PFI Press Release 20 July 2005

Go-ahead given for PFI housing bid

West Wiltshire District Council has approved a detailed plan to attract major Government subsidy for a multi-million pound project to bring at least 400 new affordable homes into the district.

The Council agreed on Tuesday to submit an outline business case to the Office of the Deputy Prime Minister for Private Finance Initiative (PFI) backing.

If the PFI application is successful, the Council would enter into a contract with a housing provider to design, build, finance and operate a minimum of 400 new homes for rent. The type, standard and general location of these properties would be specified by the authority, and all of the new homes will be let as housing association tenancies at affordable rents.

A ‘unitary charge’ of £195,000 per year, index linked from April 2004, would be paid by the Council for 30 years to cover the provision, management and maintenance of the homes. However, approximately 90% of the money needed would come from Government subsidy - known as PFI credit.

In return, the Council would have 100% nomination rights - ensuring that the properties remain as affordable social housing.

PFI project manager Chris Trowell told councillors that set-up costs were now affordable, and, although the original intention had been to bid for 500 homes, the scheme has been reduced to a minimum of 400 to improve its chances of success.

Housing services manager Graham Hogg said: “The advice we received from the Office of the Deputy Prime Minister was that a smaller scheme carried less risk. That said, once we know how much PFI credit we can get, we will negotiate with whoever we use as an operator to maximise the number of homes we can get for that money. Hopefully we will be able to exceed the 400.”

West Wiltshire has a significant shortage of smaller homes - therefore, the majority of homes built will be one and two bedroom flats and two bedroom houses, although there will be some larger properties as well. Locations will be dependent on available land supply, but the intention is to include larger villages as well as the five towns.

As part of its contribution to the scheme, the Council will provide land for at least 100 housing units. Details of the land package will be confirmed between now and Christmas, although all sites will be subject to the full planning process in time.

Councillor Trevor Carbin, finance portfolio holder and Chair of the PFI Project Board, said: “If we get Government approval, PFI will bring a glittering prize to this district, enabling us to provide more new affordable homes than we could ever hope to achieve through other methods. I am now confident that our set-up costs are robust, and we will continue to look at our land holdings to ensure that the package we put together is as practical and sustainable as it can be.”

It will take the Government at least three months to consider the proposal. Once the Council gets the green light, formal bids will be invited from housing providers who are interested in delivering the contract. It is expected that work will start on the new homes in August 2007.