Watchdog condemns “silo mentality” of States property management

Thursday 21 June 2018

A States watchdog has strongly criticised the “silo mentality” of Jersey Property Holdings, the department responsible for the States’ £1billion property portfolio.

Financial watchdog, Comptroller & Auditor General (C&AG) Karen McConnell, has published a review of how the States manage their property portfolio which reveals that over ten years after the establishment of JPH, the department has only achieved one of its main objectives.

For Ms McConnell, various findings about the inefficiency of the department in combination with the JPH’s failure to deliver on other objectives contribute to what she describes as “the silo mentality to which I have referred in many of my reports.”

The report covers all 500 of States-owned operational properties, a portfolio valued at over £1 billion, excluding those held by Andium Homes, Ports of Jersey and the States of Jersey Development Company (SoJDC).

Pictured: The Comptroller & Auditor General, Karen McConnell has compiled a report highlighting the States' ineffectual management of their £1 billion property portfolio.

Ironically, JPH, a States department with an annual maintenance budget of close to £12 million, was formed in 2005 after several reviews identified shortcomings within States’ management of land and property.

This report follows recent public criticism of JPH after the department controversially put up an area of coastal farmland up for sale. Last month, the JPH was also in the firing line from the States Complaints Board whose damning report accused the government department of failing to act “fairly, promptly and transparently” in the case of two alleged Foreshore encroachments when two coastal homeowners tried to sell their homes.

Criticism of JPH continues as Ms McConnell says: “There is no single reason why the benefits expected from changing the way in which property was managed have not been achieved” since the establishment of the JPH in 2005.

However, the C&AG’s latest report shows that the JPH has failed to accomplish the majority of its main objectives, including the development of a property strategy.

Pictured: Alan Luce, who was forced to pay around £30,000 when he tried to sell his coastal home, Roche de la Mer, despite not having created the encroachments himself.

In her report, Ms McConnell acknowledges that “the inherent challenges in establishing a corporate property function with a wide remit in a highly departmental organisation cannot be underestimated.” Nevertheless, the report details several fundamental flaws in the way that the States currently manage their property, which will require both “structural change” and a “collective commitment to the changed way of working” to resolve.

For example, the report focuses on the JPH’s failure to implement a property strategy, despite setting this out as one of its main objectives in 2005 as well as the C&AG warning in 2013 that the absence of such a strategy “increased the risk of ineffective use of the property resources of the States”.

Further to this, in her most recent report, the C&AG said: “the absence of a property strategy means that there was no explicit mechanism for translating the property-related objectives in the States’ Strategic Plan into deliverables.”

The report also highlights several other concerning findings, including the implication that the JPH team do not all possess the relevant skills or experience to work in the department. The Report reads: “The Head of JPH holds a master’s degree in real estate and is supported by a team some of whom hold professional or academic qualifications and some of whom have relevant experience”.

Pictured: The typical requirements of an effective property strategy, according to Ms McConnell's report.

The C&AG has made a series of recommendations which prioritise the development and successful implementation of a property strategy as well as the creation of ‘comprehensive objectives’ for States property management and various mechanisms which will allow for the successful attainment of these objectives.

Commenting on how her recommendations have been received, the C&AG said: "My findings and recommendations have been positively received by officers and I anticipate prompt and effective changes in this area as the States modernise.”

Commenting on the critical report, a States spokesperson has said: "We welcome the report's assertion that the new organisational structure proposed by the Chief Executive will see the States of Jersey benefitting from a more corporate management of property.

"It will enable us to consider the most efficient use of the public’s property portfolio when setting strategic targets, and a new property management system will enable us analyse the property we own and how it is used."