25 June 2010
Councils’ attempts to use the Private Finance Initiative to build houses have suffered from massive cost over-runs and delays, the National Audit Office said today. It called for an urgent evaluation of whether PFI projects provide value for money.
Of the 25 projects signed to date, 21 had experienced cost increases, with 12 costing more than double the original projection, according to the NAO report.
One early project in Leeds cost three times more than originally estimated. The most expensive project, in Islington, cost more than £160m, but was originally expected to cost less than £60m.
Sign-off of projects was delayed by two years and six months on average and the longest delay was five years, the NAO said.
There had only been a limited evaluation of alternative funding sources to give useful information about whether PFI provided value for money, the report added.
Despite the delays and inflated costs, however, tenant satisfaction surveys showed that projects were of high quality.
NAO head Amyas Morse said: ‘The Department for Communities and Local Government has pursued the PFI funding route for improving housing stock with only limited evaluation of the value for money of the programme. It should now carry out such an evaluation.
‘The department should assess, as a matter of priority, whether its current and planned PFI projects are delivering value for money. It should at the same time assess all its past projects. This assessment should be based on hard numbers as well as qualitative factors.’
