Cost of Leeds PFI housing project soars – before contract is even signed

The cost of one of several new Private Finance Initiative (PFI) projects about to get under way in Leeds has gone up by £12m a year – before the 20-year contract has even been signed.

The signing of contracts for Leeds City Council’s Little London, Beeston Hill & Holbeck PFI housing project was delayed nearly a year ago after the government began checking all PFI contracts in the pipeline to see if they were going to deliver value for money. By that stage the Council had already chosen its preferred bid for the contract. And presumably agreed a price for the contract work and services.

“The delays have meant that the council will need to meet additional costs in the contract that amount to about £1million a month,” a statement given to the leeds citizen by Cllr Peter Gruen, Leeds City Council’s executive member for housing and regeneration, said.

“Loss of rent”

Ahead of the £180m investment project getting the go-ahead, some 500 households have been rehoused, many properties are lying empty awaiting the Council’s bulldozers and many others have already been demolished, prompting one local councillor to suggest at a residents’ meeting in Holbeck last month that the delays were causing the Council to lose £12m a year in rents.

Gruen made it clear that the extra costs were “a result of cost inflation relating to the works and services to be delivered and are nothing to do with loss of rent for the properties”.

The admission of the extra PFI costs comes days after the BBC revealed that five years into a PFI deal the cost of street lighting in Leeds had more than doubled.

In terms of the housing PFI project, it wasn’t immediately clear whether the Council would have to meet the £12m a year additional costs for the 20-year lifetime of the PFI project, or whether they solely affected the 3-year construction phase of the project.

As for the claim that the Council is losing £12m in lost rents because of the delays, taking so many properties out of the Council’s housing stock for so long must be having a continuing impact on the Council’s finances. It’s just not clear how big that impact is.

The Little London, Beeston Hill and Holbeck PFI was last discussed by the Council’s Executive in July when they heard a report detailing the current state of play with regard to the project’s scope, cost and affordability. The details of the cost and affordability were kept secret (exempt) by the Council, claiming ‘commercial confidentiality’.

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