Government rules out recalculation of credits that would have made process more affordable
The government has slammed the door on a change to the private finance initiative in housing that would have made the process more affordable for local authorities.

Local authority PFI advisory body the 4ps has been pushing the government to change the way it calculates the money it pays to councils under PFI housing schemes since last summer.

At present, the government pays a certain proportion of the total capital investment needed in a council's stock – this is known as a PFI credit. The council has to make up the shortfall, often several million pounds.

Steve Trueman, executive director at 4ps, said he had been confident of "reaching a conclusion in time for the expected third round of PFI bids in July".

He said: "What this move would allow us to say to councils is that the government truly supports housing PFI in the best way. If the government is really behind PFI as one of its three options, then it will have to make the changes to its calculations."

Trueman added that this would have been in keeping with the recent approach by the Office of the Deputy Prime Minister in which it has made a number of concessions in order to make the costly and protracted process more attractive – such as permitting councils to build additional housing.

However, in a statement to Housing Today, the ODPM stated that "[none] of the suggested alternative approaches [to calculating PFI credits] would be a marked improvement on our current message".

A spokeswoman added that a consultation paper on the actual payment of PFI credits rather than their calculation, issued last week (HT, 30 May, page14), was as far as the ODPM would go.

Trueman described this as a "blow" and added that 4ps would have to decide whether it was worth pushing the issue further.

The government has made £1.4bn available for housing PFI schemes until 2006. The calculation of PFI credits is cited as one of the principal stumbling blocks to the uptake of PFI in housing.

So far, just two of the eight pathfinders – which were announced in 1999 – have been signed. These are Islington and Plymouth Grove in Manchester.

Camden – which has been allowed to proceed by the ODPM despite only having a single-bidder – is likely to be the next to sign.

Source

Housing Today