01 July 2005
Housing company blames councils for lacklustre performance of PFI
One of the few contractors to show interest in the Private Finance Initiative in housing has blamed the government and local authorities for its limited success.
Only five of the eight councils that began pathfinder schemes in the late 1990s have signed contracts to refurbish homes using the PFI and two have dropped out.
Jeffrey Adams, group chief executive of United House, which specialises in refurbishment and regeneration, said it was not in its interest to be the sole bidder for PFI projects simply because the council was under extra pressure to demonstrate value for money.
Adams told a seminar at the Chartered Institute of Housing conference in Harrogate that the London Borough of Camden was hoping to resurrect a scheme that was declared too expensive by the government earlier this year, He said local authorities required people who could 'push the boundaries' and make the PFI work.
'Each local authority was approaching and resourcing their PFI [project] differently, but it's difficult to tell a potential client how they should procure you,' he said. 'Each bid for [PFI] credits was based on flawed business planning. They were based on scant stock condition surveys and underestimated the extent of the work.'
Adams also blamed the Office of the Deputy Prime Minister for 'moving the goalposts' after the pathfinders were under way and introducing standard contracts. But he insisted there was still a 'real appetite' for the PFI in housing.
Neil McDonald, the ODPM's director of housing, said ministers were looking at new ways to streamline the process, possibly by using joint venture companies, as in the NHS. 'We are seeing increased interest from registered social landlords, contractors and funders.'
Later in the conference, housing minister Yvette Cooper announced that seven new housing PFI schemes had been approved: three for the refurbishment of council homes and four that will lead to the building of nearly 1,500 properties, to be owned by registered social landlords or other parties.
In addition to the PFI schemes, worth about £500m, Cooper also revealed the names of ten more councils that plan to set up arm's-length management organisations and 11 wishing to transfer their stock to a housing association. She told delegates £1.8bn would be raised from the private sector.
RSLs praised for exceeding housebuilding target
Social landlords are building and managing homes more efficiently but must take further steps to reduce their overheads, delegates were told.
Housing Corporation chief executive Jon Rouse paid tribute to registered social landlords for building 1,600 more homes than forecast in 2004/05. Efficiency gains resulting from the corporation's policy of focusing on large RSLs, highlighted in a new CIH study, led to 28,600 homes being built instead of the expected 27,000.
Rouse said that the corporation had asked the Office of the Deputy Prime Minister to let it give high-performing RSLs and developers grants over more than two years, and predicted that competition would generate extra savings.
But there was no room for complacency. 'If we are to meet the government's targets on homelessness and decent homes across all social housing by 2010, we have to seriously up the pace.'
Rouse unveiled details of a new value-for-grant comparator, developed with the National Audit Office, which will test bidders' efficiency. The corporation is also launching a Beacon scheme for housing associations that show innovation in procurement and homelessness.
RSLs with only a few homes should consider transferring them to other landlords, he added. 'Too many housing associations are worried about how much stock they own and manage, rather than answering questions about how the most efficient and effective services can be provided to tenants.'
Councils with Almos 'expect to save £45m'
Councils whose homes are managed by arm's-length companies are twice as likely to make efficiency gains this year as those without, research reveals.
An analysis of annual efficiency statements drawn up by councils shows that 70% of those with housing expect to make savings worth more than £68m in 2005/06. Almost half of this will come through better procurement and partnering.
But whereas councils with Almos are projecting total gains in housing of more than £45m, those that manage their stock directly are forecasting gains of only just over £23m.
This contrast is more remarkable because Almos manage only one third of the 2.3 million council homes that have not been transferred to housing associations.
Mike Owen, executive director of Carrick Homes in Cornwall, told a seminar at the conference: 'Tenants are not just getting a good service from Almos. They are getting value for money as well.'
Owen, part of an Office of the Deputy Prime Minister review group, said the review of the future of Almos was unlikely to be completed before the autumn.
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