What's special about this site, though, is the administrative framework that governs every aspect of the scene, from the building specifications to what time the tenant liaison office opens. Staff need only forget a name badge or not open the office on the dot for their employer to be hit with a hefty fine.
This is housing's first private finance initiative project, just over a year in. In the next three decades, a section of one of central Manchester's most notorious districts is to become an attractive, mixed-tenure community with new commercial centres, green spaces, 600 refurbished homes for rent and 600 new homes for sale. It's a huge job and, by deciding to fund the £90m project via PFI, Manchester council took a largely uncharted route.
"It gives us a fantastic opportunity but a much higher degree of complexity," says Ian Perry, chief executive of Harvest Housing Group and chair of the Grove Village PFI consortium. "It's like saying, 'we're going to run 100 yards' but then tying our shoelaces together."
PFI's more established sisters, stock transfer and arm's-length management organisations, manage 830,000 and 700,000 homes respectively. But there have been only a handful of housing PFIs, thanks in no small part to the system's byzantine complexity. Under PFI, a council signs a contract with a consortium, which may include registered social landlords and private companies, to bring stock up to the decent homes standard and receives funding from the government in the form of PFI credits. To date, £1.4bn has been set aside for the credits and £220m allocated to the three deals signed so far.
Manchester chose PFI because it alone could provide the cash and the freedom for a complete transformation of the area. Grove Village has a negative valuation – the value of the homes was less than the amount they needed to have invested in them. This ruled out stock transfer because no funding was available to plug the gap; and the money on offer to ALMOs must almost entirely be spent on meeting the decent homes standard, with just 5% available for tackling the environmental and crime problems that blight tenants' lives.
But PFI carries its own price. Perry explains: "They gave us a blank piece of paper to turn the estate around and we took them at their word. But all the project details have to be reflected in the PFI contract – which is difficult, to say the least."
It takes fearsome negotiations to spread a PFI project's risks between all the parties involved. At Grove Village, the wranglings were further complicated by the scope and ambition of the regeneration project. As well as Harvest's subsidiary Manchester & District Housing Association, the consortium includes MJ Gleeson – doing refurbishment, construction and maintenance – and funder Nationwide.
There are 298 performance indicators that must be met on a monthly, quarterly or annual basis. Setting these standards kept the lawyers busy for months. Perry estimates that he signed more than 300 documents – with their schedules, they would make a pile more than 10 ft high. "Because you get penalised if you don't perform, it puts in additional degrees of difficulty," says Perry.
When the deal was finally signed in March 2003, it had already been more than three years since tenants were first informed of the council's plans. So everyone was pleased when refurbishment and demolition work started last November. But, for the frontline housing workers, the complexity was just beginning. "There was a very steep learning curve," says Tom Roberts, operation unit manager at Manchester and District Housing Association. "It's a very complex project and the more detailed the documentation is, the more difficult it is to actually deliver."
Agreements, contracts, inquiries …
As well as the 232-page project agreement, there are layers of subcontracts between the partners. Roberts' team had to wade through legalese to find out exactly what targets they are supposed to meet. "For example, you need to know the service standards on answering the phones in the office – 90% within six rings – before you can report on them. When you've got a huge selection of documents, you have to try to ensure that you don't miss anything important. That's easily done in a project as wide as this."
It's not just the consortium that will bear the costs if anything goes wrong. For example, if a planning inquiry into footpath closures finds in favour of walkers' groups (HT 14 May, page 9), the plans will have to be reworked and the council will be liable for the cost of delaying the house sales.
Everyone agrees, though, that the contracts and performance indicators are a necessary evil and that it's the relationships between contractors – not the penalty clauses – that will keep the deal afloat. The indicators provide Manchester council with a rich source of information about what's happening on the estate, and give all the partners a guarantee that they won't suffer from others' mistakes. But the process does mean there is a risk of being too focused on minor details while things that really matter to residents are overlooked.
For example, fear of crime is one of the estate's greatest problems. "There's no performance indicator for that, because it's a hard thing to measure," says Perry. "What gets measured are the inputs, the estate management and the warden service. That's the issue for difficult inner-city projects: getting indicators that reflect people's experience of living there."
Surprisingly, for a system that is designed to protect tenants from contractors' negligence, tenant consultation is not a major feature of the drawn-out run-up to signing a contract. The process is dominated by the partners' lawyers and any alterations to the project specification have drastic legal and financial ramifications. Besides which, the tenants are still council tenants so, even though Harvest manages their homes and the estate, it can't go to them directly.
There are tenants on the monitoring panel, however, and they can make their feelings known. In the first month of the deal, Harvest missed several of its targets, including some on rent arrears and empty properties, and the consortium faced a £4000 fine. But tenants on the panel felt this was unreasonable. "They said 'these are clearly people trying their best and we shouldn't be penalising them'," says Perry. The fine was waived.
Undaunted, Manchester has signed up to the third round of PFI deals. The process is unlikely to be quite as tortuous this time around, thanks to the lessons from Grove Village. The ODPM has adopted some of the long-debated documentation as standard for future projects, and has been discussing other ways the process could be improved with the partners. "The deal was complex, and clearly there are things the bureaucrats can learn from the process to make it easier in future," says Steve Rumbelow, head of housing at Manchester council. For a start, Perry says, finalising project requirements and choosing a bidder to work in partnership at an earlier stage would cut some of the cost and complexity out of the process … but not all of it. PFI is unlikely to be regarded as a simple option any time soon.
While Manchester council enjoys its ground-breaker status, residents say PFI has put them on the map, too. "Before PFI, we were just a small part of a larger council area. But now, we've been able to put in individual bids for funding like lottery grants," explains David Tomlinson, chair of the Grove Village residents' association. Among other things, it's received £19,000 for pensioners' lunches, £2700 for a community newspaper and £5000 for sports clubs for 15- and 16-year-olds. Tomlinson says: "There's a real buzz about the regeneration. Before we didn't have a name, now people put Grove Village in their addresses."
Source
Housing Today
No comments yet