Support for PFI schemes worth £1.9bn withdrawn

The government has cut funding for £1.9bn of PFI projects to build 5,000 affordable homes across 13 councils.

The plans, which had previously been accepted onto the government housing PFI programme but had not had their outline business cases accepted, would also have seen 1,900 homes refurbished.

At the same time the government confirmed that 25 contracted PFI schemes will go ahead, and that a further 13 schemes worth £1.2bn in procurement but not contracted will also be funded.

These 13 in procurement will be reviewed to see if cost savings can be found.

Schemes refused funding included the Aylesbury Estate in Southwark, the site of former prime minister Tony Blair’s first speech upon being elected, which has still not been overhauled.

The changes were set out in a joint letter to relevant local authorities from Richard McCarthy, director general for housing and planning at the communities department and Homes and Communities Agency chief executive, Pat Ritchie.

The HCA said it would work with the 13 councils to explore alternative ways of funding regeneration, but cautioned that they should not have an “expectation” of any further funding being found with the next four years.

Pat Ritchie said: “At the HCA we will now concentrate on helping local authorities maximise the impact of available funding, through our expertise on procurement and other technical services. We will also work with those councils which have received disappointing news today, to look at any ways in which their objectives might be supported through a non-PFI route.”

Phillip Woolley, government and onfrastructure advisory partner at Grant Thornton, said the news was disappointing. ”We would encourage these authorities to look at joint venture structures and the new funding mechanisms being put forward by the government to assess whether they offer a viable alternative to PFI.”

Full list of schemes to lose out

Birmingham City CouncilLyndhurst Estate
Cheshire East Council and Cheshire West and Chester CouncilExtra-Care Housing
Camden London Borough CouncilGospel Oak Regeneration
Cornwall County CouncilExtra-Care and General Needs
Hull City CouncilOrchard Park Estate
Leeds City CouncilLifetime Neighbourhoods
Manchester City CouncilCollyhurst Estate
Northampton Borough CouncilEastfields and Thorplands
Nottingham City CouncilMeadows Estate
Portsmouth City CouncilSomerstown Estate
Shropshire County CouncilExtra-Care Housing
Southwark London Borough CouncilAylesbury Estate
Stoke-on-Trent City CouncilSuburban Estate