Councils form benchmarking group as PFI claims new victim

Four local authorities are to set up a "benchmarking club" to monitor the costs of their housing private finance initiative schemes, after yet another project was undermined by the complex bidding process.

Ashford, Lewisham, Newham and Camden, which all have PFI schemes involving only one bidder, are to make up the group. They will exchange information in an attempt to ensure the bidders give value for money and to identify possible savings.

The move follows the withdrawal of two of the three bidders for a PFI deal to redevelop the 1300-home Stanhope estate in Ashford, Kent. The scheme has a £25.5m PFI credit. A consortium of Hyde Housing Association, United House and lender HBOS is the only bidder left.

Paul McKenner, Ashford council's strategic housing initiatives manager, said: "We're not exactly happy; we would rather have competition." He added that Ashford would treat the single bidder like a partner in future negotiations. "We will sit down with the contract and explain in detail what our expectations are."

The benchmarking group would be a way of keeping pressure on the consortium to remain competitive, he said.

The two consortia that withdrew are a group led by Equion, which pulled out a month ago, and one led by Moat Housing Group/ Countryside, which decided not to continue two weeks ago.

Chris Cheeseman, Moat's executive director for new business, said it had been forced to withdraw after Countryside decided not to proceed. "We tried to find a new developer, but there is limited enthusiasm among others to become involved in housing PFI," he said.

An added deterrent to Ashford bidders was the fact that the successful consortium will have pay as yet undisclosed fees to Partnerships UK, the government group brought in to help Ashford through the PFI process.

n The Treasury wants to expand the use of PFI in social housing and urban regeneration projects, it announced this week in a paper called PFI: Meeting the Investment Challenge.