The change also offers more scope for local authorities to reorganise estate design, particularly where existing design encourages and promotes crime and vandalism. It also provides an opportunity for an Authority to change the social mix, particularly where groups are under represented e.g. key workers, mixed income groups. A few respondents expressed concern about giving schemes already in procurement the opportunity to rescope and include elements of new build in their schemes. for more info : Melbourne Property Valuers
However ODPM would review each application on a case by case basis and would need evidence of demonstrable value for money. ODPM is also conscious of keeping the procurement time of the existing schemes to a minimum and this would be taken into account in any decision.
The Council of Mortgage Lenders cautiously admit that the change does seem sensible, however they feel that ‘until the PFI pathfinders can be evaluated, ODPM should give proper consideration as to whether it is appropriate to encourage local authorities to undertake even limited programmes of new build via PFI’. However ODPM believe that there is little difference in extensive refurbishment and replacement build and also that replacement build can allow local authorities to tackle some of their worst condition and problematic stock, something refurbishment struggles to do.
ODPM also believe that by making the change now it will deliver a much needed boost to market confidence and improve the way in which PFI can work in housing. As Leeds CC point out ‘this would help boost confidence in PFI as an investment option and send the right message to the private sector as to the Government’s intentions’. They believe that this will bring large players into the market building new social housing and push smaller firms currently providing this service out. They also cite another reason as: ‘there is little evidence to suggest that local authorities are demanding the new right to be able to use PFI for new build’.