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Departments: Property

Volume 461: debated on Thursday 14 June 2007

To ask the Secretary of State for Work and Pensions (1) how much was raised from the sale of his Department’s property in each of the last five years; (139305)

(2) what properties the Department (a) owned and (b) rented in each of the last five years;

(3) what recent estimate has been made of the value of his Department's property portfolio.

The DWP estate (not including properties held by sponsored bodies) has been sold (freehold, freehold and long leasehold interests) or transferred (short leasehold interests) through its PFI Contract known as PRIME to Land Securities Trillium (LST). The proceeds were released to HM Treasury in April 1998 (for the original DSS estate) and further in December 2003 when PRIME was expanded to include the former Employment Service (ES) estate.

In 2003, the Department and LST agreed a vacant possession value of £140 million for the freehold and valuable leaseholds covered within the expanded PRIME Contract. The Department decided to receive this amount split into an up-front payment of £100 million after seeking variant bids and a reduction in the annual Unitary Charge over the life of the contract, equivalent in present value terms to the £40 million balance.

Following the expansion of the PRIME Contract, DWP retained two properties which for commercial reasons could not be transferred within the expansion. These two properties were subsequently sold in 2005-06 for £5.075 million.

Despite having already sold its property assets, DWP retains some ‘claw back’ rights in the form of what is called ‘development gain’. Under this mechanism, if LST sells a property vacated after April 1998 for more than the price it paid at the start of the contract, then after the sale costs are deducted, DWP receives 50 per cent. of the uplift in value with LST. This applies to market driven value increase as well as LST’s activities to enhance value such as obtaining change of planning use. For 2006-07, DWP will receive £2.8 million.