But on the other hand, there seem to be so many obstacles that few in the housing sector have confidence that this money will be spent. The government's lack of real backing for its ostensible policy commitment is only adding to this confusion, even though there were some signs at least this week that it is acting to save its fragile policy from shattering (see page 14).
Not before time. It's been three years since the government announced its eight pathfinder schemes and although one or two of them are in a state of suspended animation – with the pen poised seemingly for months over their signings – not one of the pathfinders is actually under way. Horror stories abound of bidding costs and the fiendishly complicated legal hoops that must be jumped through if schemes are to be watertight. The number of builders actually prepared to compete for projects can almost be counted on the fingers of one hand. Registered social landlords, which would join PFI consortia, are also shying away because of the prohibitive costs of entry.
It's true that early PFI hospital schemes went through the same tortured process and that once the first ones were signed others followed more quickly – but firms in that sector will testify that it's been by no means a happy ending. Housing PFI has its own legal obstacles to contend with: tenants, for a start. They can exercise their right to buy at any stage during the 30-year contracts that bidders sign for the renovation and management of council homes. Another major obstacle is a subsidy mechanism that appears, bluntly, completely loopy.
Housing PFI has its own obstacles to contend with – a subsidy mechanism that, bluntly, is completely loopy
Compared with the likes of health and education, the amount of money in housing that's riding on PFI is small beer. But with stock transfer now a no-go area for some authorities, a sceptical sector needs to know if PFI really can ride to the rescue.
At best, PFI will always be more viable for large schemes where there's more scope for bidders to add value. But for even those to get a good start, there needs to be some pretty major surgery – and fast.
Source
Housing Today
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