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Housing PFI schemes worth £1.9bn scrapped

Funding for 13 housing PFI schemes worth £1.9 billion has been withdrawn by the Department for Communities and Local Government.

A joint letter to local authorities from DCLG’s director general for housing and planning Richard McCarthy and Homes and Communities Agency chief executive Pat Ritchie confirmed that schemes representing about 5,000 affordable homes across 13 councils would go.

The plans, which had been accepted onto the programme but were waiting to be given the go ahead in light of the spending review, would have seen 1,900 homes refurbished.

However the government also confirmed that thirteen schemes currently in procurement and worth over £1.2bn would go ahead over the spending review period.

Another 25 schemes under contract will also continue to be supported.

The thirteen schemes in procurement will see 4,344 homes refurbished and 3,280 new build.

The announcement follows a review of housing PFI that could have seen support for all non-contractually committed schemes withdrawn, given DCLG’s tight spending review settlement.

Commenting on the Department’s decision, Ms Ritchie said:  “I am pleased that despite having to make some tough decisions following the Spending Review, DCLG is able to commit support for these housing PFI schemes which have the potential to make a real difference to local communities.

“At the HCA we will now concentrate on helping Local Authorities maximise the impact of available funding, through our expertise on procurement and other technical services.  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 and Infrastructure Advisory partner at Grant Thornton UK LLP said: ” The news that a number of Housing PFI projects  will no longer continue to receive Departmental funding support will come as a disappointment to the other Authorities that are still preparing Housing PFI business cases for consideration. We would encourage these Authorities 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.  This approach might offer potential to a number of the Councils engaged in Housing PFI round 6 especially when the new intermediate market rent proposals and the new homes bonus is taken into account.

 “We are pleased that the Department will continue to support Housing PFI projects already in procurement.”

The 13 schemes in procurement will be subject to further review with the outcome expected in December.

A full list of Housing PFI schemes in procurement and in the pipeline can be downloaded from the HCA website

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