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MOD exceptions to spending controls for January to December 2014MOD's exceptions (property) to spending controls July to September 2014

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Tool Ref	Department	Organisation Name	Property name	Basis for expenditure approval	Total Value Approved	Date of approval	Not set	Not set	Not set	Not set
HMG1737	MOD	Not set	GPU-LM-2563 / MOD - Newcastle AFCO, New England House, 20 Ridley Place, Newcastle	Under National Property Controls MOD reduced the size of its leased premises at Ridley Place in 2012. Back Offices were moved to MOD freehold premises reducing the size of the property from 808M? down to 77M? and saving ?96,848 per annum in rent. MOD has built into the lease the flexibility of 3 yearly tenant breaks and so MOD are able to review the requirement to retain the premises again in 2018 The current premises have been reduced down to a small shop unit ? it is not realistic to reduce the size of the premises further Retention of the high street presence in Newcastle to promote MOD career opportunities and to compliment other forms of recruitment promotion is vital to maximise the potential numbers of recruits in the Newcastle area The following delivery options have therefore been considered: 1. Relocate the shop premises to other MOD premises. Discounted. The back offices for the careers office are located in MOD owned premises in Gateshead. There is insufficient footfall and visibility at this location to support relocating the careers office. 2. Consider Civil Estate premises. Discounted. There are no suitable high street premises. 3. Consider Local Authority premises. Discounted. Whilst GPU advises the Local Authority have proposals to refurbish the Civic Centre this would not give MOD the high street presence and the required passing footfall or shop window for advertising to justify relocating the shop. 4. Reduce the demise of the current lease. Discounted. The ground floor shop is small and cannot be split. 5. Lease an alternative property on the open market. Discounted. This would involve leasing another shop of similar size (and rent) and incurring significant dilapidations and fit out costs. With no significant savings in annual rent to offset the costs this would not represent value for money. 6. Terminate the lease and do not have a high street location. Discounted. Without a high street presence, the operational needs of the recruiting process would not be met. 7. Retain existing retail premises. Option chosen. This will retain a high street presence to support recruitment. MOD achieved significant savings in 2012 when the leasehold premises were reduced. The rationale for retaining the shop was approved by GPU in 2012 and remains extant today. The premises should be retained for a further 3 years, at which point MOD will review the requirement for the premises at the next tenant lease break. MOD?s lease comprises 77M? (NIA) ground floor shop unit Rent ?23,500 plus vat Rates payable 2014/15 ?14339 Service Charge 2011 ?1132 plus vat Insurance ? 230 plus vat Total ?29,201 per annum exclusive of VAT N/A ? premises to be retained As existing ? TOTAL ?29,201 per annum exclusive of VAT There is a rent free period of 2 months equivalent to ?3916 if MOD does not operate the tenant break in July 2015 The MOD, Civil Estate and the Local Authority do not have any suitable properties available and taking an alternative property on the open market would not represent value for money. Due to the lack of suitable alternative premises the property options are to retain the existing premises or close the office entirely. Closure is not acceptable to MOD due to the importance of the use of the high street presence in Newcastle to promote careers in the MOD. Without it there would be a significant adverse impact on recruiting numbers	£23,500	01/12/2014	Not set	Not set	Not set	Not set
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