost of running its 370 billion- pound estate by about 5 billion pounds, or 20 percent. The U.K. government is both the country’s largest landowner and the biggest tenant.
“It’s a huge undertaking - it’s necessary and overdue,” Lovegrove said at the Public Property Summit. He added that the government is “cautious” about selling buildings outside London because of weak property markets.
Better management of government real estate should yield 100 million pounds of additional annual savings starting in fiscal 2013 onwards, Neil Warsop, chief operating officer of the Government Property Unit, said at the conference.
--Editors: Jeffrey St.Onge, Ross Larsen.
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