Troubled Leeds PFI regeneration scheme runs into further delay

Meynell Heights – no start on refurb till … ?

The troubled PFI regeneration scheme for three inner-city areas of Leeds has hit further delays – and the risk of even greater cost.

Last time senior councillors discussed the multi-million pound project, the aim was to get final sign-off of the contract by the end of July this year so work could start in November on the refurbishment of over 1,200 council homes and the construction of 388 new ones in Little London, Beeston and Holbeck.

In what is the latest in a series of delays to hit the project over the last two years, the start date appears to have now slipped again by at least two months.

At the beginning of July Leeds City Council stepped in with around £50m of taxpayer cash to rescue the project after one of the banks funding it pulled out. That new arrangement was approved by the Treasury in early August.

Since then there’s been no word on final sign-off – or on what could be holding it up.

No guarantees on affordability beyond September

Demolition 2010

This latest delay will be as frustrating to the council as it is to tenants waiting for their homes to be refurbished and residents waiting for sites cleared long ago to be built on.

But there’s also the problem that the longer the delay, the greater the risk of the project costs becoming unmanageable. The council admitted as much in July when it was putting the rescue package in place.

“The updated proposals are also predicated on the basis that a contract can be signed at the end of July or as soon as possible after that but before the next scheduled meeting of Executive, as the affordability position cannot be guaranteed to remain unchanged beyond that,” a council report said at the time.

“The key risk now is around programme delay which would have a greater bearing on project and funding costs,” it added.

That “next scheduled meeting” of the council’s executive came and went in September with no update on the project forthcoming.

Given that a three-month “contract mobilisation” period is required to get everything into gear after contracts are signed, it seems clear that on-site work cannot now start until New Year at the earliest.

Cost implications kept secret

It’s unclear what effect these continuing delays are having on the cost of the 20-year PFI project – a project that has been six years in the gestation.

The council admitted as long ago as January that monthly costs were £500,000 a month higher than originally anticipated.

In March the costs had gone up again (inflation, greater consortium costs, new funding arrangements) – but no-one was saying by how much.

And then in July, details of the financial implications and “affordability” of the rescue package were kept secret in an “exempt” appendix to the report quoted above.

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