Programme’s future in doubt after report highlights prevalence of large cost rises

The future of housing PFI is in doubt after the government’s auditors said today that more than 80% of government schemes delivering homes and housing refurbishment via PFI have experienced major cost increases.

A National Audit Office report said that almost half of these housing PFI schemes saw costs double between the initial business case and signing of the contract.

It cast doubt on the continuing use of the method to fund housing construction in the light of the autumn’s spending review. The PFI housing programme has received £4.3bn of government money to produce just 13,000 homes since 1998.

Overall the report said the PFI programme in housing had achieved a “measure of success” but that the risks to value for money in the programme “had not been managed”, and that more work needed to be done to address concerns of high costs and delays in the programme.

All PFI projects have been delayed from original timetables, with the average delay being two years and six months. One early project cost the communities department three times more than the original cost estimate.

The report said: “In view of a period of restraint and efficiencies in public sector spending, the department should consider PFI in the context of its other housing investment programmes, assess the different types of project used and ensure that value for money is a primary focus in terms of the selection of PFI as an investment option.”

Amyas Morse, head of the National Audit Office, said the communities department had carried out only limited evaluation of the value for money of the programme. “It should now carry out such evaluation,” he said.

“The department should assess, as a matter of priority, whether its current and planned PFI projects are delivering value for money. It should at the same time, assess all its past projects. This assessment should be based on hard numbers as well as qualitative factors.”