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PFI AND TRANSFER STRENGTHENS GOVERNMENT DECENT HOMES TARGET

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The government's drive to ensure social housing is decent by 2010 ...
The government's drive to ensure social housing is decent by 2010

received a major investment boost thanks to a £600m Private Finance

Initiative (PFI), and the unveiling of the 2004 housing transfer

programme.

Housing minister Keith Hill told delegates at the National Housing

Federation conference in Birmingham that the third round of PFI and

the new housing transfer programme would allow councils access to

extra funding in order to meet the 2010 decent homes target.

He also highlighted another option for councils - Arms Length

Management Organisations (ALMOs) - which ensure tenants receive a

dedicated day-to-day management and improvement service, freeing up

local authorities to concentrate on strategic housing plans.

He said:

'The government is unlocking huge investment in social housing

through housing PFI, transfer and ALMOs, indeed by 2004 we will have

reduced the number of non decent homes by around 1 million. In the

case of housing transfer, over 780,000 tenants have benefited from

renovation and improvement of their homes.

'Tenants also clearly benefit from greater control of their homes,

and surrounding areas, through representation on the boards and

greater involvement with council plan.

Expressions of interest for the PFI bidding round are due by 18

December and for housing transfer 19 December. Local authorities have

until 26 September to lodge their interest in the ALMOs - with formal

applications expected by 31 December.

Notes

Public Finance (PFI)

1. Housing PFI projects deliver investment in affordable housing

through long-term contracts which fall into two groups, Housing

Revenue Account (HRA) and non-HRA PFI.

2. Within HRA PFI projects the local authority retains ownership of

the stock and the tenants retain their secure tenancies. A consortium

of private sector firms raise capital to first refurbish homes under

a contract negotiated with a loc al authority. The consortium then

provides repairs, maintenance and a range of housing management

services to the stock as part of the same contract. Financial support

for the capital element of the project is provided by central

government to the local authority via 'PFI credits'. The revenue

element is supported by the local authority via rents etc. The

private consortium is paid on a performance basis. Performance is

measured against the local authority's output specification for the

stock, which describes the desired level of service.

3. Non-HRA PFI uses a similar contract structure, usually to provide

new stock, which is delivered via a registered social landlord (RSL)

and tenants become RSL tenants.

4. In 1999 8 local authorities were chosen to pioneer the Housing

Revenue Account (HRA) PFI scheme as pathfinders. There are now 17 HRA

PFI schemes and 9 non-HRA PFI schemes in procurement. HRA Pathfinders

and Round 2 schemes were allocated #760m in PFI credits and are

expected to refurbish around 30 000 homes. Two schemes - Manchester &

Islington have signed contracts in March 2003. Two non-HRA schemes

have signed contracts and a further nine are at different stages of

the procurement process.

5. Main Facts and Figures:

- £160m worth of PFI credits were earmarked for the HRA pathfinder

projects (2001/2002).

- £600m has been allocated to support schemes signing contracts in

HRA Round 2 (2002/2003 & 2003/2004).

- £80m has been allocated to date for Non-HRA schemes.

- £685m has been allocated from SR2002 of which £600m is available

for the third bidding round.

Large Scale Voluntary Transfer (LSVT)

6. Since the Stock Transfer programme began in 1988 more than 780,000

homes have transferred in 142 local authorities attracting of £12

bn of private investment. The 2004 transfer programme should see

this reach 1 million homes transferred by the end of 2005.

7. The 2003 transfer programme was announced on 3 July giving the go

ahead to plans to proceed with transfer of over 125,000 homes. There

are 26 schemes in 17 local authorities.

8. Authorities wishing to apply for the 2004 Housing Transfer

Programme should follow the application procedure set out in Section

9 of the 'Housing Transfer Manual - 2003 Programme'

Arms Length Management Organisations (ALMOs)

9. Sustainable Communities - Building for the future announced

£1,994m was being made available for additional investment in local

authority homes where councils set up arms length housing management

organisations and achieve high standards. This is in addition to the

support given in 2002/03, making a four year total of over £2.1

bn. The expected model for ALMOs is 100 per cent local authority

owned company run by a board made up of tenants, councillors and

independent members.

Eight councils were awarded conditional funding under Round 1 of the

scheme in November 2001

Thirteen councils were awarded conditional funding under Round 2 for

expenditure starting in 2003/04.

At the end of July, Keith Hill announced that 13 more

authorities had been successful in applying for places on Round 3 of

the programme.

10. The addition of Round 3 to the investment already proposed under

Rounds 1 and 2 mean that ALMOs are looking to invest an extra £3.3bn

between now and 2010 to bring all their stock up to the

decent homes standard. Together ALMOs, either existing or proposed,

under the current three rounds of the programme cover just under

550,000 homes or 1 in 5 of all council stock.

11. We have invited expressions of interest in a fourth round by 26

September 2003. Final bids are due by 31 December 2003.

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