PFI Press Release 10/02/05

Work continues on PFI housing scheme

Work is continuing to bring 500 new affordable homes into West Wiltshire through a private finance initiative (PFI) scheme.

District councillors have given their unanimous support for further investigations into how such a scheme could be funded, with an extra £35,000 expenditure agreed for this work to be carried out.

Under PFI, the Council would enter into a contract with a social housing provider to design, build, finance and operate 500 new homes. The type, standard and location of these properties would be specified by the authority.

A ‘unitary charge’ would be paid by the Council for 30 years to cover the provision, management and maintenance of the homes, although 95% of this would come from Government subsidy - known as PFI credit.

In return, the Council would have 100% nomination rights for 30 years and 75% nomination rights for the following 30 years - ensuring that the properties remain as affordable social housing.

Tim Darsley, the corporate director overseeing the project, explained: “The Government approved our bid to be included in the PFI programme last May, and we have been working closely with the Office of the Deputy Prime Minister [ODPM] since then to develop our outline business case. This is a very significant scheme, as it is the only PFI housing project in the South West and the only district-based housing proposal of its type in the country.”

He added: “We now have a set of realistic costings and we have identified enough potential land within the district for the scheme to be viable. Our challenge now is to find ways of meeting the set-up costs, which are very substantial for a district council of our size.”

At the full Council meeting on 8 February, councillors were told that the cost of setting up a PFI contract, with specialist advisors and project management, could reach £1 million.

Within its existing budgets, the Council could not afford more than £500,000 from its revenue budget and only £100,000 could be accepted as a capital contribution.

A number of options for covering the £400,000 shortfall have been identified and these will be explored between now and July, when a further report will be brought to full Council for consideration.

Councillor Michael Mounde, the Cabinet member with responsibility for PFI, said: “The continuing unanimous cross-party agreement of full Council for this PFI scheme is very welcome, particularly as it is such a big contributor to ultimate success. There are uncertainties with the scheme and there are risks, and both will need to be carefully managed. But this scheme is our best hope of bringing a very significant quantity of much needed new affordable homes into the district.”