The ailing private finance initiative could be rejuvenated by ODPM plans to use the procurement method to build thousands of low-cost homes.
The lengthy, complex PFI process has proved unpopular with the housing sector, but ODPM ministers see it as a way to attract crucial private sector investment into building affordable homes.

Now, housing PFI will form part of the department's submission to July's comprehensive spending review.

Julie Pearce, the ODPM's private finance team leader, said: "Ministers are very interested in using housing PFI as part of the comprehensive spending review and to provide affordable housing in the future.

"We want to get the time taken to procure schemes down from four to two years so I think there is definite potential for expanding the use of PFI."

Only two housing PFI deals have been signed; 14 others are still in negotiation. Four of these have been in negotiation for four years. A housing source involved in negotiations said: "If the ODPM was to go down this path we would welcome this and would definitely bid to get involved. It could see thousands of homes built after a few years."

The move is likely to find favour in the Treasury as it would dovetail with the Barker Report's call to attract more private finance into housing.

Public funding would be required, however: the ODPM has set aside £1.2bn in PFI credits to cover capital expenditure by councils that presently use PFI to refurbish small pockets of housing and bring them up to the decent homes standard.

We want to get the time to procure schemes down from four to two years so there is potential for expanding PFI

Julie Pearce, ODPM

Ben Denton, senior director at consultant Abros, said he thought using the PFI credits for new build rather than refurbishment would be a better use of public money.

"It would tie in construction and innovation with management of the stock much better," he said.

"Financially, the benefits of purely new build PFI are better from the cost and value point of view for the private sector."

  • Oldham and Rochdale councils could be the first to undertake a joint housing PFI scheme if their bid is accepted later this month.

    The bid would also be the first to link up with a market renewal pathfinder. Under the scheme, a contractor would work on the 3200 homes to be refurbished or demolished and rebuilt through the PFI and could also improve some private homes in the pathfinder.

    • Source

    Housing Today