History for sale, one careful owner

JOHN RENTOUL

Political Correspondent

The Admiralty Arch may have been taken off the market even before it was put on, and the sale of Old Admiralty - which provoked apoplexy among the Royal Navy hierarchy - may never have been contemplated, but the "For Sale" sign has gone up over large slices of Whitehall.

Not only is much of the rest of the Ministry of Defence's real estate up for sale, but this month also sees the close of bids for Her Majesty's Treasury. The sale of the Treasury building, in Great George Street, prompts responses as incredulous as Admiral of the Fleet Lord Hill-Norton's reaction to the possible sale of Admiralty Arch.

Lord Hill-Norton, a former Chief of Defence Staff, called Michael Portillo, the Secretary of State for Defence, a "little creep", and John Major seized the chance to appear to slap down the chief hate figure for potential defectors among moderate Conservative MPs. The Prime Minister "made his views known" and a statement was issued on Friday saying the Government had "no intention" of selling the Arch.

Of the Treasury sale, a Labour MP said: "They're not just selling the family silver, they're selling the box it's kept in." The two short-listed bidders have until the end of this month to submit their tenders for the prime site, overlooking the Houses of Parliament. They will buy the listed building, refurbish it to modern office standards, and then lease part of it back to the Treasury. The surplus will be let commercially. A Labour Party official commented acidly: "That's what the Tories said was an outrage when Labour councils did it, isn't it? They're selling it off and then leasing it back."

The Ministry of Defence, meanwhile, has a huge amount of surplus property all over central London which it has found it difficult to sell because the property market has been flat. A series of prime sites, including two in Northumberland Avenue, off Trafalgar Square, Adastral and Lacon Houses in Theobalds Road, Holborn, and the Empress State Building in Earl's Court, all stand empty, awaiting sale. But the Ministry has recently sold six properties in Holborn, Oxford Street and Fleet Street.

The old Department of Health and Social Security building, Alexander Fleming House, at Elephant and Castle, south of the Thames, was returned to its landlord a week ago. Evil monstrosity or award-winning example of modern architecture, the Government is glad to have it off its books.

The driving force behind the sales, which are transforming the physical appearance of central government, is a revolutionary change which comes into effect in three months' time. In April, Whitehall departments become responsible for their own property. Previously, office space was run for them by the Property Services Agency, an inefficient branch of the Department of the Environment, which took over direct control some years ago.

This has focused attention on the 7 million square feet of empty office space, equivalent to two Canary Wharf towers, which costs the taxpayer at least pounds 100m a year.

The other big factor behind the unprecedented game of "musical buildings" which government departments have played in recent years was the decision to demolish the three giant towers on Marsham Street, which blight the skyline around Westminster Abbey. As a result, the Department of Transport has already moved to a brand new leasehold block across the road, while the Department of Environment itself will eventually move into Ashdown House and Eland House, government offices yet to be refurbished in Victoria Street.

When departments have to pay the full cost of their premises, many more may try to sell off historic parts of the nation's heritage and decamp into ordinary leasehold offices - as well as looking again at how many civil servants really need to be in SW1. Docklands in east London, having accommodated most of Fleet Street, could take some of Whitehall on board too.

But resistance to the sale of "heritage" buildings to the private sector could act as a brake. Although the Department of the Environment, acting for the Ministry of Defence, denied that there were plans to sell the Old Admiralty buildings at the top of Whitehall, the idea appeared to have been floated alongside the "review of options" for the Admiralty Arch, which connects Trafalgar Square to the Mall and has the best view of Buckingham Palace. But retired brass splutterings about "the room in which the Napoleonic wars were planned" were enough to rule it out of court. And the Government has run into trouble selling the Royal Naval College in Greenwich, with the University of Greenwich the only serious bidder.

It is, of course, grossly unfair that Michael Portillo should carry the blame for the chill wind of market disciplines blowing down Whitehall. Admiralty Arch does not belong to the MoD now, and the new rules of departmental accounting were actually announced two years ago by William Waldegrave, from the opposite wing of the Tory party. NOTE : GRAPHICS OMITTED