26 September 2008
Seven councils that set up the first private finance initiative schemes in housing have saved the Treasury about £47m.
Research carried out for the Department for Communities and Local Government shows that the contracts cost £598m. Had the same work been funded through normal public expenditure, the estimated bill would have been £645m.
The London Borough of Newham saved nearly £16m when it paid a private firm £71m to refurbish 1,200 homes. But a plan by Leeds to improve 1,500 homes cost £112m — a saving of just £1m. Reading and Sandwell both reported savings of 5%.
The report, published on September 18, says the PFI allows councils to embark on projects sooner, as well as potentially saving money. But only 58% of residents in the local authorities involved had heard of the initiative.
A wide range of services, including rent collection and repairs, are now in private hands. 'The level of financial success will be judged on whether the schemes are delivered to standard,' says the report.'
Earlier this year, the DCLG launched a sixth round of housing PFI schemes, worth £1.87bn.