Government spends £16m to bail out eco-home scheme

The government has been forced to pump about £16m of public money into a zero-carbon exemplar housing scheme to get it off the ground, it emerged this week.

The government’s regeneration agency English Partnerships (EP) this week selected a consortium led by a registered social landlord from Sunderland to build the first of 344 eco-homes planned in Peterborough under its Carbon Challenge initiative.

However, the agency’s director of policy Steve Carr admitted public sector agencies had been forced to commit the funding to ensure the scheme goes ahead during the credit crunch. This includes handing the £6m site over to developers for just £1.

In March, three of the six bidders for the scheme pulled out because of the high potential costs of building to zero carbon. This prompted EP to attempt to find a public sector deal which could tempt the bidders back in.

The funding package includes:

• £7m of guaranteed funding for social housing from the Housing Corporation
• £3m of land remediation costs to be met by public sector
• Joint site owners EP, the East of England Development Agency and Peterborough council to waive the estimated £6m land receipts, passing the land over instead for a nominal £1 value.

Carr said: “We weren’t willing to go ahead with a developer using figures arrived at when the market was fine. This is now effectively a joint venture with the public sector. It looks like schemes with higher levels of sustainability are going to have to be more public-sector-led.”

In the end, EP selected the pPod consortium, made up of housing association Gentoo, regional housebuilder Morris Homes, and architect Browne Smith Baker. The homes will be built to level six of the Code for Sustainable Homes and the scheme will be heated by a biomass-powered combined heat and power plant. The homes must meet EP’s quality and space standards, with 35% to be affordable.

EP said it expected a planning application for the 7ha Peterborough site to be submitted in early 2009, with the first homes completed by spring 2010.