Government to put £1.58bn into housing PFI over three years

The ODPM will subsidise private finance initiative housing to the tune of £1.58bn over the next three years, according to figures from last Monday’s comprehensive spending review.

This will comprise £360m in 2005/6 and £610m in each of the two following years.

The £360m will all be spent on PFI schemes to refurbish council homes.

An ODPM spokeswoman said the government had not decided how much of the money for 2006/7 and 2007/8 would be spent on new build.

But a Whitehall source said £360m would be spent in each year on making council houses decent – through housing revenue account schemes – and £250m reserved for new build.

These allocations represent a significant increase on current funding for the PFI. The two previous spending reviews, for 2000 to 2003 and 2002 to 2005, allocated £750m and £685m respectively to the PFI.

But there are concerns over the PFI’s track record in housing: building work has started on only seven of the 33 housing PFI schemes launched since 2000.

Richard Kemp, housing vice-chair of the Local Government Association, said: “It’s a significant sum of money, but how much of it will go on consultants’ fees? The PFI has proved to be horribly expensive and time-consuming.”

Richard Parker, director of public-private partnership at PricewaterhouseCoopers, said ring-fencing £250m for new build would decrease the amount spent on decent homes.

“It’s not healthy for the sector if only three or four [decent homes] schemes can progress each year,” he said.

But Steve Trueman, director of housing at PFI consultancy 4Ps, said the move was “great news”.

He added: “The split [between funding for new build and decent homes] shows the government sees the private finance initiative making a real contribution to the overarching aspirations for new housing in the Communities Plan.”