Chief executive of Harvest Housing Group Ian Perry has spent three years slogging to pull off the first housing PFI pathfinder project. It's entailed some pretty deft diplomacy and some hard bargaining, but it's finally paid off. Josephine Smit tell the inside story.
If Dutch tourists visiting Manchester are unlucky enough to lose their passport, they have to travel to the city fringe headquarters of registered social landlord Harvest Housing Group to get them replaced. There, the usual consular business of issuing passports and visas to Dutch nationals is carried out alongside the provision and management of affordable housing for tenants across the north-west of England.

The dual personality and nationality of Harvest's office has nothing to do with the Netherlands' reputation for innovative home design and construction and is purely down to a quirk of fate through which Harvest Housing Group's chief executive, Ian B Perry, found himself selected for the post of Netherlands consul. Fate has also decreed that the gently spoken Yorkshireman should have another high-profile role: as a pioneer and figurehead for housing PFI.

Harvest is housing association partner in the first of the eight initial local authority housing PFI pathfinder projects to get off the starting blocks, the regeneration of Manchester's 1090-home Plymouth Grove estate into Grove Village. On 25 March Harvest, alongside contractor Gleeson and building society Nationwide, its partners in the Grove Village consortium, signed a 30-year contract with Manchester council. Six days later that contract came into force, a neighbourhood office opened on the estate and refurbishment work got under way on 60 void units.

The rapid start belies the fact that more than three years of effort have gone into pulling off the PFI deal, and Perry has played a key role in making it happen, largely thanks, he says, to a long-standing relationship with the city council, which has been fostered through the housing association's involvement in the Hulme regeneration and the transfer of council housing at Partington. For Perry, who has been in the chief executive's role for 15 years and whose background is in development, the project has meant a return to the coalface. "It has given me a bit of a buzz," he says. "I'm chief executive of a business, but I've got closer to this than to any of our other projects."

Grove Village is one of only two of the eight initial housing PFI pathfinder projects to have its contract signed, and understandably the delivery route has come in for criticism over delay. "I'm sure that if you talked to the residents they would say they are frustrated. It has been difficult to keep our people together on this," says Perry, displaying some of his deal-making diplomacy.

It has given me a bit of a buzz. I’m chief executive of a business, but I’ve got closer to this than to any of our other projects

"This is so complex – partly because of the nature of housing revenue account PFI and because of what we're wanting to achieve," he adds – and when he sets out the challenge, it is clear what he means. "We're working with existing tenants who're in place, we had to consider the housing management staff at Manchester council, some of whom have transferred to work for us. Usually in a rundown area you look to make a big difference, by giving a high level of service and improving the built environment. We're demolishing homes, changing tenures, changing the housing mix, making social changes and providing community facilities – and we're doing all that in a PFI designed to provide roads and cheap and cheerful office blocks for the Inland Revenue."

Many of the new homes will be for sale or market rent, something that has caused controversy, but Perry says the consortium will not be making a financial killing out of the deal. "Grove Village will make a profit but it is mainly back-end loaded. As a management subcontractor, E E we're planning to make a profit from year two." The rate of return for both will be more than 10% but less than 20%, says Perry. "There are a lot of penalties so it is geared to how we perform. If we can find more imaginative ways of doing things over the 30 years we can make savings, but any change we make to the service has to be agreed with the residents.

"We've got a scheme that's good, but we've struggled to make it affordable," he points out. "Because we don't have the experience it is hard to get the initial estimates right, and estimating costs is made more difficult by ideas like the managed village. Standard parameters are based on standard estate management." In putting together the bid Harvest could apply some PFI experience. "We'd done PFI work in the health sector for staff accommodation so we did know something, but that's much simpler," says Perry. "We drew on our experience of PFI, and of stock transfer and we knew a lot about the redesign of estates with a Radburn layout and realised how expensive they are to redesign properly." Hundreds of thousands of pounds were spent on winning the bid, calling in the skills of primary consultants, architect PRP, Price Waterhouse Coopers, Eversheds, ABA Engineers, Gleeds and the Secure Neighbourhood Unit.

