Agenda item

The Committee has had a long standing interest in the progression of the Housing PFI project, receiving reports in November 2009, May 2010 and an oral update from the Project Manager in July 2010. In the last update members learnt that Cabinet had approved the agreement and it was hoped that following scrutiny from central government the project would commence to provide 350 new social rented homes over 2 phases.

An update on the status of the PFI Project is now provided and the Committee is asked to consider its content and raise any comments or queries with the Cabinet Member for Economic Development, Planning and Housing.

Cllr Howard Greenman – portfolio holder for Housing and Mike Swabey – Strategic Project Manager were in attendance to present a report on the status of the Housing PFI Project to provide 350 new social rented homes.

Clarification was provided by the portfolio holder that there had been minimal change in progression of the project since the Committees previous update although commercial agreement had been reached between the Council and Silbury Housing Ltd in respect of the housing PFI deal.

However due to additional government approval processes it was likely that further negotiations would be reopened once consideration of central government’s derogations response had taken place.

Members of the Committee noted that a new housing bonus, which it was understood would be payable to Councils allowing house builds on Council owned land, was likely to be written into the Localism Bill and questioned whether the project would be able to benefit from such a bonus.  The Strategic Project Manager confirmed that this avenue would be further investigated but also provided clarity that the majority of the land in question was privately owned and as such would not be applicable.

Clarity was also provided that following value for money (VfM) assessments the Council had been advised that maintenance and operational insurance costs were considered high for the project.  As such further discussions had taken place with Silbury and costs reduced accordingly. Contract management and monitoring costs had also been reduced internally with no effect to the project. 

The specification of the properties had been reduced from a Level 4 to Level 3 which was the minimum build requirement for social housing.  Although the initial aspirations of the Council was to provide Level 4 specification, Level 3 had been set by the Homes and Communities Agency (HCA) and no further funding would be made available from the HCA for a higher specification.

In line with guidance received centrally projects across the County were expected to achieve in the region of 8-10% cost savings.  The HCA had asked that Councils work with bidders to assess the private funder margins to achieve further cost savings where possible.

The set up costs of the project to date equated to £2.4m and there was therefore an incentive to see the project through to fruition.  The bidding consortium led by Sarsen Housing had also invested heavily into the project.  There was also a significant government grant attached to the build.

Before entering into the contract further information on the VfM element would be considered, via delegated decision, by Corporate Directors.  The contract would also be required to pass through an internal VfM process set by Treasury.

The portfolio holder confirmed that the Committees concerns including the reduced specification of the build and costs already associated with the project would be noted.

Following motions received the Committee resolved to:

1)        Welcome the Cabinet Member’s decision to continue with the project; and

2)        Request that the officer research the difference in cost between a Level 3 and Level 4 specification and that this and the information on efficiencies would be taken into consideration by the Corporate Directors with delegated powers.