Leeds City Council has broken its silence over what’s holding up the start of its troubled PFI council housing project. It says it now hopes work can get under way in spring.
A statement today from housing chief Cllr Peter Gruen said the council was “waiting for the contractor to finalise their funding and construction programmes for the scheme”.
“All council approvals are in place and I would hope that a start can be made in the Spring, once the contractor has been formally appointed,” he said.
In a press release the council said today it had been told by the proposed contractor and funders that good progress was being made towards getting the contracts for the scheme finally signed.
Cllr Gruen sounded a note of caution, however.
“Although I welcome the progress, we have been made promises before and the onus, however, is on the new company (PFI consortium) Sustainable Communities for Leeds and its funders to resolve these issues in a timely manner,” he said.
His caution is understandable: planning applications for much of the PFI scheme started to be heard in 2008, residents were moved ahead of major demolition in 2010, and the start-date for on site work has slipped four times in the last 18 months.
In July 2011 the council was hoping work would get under way in January 2012. In March 2012, it was hoping for July. In July for the end of the year. And now we’ve got to the end of the year, it’s spring 2013.
Public test of confidence in banks
The £180m scheme to refurbish over 1,200 council homes and build 388 new ones in the inner city areas of Little London, Beeston and Holbeck has been by dogged by difficulties and delays over the past two years.
The project was held up initially for several months by a central government value-for-money review.
Then at the beginning of July this year the council stepped in with around £40m of taxpayer cash to rescue the project after one of the banks funding it pulled out.
And it’s at the banks where Cllr Gruen’s finger now appears to be pointing.
“For the communities in South Leeds, this is becoming a public test of confidence regarding whether the major banks have really turned the corner or not,” Cllr Gruen said. “This is a blue-chip scheme and the Leeds public will draw its own conclusions if there is continuing delay in investing in Leeds,” he added.
“The proposed contractor and funders of the scheme have told the council that they are making good progress towards financial close and have expressed optimism that the process is on the way to completion early in the new year”, the council press release said.
The new-build, refurbishment and maintenance work on the scheme is to be carried out by Frank Haslam Milan and Milnerbuild, two subsidiaries of regeneration sector specialists Keepmoat.
It’s not clear what effect the delays have had on the 20-year scheme’s overall cost. As long ago as October 2011, Cllr Gruen was speaking of an extra £1m per month that was going to have to be found because of the delay up to that point.
That was 14 months ago.
As each subsequent projected deadline for the signing of contracts has been missed, the detail of the financial implications has been kept under wraps.
For fuller background to today’s announcement you could start here and work your way backwards.
Help me out, dear readers
I’m no expert, so I’m having difficulty working out what the phrase “waiting for the contractor to finalise their funding and construction programmes” means.
As far as I’m aware there are five major parties to this scheme, two of which, the council and central government, aren’t responsible for the current delay in getting the project signed off.
So that leaves the banks providing the funding, the people who are going to do the actual work (Keepmoat) and the consortium who put the deal together (the “contractor” Sustainable Communities for Leeds).
The problem’s presumably about money, but whose money? And why?
Any help much appreciated.