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• Private Finance Initiative (PFI) for Housing Revenue Account Housing - Early Lessons from the Pathfinder Programme

Housing

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Summary

Ensuring sufficient levels of investment in major refurbishment works has been an enduring challenge for social housing policy. Several years ago the Chartered Institute of Housing reported a £21-23 billion investment backlog - an amount that is unlikely to be affordable from traditional capital funding routes. PFI potentially provides an important new route for generating additional affordable investment and, by placing risk with the private sector where it is best equipped to manage it, securing value for money. Local government capital funding regulations were relaxed in 1998 to allow PFI to be undertaken on refurbishment projects involving HRA land. While local authorities (LAs) could use their own resources to fund PFI projects, in practice they rely on support from central Government in the form of PFI credits.

Stock transfer already provides a mechanism to raise additional private capital for social housing investment, by transferring ownership from the public to private sector. However, there are constraints on how far this approach can be pursued, not least because it requires the approval of tenants. More recently the provision of capital monies for Arms Length Management Organisations (ALMOs) provides yet another potential new route to accessing (limited) investment for stock requiring refurbishment. Therefore PFI for HRA needs to be seen in the context of a variety of investment routes for social housing.

This is a summary of the early lessons learnt from the Pathfinder authorities on PFI for social housing within the PFI.

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• PFI for HRA: Early lessons from the Pathfinder Programme
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