High office costs in central government – major potential for savings
Government agencies have large and expensive offices. The Swedish National Audit Office therefore recommends that the Government steers agencies more clearly towards smaller and less costly office premises. The Government should also consider coordinating agencies’ procurements of office premises.
The Swedish National Audit Office has examined use and procurement of office premises in the central government. The audit shows that government agencies’ average office space is around 22 square metres per employee, which far exceeds that of comparable operations.
The Swedish National Audit Office has not identified any conditions to justify this figure – especially in light of office occupancy rates having declined in recent years, as many central government employees now work remotely to a large extent.
“Government agencies essentially base their choice of premises on their financial frameworks rather than their operational needs. Since appropriations are increased in relation to rental costs, agencies have little incentive to improve efficiency,” says Auditor General Christina Gellerbrant Hagberg.
The total annual cost of office use for government agencies is estimated at SEK 10–15 billion. The Swedish National Audit Office estimates that costs could be cut by SEK 2.5–4 billion if office space per employee decreased from 22 to 15 square metres and government agencies used offices in less central locations. Savings could mainly be achieved through smaller office space which, in most cases, would be reasonable given the low occupancy rate.
“While this is a rough estimate with some margin of error, it demonstrates that it is possible to reduce central government costs by several billion Swedish kronor annually through more efficient office use,” says Krister Jensevik, project leader for the audit.
The audit also shows that small government agencies in particular have high procurement costs, for example when signing a new lease. On average, these costs equal one year’s rental expense. The Swedish National Audit Office therefore considers that it may be possible to reduce costs through coordinated procurement processes.
“This requires clearer guidance from the Government, which should develop a strategy for central government office use and consider coordinating office procurement for agencies in the same locality,” says Auditor General Christina Gellerbrant Hagberg.
The Swedish National Audit Office also notes that government agencies that currently streamline their office use can keep the funds they save, meaning that potential savings are not allocated in line with policy prioritisation. This risks leading to inefficient resource management for the central government as a whole.
“Overall, it is a matter of substantial amounts that could be put to better use elsewhere. The Government should therefore consider more active governance in this area to enable conscious policy prioritisation,” says Auditor General Christina Gellerbrant Hagberg.
Recommendations
The Swedish National Audit Office makes the following recommendations to the Government.
- Implement a strategy for office use in the central government that clarifies guidelines for office space and location.
- Consider complementing current budgetary control with active decisions to ensure compliance with the strategy and enable conscious policy prioritisation.
- Consider coordinated procurement of office space for government agencies in the same locality.