Clarification in line with sector's demands means schemes could get under way in four months
The government is to alter long-standing problems with housing PFi after sustained pressure from the sector.

Local authority sources predicted a flurry of contract signings if changes came quickly.

The main stumbling blocks in the beleaguered £1bn PFI programme could be revised within four months, local authority sources said, after a meeting last week involving the Office of the Deputy Prime Minister, councils and PFI bidders.

The main problems have been:

  • a confusing system of PFI credits that left bidders unsure of their income from the projects
  • a variable interest rate applied to the PFI credits distributed by the government to councils
  • rules restricting councils from devolving their housing management functions to subcontractors.

Change on all these points is seen as essential by councils and PFI bidders, who are aiming to avoid the uncertainty surrounding subsidy that has dogged pathfinder schemes for three years and hindered the development of new projects.

Paul Bradshaw, director of community services at North-east Derbyshire council, one of the eight PFI pathfinder authorities, said he expected contracts and finance arrangement for its PFI scheme to be completed by June. He said: "The pathfinders should now be given the money they need to make PFI work. Policy has been developed on the hoof and they have had to overcome a lot of problems, but they need to succeed for others to learn."

Paul Langford, assistant director of resources and support services at Leeds council, said the anticipated changes would allow contracts to be signed within a matter of months.

The pathfinders should now be given the money they need to make PFI work – they need to succeed for others to learn

Paul Bradshaw, director of community services, North-east Derbyshire council

Steve Trueman, executive director of government agency 4Ps, said local and central government has reached a consensus on what needed to be changed about the PFI subsidy system. He said: "The result will hopefully be a better system for those that follow the pathfinders, and transitional arrangements to help those that are struggling with the existing system."

Housing association sources welcomed change but said more needed to be done to bolster battered confidence in the use of PFI in housing.

Further meetings between the ODPM and interested parties are scheduled, at which detailed solutions to the subsidy problem will be hammered out.

It is expected that viable plans will be ready by spring.

The news came as the ODPM moved closer to passing a regulatory reform order that will allow PFI contractors to subcontract specialised housing services like sheltered housing. Such orders allow ministers to alter primary legislation to remove a regulatory burden.

Source

Housing Today