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Shapps pledges review of PFI housing

The Government will re-examine the effectiveness of PFI housing schemes after a report questioned the value for money offered by the initiative.

Housing minister Grant Shapps said work to improve the model would be undertaken as part of the autumn comprehensive spending review.

The National Audit Office found that most PFI schemes used by councils to refurbish housing stock and provide new homes have overrun budgets and deadlines.

It reported that 21 of the 25 PFI schemes signed since the initiative’s introduction in 1998 had run up increased costs. All the projects for which information was available had been delayed - for an average of two-and-a-half-years.

Mr Shapps said: “We can and must do better. Housing PFI plays a useful role in improving existing homes and providing new homes in areas of housing need. But we also have a responsibility to ensure every pound is spent wisely because of the huge deficit in public finances we have inherited.

“So as part of work already under way to take a close look at all of our planned spending on new homes, the department will take a fresh look, in the spending review, at how housing PFI can best offer genuine value for money.”

The NAO report acknowledged that the PFI programme has had success in improving councils’ housing stock and that the Department for Communities and Local Government ensured any increased funding was valid. However, it concluded that the department could do more to determine the value for money of the schemes.

NAO head Amyas Morse said: “The DCLG 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 evaluation.”

The main alternatives to PFI funding are transferring stock transfers to housing associations that fund refurbishment through private borrowing, or creating arms-length organisations to improve housing stock using central funding.

Since 1998, the DCLG has allocated £4.3bn to local authority PFI projects, which had refurbished 12,343 homes and bought or built 991 homes by April last year.

The Homes and Communities Agency took on management responsibility for PFI scheme delivery in 2008.
HCA chief executive Sir Bob Kerslake said: “Since the HCA inherited responsibility for PFI programme management just over 18 months ago we have maintained momentum, provisionally allocating £1.7bn to truly transformational estate regeneration projects, as well as taking steps to manage timescales and introduce more expert support for local authorities.

“We are now taking stock of our first full year of programme management with the DCLG, which will contribute to its assessment of PFI in the spending review.”