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Top e-government news, updated daily, and regular features from the top people in the public sector.
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| Rigid PFI contracts hamper consultation with tenants |
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Conflicting advice from Whitehall on how to run housing private finance initiatives is causing delays and risks ramping up costs, project specialists have warned.
Partnerships UK, the Treasury-backed PFI advice agency, has endorsed the use of a model contract, which can be applied to all types of new build schemes, including housing, health and education.
But PFI consultants have warned that meeting the demands of the contract is hampering local authorities' efforts to comply with the Department for Communities and Local Government's drive to involve residents in contract negotiations.
Jeff Zitron, director of consultancy Tribal HCH, said the rigidity of the contract had obstructed local authorities' ability to consult tenants on proposals.
'There is a general conflict between the sustainable community approach that [the DCLG] wants and the speedy procurement of the Partnership UK approach,' he said.
'The DCLG has been trying to use the advantage of the contract based structure to turn it into a partnership model for all the different stakeholders involved,' he said. 'That doesn't fit well with the standard contracts the government is trumpeting.'
The unique demand on councils to ensure tenants were consulted as part of a housing PFI bid made it more difficult to force contracts into the mould of the Treasury's model agreement, he added.
'Conventional PFI doesn't lend itself to housing based regeneration. That is what the DCLG knows and that is why it is encouraging a different approach.'
Ian Davitt, head of housing PFI at accountancy firm RSM Robson Rhodes, said that the move towards more rigid contracts risked delaying the progress of bids through the Whitehall machine.
'As housing PFI schemes become more structured it is important that the regulatory approval process keeps pace to ensure that construction costs don't require repricing following the expiration of a fixed price period.
'There is a danger that if the approval of schemes is unduly delayed in the regulatory process that contractors may exercise their option to reprice their bids to the detriment of the public purse.'
Construction prices were predicted to rise by up to 8 per cent this year, Davitt added. 'On a £50 million contract that means another £3 million,' he said.
Chris Trowell, housing PFI project manager at West Wiltshire Council, said authorities also faced the challenge of ensuring the Treasury's model contracts complied with a new non-housing revenue account PFI agreement the DCLG was due to release in the summer.
'The challenge is that non-HRA PFI schemes are not all the same. You have to put them into a standardised framework without homogenising them,' he said.
'Because we are still an emerging sector we are all finding our way to an extent.'
Ian Keys, partnership director at social housing management company Pinnacle PSG, said: 'The general principle of tenant involvement is filtering through more and more as councils take decisions about their stock. It is absolutely vital and in everyone's interest to engage with communities.' |
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