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withdrawn £1.9bn of funding from 13 planned Private Finance Initiative housing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.
