Further problems for Leeds PFI housing scheme – no start now before October

Waiting for a refurb - Meynell Heights in Holbeck

Still waiting for a refurb – Meynell Heights in Holbeck

Leeds troubled PFI council housing project has hit further problems and now won’t get under way until October at the earliest, the council has announced.

Leeds City Council housing chief Cllr Peter Gruen told a press briefing yesterday that the government has pulled the plug on the project’s funding arrangements and has told the council to look for a cheaper option that would represent better value for money.

The £185m 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, with the start date for on-site work slipping five times in the last 20 months.

The consortium chosen by the council to run the project – Sustainable Communities for Leeds (SC4L) – is now going to have to seek funding not from banks, but through the bond markets.

The council is hoping that a new financing deal can be in place by July, with work on site starting three months later. The project schedule is being rejigged so that urgent refurbishment work gets under way first.

Cllr Gruen acknowledged that the news would be “extremely disappointing” for the local communities affected by the project.

Representatives of residents’ associations and community groups were told of the latest delay in a meeting at the Civic Hall yesterday, and letters are being written to all tenants.

“Areas not being abandoned”

Demolition 2010, new-build ???

Demolition 2010, new-build ???

Cllr Gruen announced four new projects for the affected areas, as a way to   “restate (the council’s) faith in the areas and show them they are not being abandoned”.

In Beeston, an immediate start is going to be made on a £2.5m programme to bring 87 empty properties on Malvern Rise and Waverley Garth back into use. Work will be completed by May.

A further 21 empty properties (back-to-backs) at the Garnets will also be brought back into use in partnership with the Leeds Federated Housing organisation.

In Holbeck, 41 new affordable homes are to be built on cleared land at Brown Lane East in partnership with Unity Housing Association.

In Little London, work will get under “later this year” on a package of measures that include improved primary school provision, shopping and community facilities.  A new shopping area will be open by January next year, the briefing was told.

At first sight the measures announced for Little London differ little from plans already drawn up by the council for the area last December – before the PFI deal with the banks collapsed. Those plans were being driven by the council’s statutory obligation to provide more primary school places by September 2014.

Call me Bond, PFI Bond

Housing chief Cllr Peter Gruen

Housing chief Cllr Peter Gruen

Cllr Gruen said the government’s intervention followed its “reform” of the Private Finance Initiative, launched in December as PF2. Leeds had not been singled out, he said.

One of the aims of the government’s reform is to end the reliance of PFI projects on using expensive commercial banks and open up the market to a wider range of financial institutions, especially pension funds and insurance firms.

Cllr Gruen said the new funding arrangement being sought for the Leeds housing project through the bond market would be “substantially cheaper” and “more stable” than the terms offered by the banks, which had not been acceptable to the Treasury.

SC4L was confident it could go ahead with the project through the new funding stream, he added. It will be looking for £145m funding for the project, as the council is still going to be contributing the £40m it pledged as part of what has now turned out to be an abortive rescue package put in place in July last year.

The new-build, refurbishment and maintenance work on the scheme is still going to be carried out by Frank Haslam Milan and Milnerbuild, two subsidiaries of “regeneration” sector specialists Keepmoat.

For fuller background to yesterday’s announcement, you can click here and work your way backwards.

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2 Responses to Further problems for Leeds PFI housing scheme – no start now before October

  1. Paddle Daddle says:

    Don’t blame it on the sunshine
    Don’t blame it on the moonlight
    Don’t blame it on the good times
    Blame it on the Bankers

    (but that’s probably right)

  2. Le Corbusier says:

    Hmmmm, let’s cast back to the days of the original consultation on all of this, the one where residents & tenants in Little London clearly stated they preferred just some good old fashioned repairs & refurbishment of existing homes… But no, certain senior officials wanted to feather nests & jump on the PFI bandwagon – some high paid jobs were created on the back of all this at the Council and its partners & now look what’s happening – at a time when public funds are severely limited the Council is now having to save face by putting back some of the homes demolished. There is some merit in the old adage of fixing the roof whilst the sun shines – but what a hard lesson for tenants and residents, they are the ones really affected by all of this. But, what of those senior officers who fudged the original consultation to suit their own careers & have now been shown as failing the people of Leeds – we know the current consensus on what to do with leaders who fail or perform badly, they should follow the bankers & private sector bosses they tried to emulate & bow out. People of Leeds don’t need these kinds of leaders.

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