Troubled Leeds PFI housing deal further delayed after signing slips three more months

Meynell Heights refurbishment work “in 2012”

The timetable for Leeds’ troubled Private Finance Initiative (PFI) housing project has slipped further with an unexplained three-month delay in getting the £180m contract signed off.

After a costly wait for government decisions during 2011, it had been expected that the contract to refurbish and build homes in three areas of the city was finally going to be signed off by the end of March this year, with work getting under way on site in July.

But July is here and the deal – under which Leeds City Council is going to use PFI credits to build 388 new homes and refurbish over 1,200 in Little London, Beeston Hill and Holbeck – remains unsigned.

“Discussions ongoing”

A council report at the end of last month said “discussions are ongoing … to confirm the finer details of the scheme” between the council and the company that’s going to deliver the project, Sustainable Communities for Leeds (sc4L).

The clearest indication of a new timescale is that refurbishment of the 1960s Meynell Heights tower block in Holbeck will start some time “in 2012” and that new build work will start on another of the many project sites – Folly Lane in Beeston Hill.

While it’s not been spelt out what the “finer details” are that have been holding up the signing, it’s difficult to see how this further slippage isn’t going to increase the cost of a project that’s already way over what was originally envisaged.

Costs up in January, March and ….?

We already knew in January that the protracted delays to the project – it’s been six years in the gestation – meant we are going to be paying £500,000 a month more than originally planned. Over the 20-year lifetime of the deal.

Then in March the council reported that costs had gone up again: inflation meant the building work was going to be pricier; new funding arrangements had had to be put in place and they were going to be more expensive; and the costs of the Sc4L-led consortium delivering the project had ended up higher than anticipated.

Quite how much more expensive it was all going to end up, nobody was saying at the time – the details of the new costs were being kept under wraps for reasons of “commercial confidentiality”.

“Very high risk”

That was all three months ago, during which time inflation hasn’t stood still. So we could be looking at even greater costs before the deal finally gets signed.

Worth noting too that back in March the council was admitting that there was a “very high” risk that the project could become unaffordable if interest rates rose prior to final signing of the contract. A buffer had been built into the costs to cope with that eventuality, but we’re now three months on…


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