With job cuts, bust budgets and development in the doldrums, modular pioneer the Peabody Trust could be in a terminal state of decline – but then it could just be suffering a hiccup
Is the Peabody Trust suffering from a temporary malaise, or are its current problems a sign of something more serious? There are certainly signs of trauma. As well as losing 51 staff recently Peabody is cutting back on new developments and preparing to sell stock to raise funds to refurbish its existing stock.

There have also been cost overruns on two of Peabody’s recent landmark schemes, which have cast question marks over its ability to develop innovative buildings within budget. In a further blow, the Housing Corporation has also downgraded Peabody’s “viability” status from green to amber.

Part of Peabody’s problems have arisen from the government’s pledge to bring all existing housing stock up to the Decent Homes standard by 2010. This means Peabody has to redistribute funds from new-build to refurbishment. It also has less ability to borrow because of new Housing Corporation rules that restrict rent rises, and thus restrict the amount Peabody can repay in loans. Peabody’s capital programme this year is £65m, and it is spending £35m on new build.

The Housing Corporation says that the financial implications of having to bring stock up to decent homes standard were larger than Peabody expected. It also says that some of Peabody’s existing projects were financially marginal, leaving Peabody with little room for error.

BedZED and Raines Dairy are two high-profile projects that have suffered from cost overruns. At Raines Dairy the costs overran by £1.4m, ending up at £8.9m rather than £7.5m. The budget at BedZED was bust more substantially - costs at the Sutton development in south London rose from £10m to £15m.

However in Building this week, Dickon Robinson, development director at Peabody, gave a robust response to those questioning the trust’s performance. He claims that the cost overrun at Raines Diary was caused by a hidden sewer, and said that some of the overbudget at BedZED was down to an increase in the project size.

Robinson is quick to scotch rumours that Peabody will be developing less risky, more traditional homes. He says that the trust is committed to volumetric construction and he is contemptuous towards those who scoff at Peabody’s attempts to incorporate sustainability into its buildings. “There are people who have been rather ... gleeful that there have been problems. They have vested interest in the status quo. We are proud of the projects we have built. They have made important contributions on the wider sustainability agenda”.