Local councils, housing authorities and other groups with an interest in the Public Finance Initiative are to be consulted over proposals designed to help improve council tenants’ homes. The plans have been published in a consultation paper from the Office of the Deputy Prime Minister. It expects the proposals to help clear the way for an increase in the number of Housing Revenue Account Public Finance Initiative schemes to provide funding to improve council houses.It suggests replacing the current system, where the level of HRA subsidy for PFI schemes in a year is linked to the housing authority’s interest rate. Housing authorities operating PFI schemes have been concerned that under this formula historically low interest rates have meant that long-term subsidy entitlement might not match the true costs of the scheme because charges to the authority are fixed for the period of a project and take no account of interest rate fluctuations.
The ODPM is now proposing a fixed level of annual subsidy, to be known as a PFI allowance, which will be determined for the duration of the scheme. The subsidy entitlement would aim to match as closely as possible the capital element of an authority’s unitary charge payments.
Consultations on the proposal will be carried out with those with an interest in PFI, local authorities and housing organisations as well as members of the public. The consultation document is available on the ODPM website.
The HRA Public Finance Initiative is one of three ways in which local authorities can access additional money to help meet government targets for improvements to housing stocks by 2010. Manchester and Islington councils, the first of eight pathfinder authorities, signed contracts to begin improvements in their areas in March.