Rundown housing estates offered the PFI treatment

11 Nov 99
A major boost to the Private Finance Initiative in housing came this week with the government's announcement of four PFI schemes, totalling £185m, for the refurbishment of council houses.

12 November 1999

The four pathfinder schemes were part of the latest tranche of local government PFI projects. They cover rundown housing estates in Manchester (£90m), Leeds (£45m), Sandwell (£28m) and North East Derbyshire (£22m)

'This is very significant. It is a major step forward following a two-year campaign that we have been waging to open up PFI to social housing,' said Peter Fanning, the chief executive of the 4Ps, the body charged with promoting PFI in local government.

It is expected that PFI will now begin to take off in housing. Five other schemes are already in progress (two with signed contracts) covering refurbishment and the building of new council homes.

The four successful housing departments were part of a group of eight earmarked by the government as PFI pioneers. It is likely that the next tranche of schemes will include the four authorities which were unsuccessful this time.

All eight have worked together to share information and help reduce the overall procurement costs. 'It shows that with the right encouragement local authorities do work very effectively together,' said Fanning.

Refurbishment is an obvious outlet for private finance. It appears to be popular with housing departments and with residents, who prefer it to the alternative of transferring the stock to housing associations.

'The palatable thing about the PFI option is that the stock stays in local authority ownership. We will be retaining lots of functions – the people management, the tenancy management and the collection of arrears,' said Paul Langford, head of finance for Leeds housing department.

He said that where there was guaranteed long-term demand and a sufficient income stream, PFI would be likely to be used on other housing estates in the city.

'We have got something like a £25bn gap in terms of a backlog of housing investment across the country. Anything that will lever in finance from other sources has got to be good,' he added.

  • The government's emphasis on regenerating poor neighbourhoods was also boosted with the announcement that a further 22 areas are to be included in the New Deal for Communities. These join the 17 existing areas which will have access to funding of £800m over three years.


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