Now the consortium and its team can finally test the robustness of its work on site. Under the contract the demolition and refurbishment works have to be completed within three years, and the new build in seven years. The consortium is waiting for planning permission to build the new homes and is hoping to start building in September. The ODPM has carried out a baseline study of tenant satisfaction and will be repeating the study every two years to measure if PFI works for residents. The consortium has given its own feedback to the ODPM. "The ODPM seems to be a bit worried about the cost of it and rightly so," says Perry. "They can't be seen to be a bottomless pit and they don't want people coming back and asking for more."

From mugger-friendly paths to tree-lined boulevards

The Grove Village consortium is a special purpose vehicle in which Harvest and Nationwide Building Society each have a 25.5% equity stake, and contractor Gleeson has 49%. Nationwide provides the loan facility, which will be serviced by the PFI credit which ODPM will pay Manchester council over 30 years, and which will be supplemented by a contribution from the council. Harvest’s subsidiary Manchester and District Housing Association is subcontracted to manage the estate, providing what it calls the managed village concept, which includes warden services and a neighbourhood office which will be a point of contact for all village residents, irrespective of the tenure of their homes. Contractor Gleeson is carrying out the refurbishment, demolition and construction work. Under the contract, the council retains ownership of the homes, but gets the essential repairs done to bring them up to the government’s Decent Homes standard, plus a whole lot more. The 1970s-built estate with its threatening Radburn layout of cul de sacs and mugger-friendly paths will be remodelled with permeable streets, a broad tree-lined boulevard, and smart modern home designs courtesy of PRP Architects. In all, 660 homes will be refurbished, 430 homes will be demolished and 600 new homes built in their place. Throughout the contract period, the consortium is committed to providing a set level of service to Grove Village residents, the service being itemised in such detail that even the opening hours of the neighbourhood office are written down.

Personal & Professional

So how did you get to be a Dutch consul?
The previous holder of the office was retiring and wanted a partner in his business to take on the post, but he had to put forward six potential names to the Dutch government. He asked me to be one of the six, and I ended up being chosen. I don’t get paid for the post, but the Dutch government pays for the consul’s office here, which is officially Dutch soil. Where do you live?
In a stone cottage built in the 1850s. What are your hobbies?
I like both amateur and professional football. Manchester City or Manchester United?
Neither. I’m a season ticket holder for Liverpool, which doesn’t go down very well in this office. How is Harvest performing?
The group achieved a pre-tax surplus of £2.7m in 2002 and turnover increased by £2m to £36.8m. It scored 81% in its tenant satisfaction survey and has 15,000 homes in management.

Nutcracker: The PFI route to regeneration

PFI hasn’t only been a complex route to regeneration for Ian Perry and his partners. Architect PRP has also found itself working within strict parameters. “We were given a specific number of dwellings that had to be retained, and specific proportions for the size of units that had to make up the retained homes,” says Ziba Adrangi, associate with PRP. “It was a difficult nut to crack. We had to work out where it was right to demolish homes, so we looked at where the least desirable properties were and where the layout wasn’t working at all well.” The remodelling of the Radburn layout estate has permeable streets, a more traditional street layout with front doors overlooking the streets and private rear gardens which back onto each other. The new green route will be a mile-long Home Zone, where pedestrians can walk, children can play and cars are slowed to walking pace. The architect has already produced detailed drawings for each dwelling type that will be refurbished. “We had to be extremely meticulous,” says Adrangi. “All the information had to be digested by the PFI contractor, priced and the risk priced too. With a PFI hospital you have one point of contact. Here there are 1300 householders and although we can look at each dwelling type we don’t know what is in every house, and there is the human element to consider. It has been much more complex upfront.”