PFI housing: Government urged to restart programme

Leading housing firm United House has called on the Government to restart its long delayed PFI housing programme.

The call follows the publication of a Government review last month which found the capital build costs of new-build PFI housing schemes to be "acceptable".

The review, by the Communities and Local Government department (CLG), was triggered last year after an earlier review raised concerns about the building costs of PFI new build housing schemes compared to grant funded schemes.

The findings triggered a moratorium on new build PFI schemes with seven PFI new build housing schemes worth £600m put on hold while the review looked at the schemes’ capital build costs.

This latest review found only two PFI schemes had costs "unlikely to be acceptable." The other five were either at or below the average cost of grant funded schemes, with only one more expensive. However this was deemed "acceptable" as it was within a 10% range of the grant funded average, which was added to cover the cost of risk transfer.

Three of the seven schemes have already been given the green light following the review. These are care housing schemes in Cheshire, Stoke-on-Trent and Kent, worth a combined £300m.

However three other schemes submitted by Brent Housing Partnership, the Vale of White Horse District Council in Oxfordshire, and East Sussex County Council dropped out of the bidding during the review. A fourth scheme, submitted by Birmingham City Council, was rejected by CLG.

United House welcomed the review’s findings. Andrew Mickleburgh, United House Solutions managing director, told CJ: "This is good news for PFI. It acknowledges that PFI costs are driven by risk transfer and life cycle maintenance costs and implies by its conclusion that PFI is a good method of delivering housing."

However Mickleburgh warned against local authorities using the 10% marker for additional PFI costs. "It is not unreasonable but the danger is local authorities may stick rigidly to that figure."

He also called on the Government to release PFI new build housing schemes on the back of the findings. "If the Government is to meet the new housing targets set out in its Green Paper it needs to utilize every resource in the industry."

The seven schemes in the PFI housing review were:

• Birmingham City Council - 150 extra care units, and 30 units for private sale/shared ownership.
• London Borough of Brent - 200 units of new social housing.
• Cheshire County Council - 200 units of extra care housing for the elderly.
• East Sussex County Council - up to 450 general needs/extra care units, and 80 homes for sale/shared ownership.
• Kent County Council - 174 units of extra care housing for a diverse client range.
• Stoke on Trent City Council - 300 units of extra care accommodation.
• Vale of White Horse District Council - 500 new build social rented units.

A third CLG review will now look at the procurement costs of the Cheshire, Stoke on Trent and Kent schemes as they proceed.