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Meeting The Decent Homes Standard The growth in the housing PFI market is a direct response to the government’s “Decent Homes” commitment that, by 2010, requires all homes to be warm, weatherproof, and have reasonably modern facilities. Prior to the introduction of the housing PFI programme in 1999, the government estimated that there were 2.1 million houses in the public sector that did not meet this standard, and an overall repair backlog in the region of £19 billion. Government investment in housing has seen improvements to approximately one million of these homes since 1997, but much remains to be done. On the 23rd June, the government announced approval to seven housing PFI schemes worth approximately £500 million. The programme involves the refurbishment and building of more than 5000 social homes and builds on the 2004 government spending round in which housing was awarded £1.2 billion of PFI credits, making it the third largest recipient behind transport and schools. There has been considerable competition for PFI resources, and an analysis of bids from councils whose schemes have been accepted onto the programme provides some useful guidance to the structure of successful bids. Projects that have made it onto the programme have demonstrated that they are embedded in the wider housing strategy for the Council’s area, and either support wider regeneration initiatives in the area, co-ordinate partnerships with social services and health services alongside housing provision, or in line with the recommendations of the Gershon Review, demonstrate efficiency savings from joint procurement of services. Between bid approval and financial close progress with the housing PFI pathfinders has generally been slow, mirroring the initial experience in the health and education sectors. This reflects the learning curve experienced by the councils, private sector bidders and funders involved. In addition there have been criticisms of housing refurbishment PFI schemes both on grounds of cost, and difficulties with risk transfer. However, the attraction of PFI for housing is unlikely to be short lived. The recent production of a housing PFI procurement pack should help to reduce transaction costs and the ODPM are confident that by learning from the Pathfinders, the procurement period can be reduced to around 18 months. In addition, new build housing and care schemes, where there is pent up demand, but which may in the past have been too small to justify a PFI solution, may prove cost effective under LIFT, or LIFT type schemes, that are now being piloted. The attraction of PFI may well be enhanced further by the recent concession that Councils will be permitted to build new homes through PFI where the business case justifies it. All of the evidence points to a consolidation of PFI solutions in the housing sector.
At Martineau we have substantial experience of PFI and PPP projects, advising local authorities across a range of public services. Our projects experience is complemented by particular specialisms within the firm in respect of urban regeneration and public sector property and land development. We have recently strengthened our public sector practice further with the recruitment of an Associate specialising in strategic housing solutions. Liam Nevin, a qualified member of the Chartered Institute of Housing, brings 17 years experience of the public sector including 11 years in the housing profession.
For further information please contact Catherine Burke on catherine.burke@martineau-uk.com Martineau's publications are no substitute
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