DCLG orders PFI housing cost review

A review of building costs on privately-financed, new-build social housing schemes has been ordered by the Department of Communities and Local Government (DCLG) after the building costs on seven PFI schemes awaiting approval were found to be significantly higher than on traditionally funded schemes.

The seven schemes (see Insight, page 14), worth an estimated £700m in total, were benchmarked against traditional new-build schemes funded through Housing Corporation capital grants. The cost differences were so marked that the DCLG has ordered a moratorium on all new-build PFI social housing schemes while it investigates why the costs are so high.

The department has warned that the future of the new build PFI programme is dependent on successfully reducing the costs of the seven schemes.