Islington Council has successfully brought life to its second housing Private Finance Initiative (PFI) scheme. Islington is the only council to achieve this and secure crucial funds for the renovation of over 4,100 homes. PFI 2 follows the success of PFI 1, under which 2,300 homes are being improved. PFI 1 was the first pathfinder housing PFI scheme in the country to get up and running. Islington's Assistant Director for Special Projects, Chris Worby, explained some of the difficulties that were overcome.
"Bringing about two PFI schemes was no easy feat. We learnt a lot from the first and expected the second to be easier but we faced new challenges. Councils usually carry out mass repairs to properties on estates because the structure of council housing means that's where the most of them are, so usually the work is contained. This was different."
Both Islington's PFI schemes involved renovating thousands of properties located in streets across a busy borough near the centre of London. Tenants and leaseholders occupy these properties so as well as explaining to leaseholders what their share of costs were, the council had to communicate how the schemes were progressing, to tenants and leaseholders that were spread across the borough.
"Surveying the street properties, carrying out the work, and even parking is more difficult than when working on an estate," added Chris. Explaining, he said: "The PFI 2 surveys took longer because we collected three times more information than with PFI 1 and the bidders were far more cautious. All this meant we faced affordability challenges."
Recalling the experiences gained, Chris said that by the time the first PFI negotiations ended, Islington Council had amassed a good knowledge of prices. He said: "We used the costs and the experiences from PFI 1 to make a detailed bid to Government in June 2003, to fund PFI 2."
Chris recalls the Government needed some time to consider the submission and almost a year later in May 2004, Islington Council was granted an increased credit approval. "Other difficulties lay ahead though because by the time the council got an answer from the Government, the second bidder had fallen aside," he said.
Expanding on difficulties getting interest in PFI 2, he said that although eight potential bidders initially showed an interest in the contract, only two came forward. Explaining the reason for the lack of interest, Chris said: "Many organisations decided not to get involved - they believed the scheme was too complex. The properties are all different, some 200 years old and they vary in standards as a result of intermittent investment and repairs.
"When Islington Council finally submitted the bid, it was too expensive," added Chris.
When another council got the go ahead to progress a 15-year project, Islington Council looked again at the scope of its PFI project and the costs. Revising the scheme from a 30-year scheme to 16 years helped make it affordable.
Concluding Chris said: "Because of the 'single bidder' situation, the council then had to go through a major bench-marking exercise, in order to prove that the revised negotiated scheme could demonstrate value for money."
Cllr Terry Stacy, Deputy Leader and Executive Member for Housing and Communities, was also involved in the negotiations. He said: "This second contract with Partners for Improvement in Islington means we are confident of reaching our goal of bringing all our properties up to the Decent Homes Standard within five years.
"And once again, Islington leads by innovation. By investing government money in our housing stock we are ensuring a better quality of life for thousands of tenants and leaseholders."
The contract, signed on 15 September, will bring £153m of capital investment to upgrade tenants' kitchens, bathrooms, wiring and central heating. It will also be used to carry out major repairs in 2,900 tenanted and 1,200 leasehold homes over the next five years.
Islington's PFI 2 contract is already underway and Partners will manage street properties throughout the Borough of Islington.
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Page Last Updated: 29 July 2008