Transforming public sector estates for financial sustainability

In response, the Chancellor has pledged to find £5.5bn in savings this year and £8.1bn next year, stating that difficult decisions will need to be made. Therefore, effective management and optimisation of the public sector estate, including government buildings, social housing, healthcare facilities, schools, defence properties, social care buildings and land, is not just a priority but essential for long-term, financial sustainability. By reducing costs and maximising the value of public assets, estate optimisation creates the financial bandwidth needed to protect and sustain the vital services that communities rely on.

The proper maintenance and efficient use of buildings and land reduces operational costs, helps estates meet environmental and sustainability targets, and mitigates health and safety risks. It also increases asset value, improving balance sheets and enabling financial flexibility through the leasing, renting or selling of such assets. This can provide additional funds for other critical public services.

However, while these benefits are well publicised, putting theory into practice can be tough.

The lay of the land

One significant challenge is the sheer size and scope of the UK’s public sector estate. In 2022-2023 the number of built and land assets reached 141,600 and 23,100 respectively. Another key issue is cost. Running costs have increased by 3.9% from 2021-2022 to £22bn, primarily due to a rise in energy costs and the impact of inflation.

Many public buildings and facilities are ageing and require significant investment to maintain or upgrade. A large number of built assets are underutilised, outdated or incapable of meeting current needs or environmental targets.

According to an investigation by The Guardian, more than 1.5 million children are learning in dilapidated school buildings, with years of underinvestment leaving England’s public infrastructure in a “crumbling state”. The Health Foundation reports that the maintenance backlog of the NHS has more than doubled from £6.4bn in 2015-2016 to £13.8bn in 2023-2024, with the fastest fastest-growing backlog in the highest-risk category - urgent repairs needed to prevent catastrophic failures or service disruptions. Since 2021-2022, the backlog has grown by £2.1bn, further exacerbated by a £707m reduction in funding.

Government action and support

The good news is that the government has recognised these challenges and introduced policy changes to support better estate management.

• Spending on public services has substantially increased for 2024-2025 and 2025-2026, with allocations of £23bn and £39bn respectively. In real terms, departmental spending will rise by 3.5% in 2024-2025 and 4.3% in 2025-2026.
• The government has avoided making cuts to unprotected departments by increasing the overall spending envelope, with justice and local government being the largest beneficiaries.
• Capital spending in public services has increased for 2025-2026, marking a step towards addressing decades of underinvestment in essential services such as the NHS, schools, and prisons. Over time, this should facilitate better maintenance of existing assets, as well as the development of new buildings and infrastructure.

A creative approach to estate optimisation

While no two public sector entities are ever the same, there are a number of useful best practices that can enhance estate management efficiency and cost-effectiveness:

1. Regular maintenance and renovation 
   Substantial investment, creative thinking and in-depth commercial awareness are required to repurpose underperforming assets, secure essential funding and ensure every pound spent delivers maximum value – even in the face of financial constraints.
2. Smart building technology and data analytics 
   Cutting edge technology and data-driven insights play an important role in optimising space usage, reducing energy consumption, and achieving net zero goals through energy-efficient processes and sustainable practices.
3. Public-private partnerships (PPPs) 
   Public sector organisations commonly turn to private sector partnerships to access the necessary skills, funding, and expertise. These collaborations bring in strategic knowledge, specialist capabilities, and extensive networks to deliver large-scale solutions while ensuring compliance with safety, building, and environmental standards. Notable examples include the UK’s Private Finance Initiative (PFI) in healthcare or major infrastructure projects such as Crossrail.
4. Selling or repurposing underutilised properties 
   The challenge for the public sector is to ensure that all land and property for which it is responsible delivers value for money, real community benefits and fulfils both current and projected demands. Amid these pressures, strategic estate management not only improves public spaces but also creates sustainable, future-ready places that deliver long-term value.
5. Maximising operational efficiency for end-to-end success
   Adopting or developing an asset management framework helps to establish clear objectives, define roles and responsibilities, improve decision-making, and enhance organisational performance across the estate lifecycle.

Future-proofing public estates

Public sector estates are at a turning point. The choices made today will define their efficiency, sustainability and financial impact for years to come. Each sector faces unique pressures, but strategic estate management can unlock opportunities for long-term resilience and smarter public service delivery:

• Education: The sector urgently requires expertise in sustainable building practices, compliance with new health and safety regulations, and digital transformation. The global EdTech market, projected to grow to £252bn by 2027, will drive demand for smart building management systems and interactive learning environments.
• Social housing: As the demand for affordable homes grows, the sector must address tenant concerns and improve living standards. Sustainability and energy efficiency will remain high priorities, particularly as climate change continues to influence policy and investment decisions.
• Healthcare: NHS England is developing a nationally agreed set of infrastructure priorities, shaped by local needs. This approach aims to ensure that hospital estates and other healthcare facilities are modern, efficient, and capable of meeting future demands.
• Defence: The Strategy for Defence Infrastructure (SDI) is focused on improving accommodation for service personnel, enhancing workplace quality, and investing in the necessary skills to support long-term sector infrastructure needs.

Whatever the specific requirements, strategic estate management is essential for ensuring safe, sustainable, and financially resilient public spaces – ensuring they serve communities for generations to come.

Contact us today to learn how we can help you to optimise your estates for long-term success and financial sustainability.