DCLG scraps 13 PFI housing projects worth £1.9bn

22 Nov 10
The Department for Communities and Local Government has withdrawn £1.9bn of funding from 13 planned Private Finance Initiative housing projects, it was announced today
By David Williams

22 November 2010

The Department for Communities and Local Government has withdrawn £1.9bn of funding from 13 planned Private Finance Initiative housing projects, it was announced today.

Plans for the ‘pipeline’ schemes were still being developed and none had had their business cases approved by the DCLG and Treasury. The cull accounts for all the potential funding under round six of the department’s housing PFI scheme.

Each project would have been led by a local authority, many in partnership with housing associations. Most involved regenerating or replacing existing housing estates.

The department and the Homes and Communities Agency have written to local authorities, explaining the development. The letter adds that the DCLG might consider business cases later in the next Comprehensive Spending Review period, if new resources become available.

More advanced housing PFI schemes will continue to be supported. They consist of 25 already under contract and 13 currently at procurement stage, worth £1.2bn. However, the HCA said these would be subject to a further ‘rigorous review’ for value for money. HCA chief executive Pat Ritchie welcomed the news that not all housing PFI support had been scrapped. ‘I am pleased that, despite having to make some tough decisions following the spending review, the DCLG is able to commit support for these housing PFI schemes,’ she said.

‘At the HCA we will now concentrate on helping local authorities maximise the impact of available funding… we will also work with those councils which have received disappointing news today, to look at any ways in which their objectives might be supported through a non-PFI route.’

Phillip Woolley, government infrastructure advisory partner at accountancy firm Grant Thornton, said the news would be disappointing for all councils preparing PFI business cases.

‘We would encourage them to look at joint venture structures and the new funding mechanisms being put forward by the Government to assess whether they offer a viable alternative to PFI,’ he said.

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