Camden hit by new blow

Camden Council has suffered a fresh blow in its bid to meet the decent homes target, with a shock government decision to pull the plug on one of the flagship housing private finance initiative projects.

The council, which has a three-star housing service, reacted with ‘shock and disappointment' to the government's decision to bin the project – after more than four years of preparatory work.

The scheme was rejected by officials from the Treasury and the Office of the Deputy Prime Minister at a meeting last week on the grounds that it was not value for money.

The council had asked for a higher level of government funding for the scheme than had been anticipated. Raj Chada, executive member for housing, said: ‘I am shocked the Treasury has made a decision at the eleventh hour that the scheme is too costly, despite four years of work and negotiation with the Office of the Deputy Prime Minister to make the deal work.

‘Together with the tenants and residents we have done everything the government has asked of us in negotiations for the PFI scheme.

We were led to believe right up until this point that the scheme would receive funding and go ahead.' A statement from the ODPM said: ‘Concern was expressed over the length of the procurement [process] and the increases in price since the scheme was originally approved, particularly since a large part of the negotiations have been with a single bidder.

‘Though ODPM supported the scheme, following discussions, the conclusion was that the project did not represent a value for money procurement.'

Neil Litherland, director of housing at Camden Council, said there had been only one bidder for the project since 2001 but the ODPM had encouraged the council to continue.

‘The time to say a single bidder and value for money do not go together would have been the time we went down to a single bidder,' he told Inside Housing.

The decision is likely to worry other authorities that have only one bidder for their schemes. Jeff Zitron, a director of Tribal HCH, said the rejection of the scheme at this stage would do nothing to endear the initiative, which the ODPM has promoted heavily, to other councils.

‘I think it will put authorities off for justifiable reasons,' he said. ‘PFI for new build is a great idea. PFI for refurbishment ought to be put out of its misery as quickly as possible.'

The government's rejection of the scheme follows the council's decision last year to scrap another housing PFI scheme after balloting tenants on the proposals and the rejection by tenants of plans for an arm's-length management organisation.