PFI frequently asked questions
Below is a list of frequently asked questions relating to the Pendleton Private Finance Initiative (PFI) process. Click on your area of interest below to take you to a list of questions and answers.
Pendleton Private Finance Initiative
- What it is and what stage it is at
- Why PFI and the benefits
- The PFI contract - who manages PFI
- How PFI will affect council tenants and leaseholders
- Are homes going to be demolished?
- Living in Pendleton during the redevelopment
Pendleton Planning Guidance information
- The bigger picture - wider regeneration of Pendleton
- Changing processes from Pendleton Area Action Plan to Planning Guidance
- Physical changes
Pendleton Private Finance Initiative - What it is and what stage it is at
Q) What is the Pendleton Private Finance Initiative bid and why is it important to Pendleton?
A) The Private Finance Initiative (often referred to as simply PFI) is a means by which Salford City Council is able to secure substantial investment from the government to improve, manage and maintain council housing. Tenants and leaseholders selected PFI as their preferred investment option for council homes within Pendleton and the council is now pursuing this on their behalf. PFI is important for Pendleton as it is needed to achieve the 'Decent Homes Standard' and to help transform under-used land, vacant land and community facilities within the area. The PFI process is being developed alongside the Pendleton Planning Guidance which is the overall plan for the regeneration of Pendleton.
Q) Is every housing PFI the same?
A) Each PFI project is different depending on local circumstances. However, there are some common threads that run through all projects. Salford City Council will sign a contract with a private sector ‘operator’ which will typically last 30 years. Over the first part of this contract, usually three to five years, the operator will refurbish, re-provide or build new homes. During this period and for the full length of the contract the operator will provide certain services which are currently provided by the local authority. These will include repairs and maintenance and perhaps rent collection, tenancy management, care taking and security. The exact services included may vary from project to project. The operator is paid for the work over the course of the contract and on a performance basis. The authority and tenants will design an ‘output specification’ which is a document setting out what the operator is expected to achieve. If the operator fails to meet any of the agreed standards it will lose an element of its payment until standards are improved.
Q) How has the PFI progressed this year?
A) Inspiral Pendleton and SP+ are the remaining two bidders and will now work up their proposals into very detailed submissions. The council are meeting with Inspiral Pendleton and SP+ to help to refine their proposals and develop contractual documents.
Housing Minister Grant Shapps has signed off the next stage of the investment programme after being reassured it will deliver improvements that are value for money for local people. Since the October public spending review, housing private finance initiative (PFI) projects nationally have been put on hold to undergo further scrutiny from the Homes and Communities Agency. Pendleton’s plans survived the review which means the city council can now push forward with its plan to completely redevelop Pendleton with a mixture of 1,600 new homes and improvements to some 1,200 existing homes.
Q) What happens next?
A) The council will now put together a full business case to submit to the government for further review. A decision is expected in the next few months after which a preferred bidder to carry out the work will be chosen. The final bid documents will be submitted this summer. The final bids will then be evaluated by the Pendleton Team and in autumn the winning bidder will be confirmed. The PFI timetable provides an overview of what has happened to date and what is planned.
The 'Creating a new Pendleton' newsletter keeps you informed about what is happening in Pendleton including updates on the Private Finance Initiative (PFI) and more.
Q) What will PFI do for council tenants and leaseholders that cannot be achieved by the council alone or through a Tenant Management Organisation (TMO)?
A) The council receives substantial funding from the government and substantial funding through PFI to improve council homes and bring them up to the government's 'Decent Homes Standard'. The additional funding through PFI is not available to the council or Tenant Management Organisation outside PFI. Neither the council nor Tenant Management Organisation can secure the long term funding for future maintenance and refurbishment of homes on their own.
Q) What is the Decent Homes Standard?
A) The Decent Homes Standard was set by the government in 2000 as a minimum requirement for council housing. A decent home is defined as warm, weatherproof with reasonably modern facilities.
The PFI contract - who manages PFI
Q) Who will manage the PFI area when it is awarded?
A) The winning consortium will manage the PFI, which consists of a bank, a contractor and a Registered Social Landlord (RSL) (also known as a housing association).
Q) Do tenants have a say in the selection process for the PFI consortium (i.e. what bank, builder and housing association will make up the PFI)?
A) Yes. A wide range of community representatives have been identified and these people have all completed a 12 month training programme to develop their knowledge of PFI. The training programmes ensure that community representatives are fully equipped to take part in the selection of an appropriate PFI consortium. Tenants have been involved in developing service standards set out in the contract and will be evaluating bids from contractors. Residents will be crucial in evaluating and monitoring contractors’ performance when the PFI contract begins.
Q) How long will the PFI contractor manage the council homes for?
A) A typical PFI contract period will be for 25-30 years. The Pendleton PFI proposal is for a 30-year period.
Q) Why does the PFI contract have to be for so long?
A) A long-term contract enables the PFI contractor to borrow the money needed to repair, refurbish and improve council homes, and allows the council to make affordable payments to the contractor for its investment and services over the contract term.
A long-term contract should enable the council and the contractor to develop a good working relationship that should be reflected in better services to tenants and leaseholders.
Q) What does the contractor get out of PFI?
A) The contractor will get a guaranteed income over the life of the contract, subject to meeting the council’s performance standards. The contractor will not have to re-tender every three or five years. Such a guaranteed long-term income stream provides financial security to a contractor and makes PFI attractive to the private sector.
Q) How can you be sure that the PFI won’t run out of money?
A) The PFI contractor would have a business plan showing the income and expenditure for the length of the contract. The business plan would be vetted by the council and its advisors to ensure that it is robust. The contractor can borrow money to improve the housing from a bank, by showing how it would repay the money over the length of the contract. They would also receive additional financial support from the government in the form of PFI credits. The amount of government funding available is limited.
Q) Who will monitor the PFI contractor and make sure the PFI contractor delivers?
A) The council will establish a PFI Contract Management Team who would monitor the contractor’s performance. This team would ensure that homes are maintained to the set standards, and that services to tenants and leaseholders are delivered to set standards. The team will monitor the contractor’s performance across all services including tenant and leaseholder complaints.
Professional property surveyors would also advise the PFI Contract Management Team as to whether or not properties are meeting the physical standards of repair, refurbishment and improvement set out in the contract. There would also be a proper and effective dispute resolution procedure to avoid any disputes.
There could also be a PFI Contract Forum involving tenants, leaseholders, the council and the contractor. A contract forum could be a way of bringing tenants and leaseholders together with the council and the contractor, to ensure open reporting and monitoring of the contractor’s performance, providing accountability of both the contractor and the council to residents and be a way of making sure that there is effective communication between tenants, leaseholders, the contractor and the council.
Q) What are the roles of the council and Salix Homes in the project?
A) The council is responsible for developing the project, appointing the contractor and delivering the PFI scheme. Salix Homes will manage council homes in Pendleton until the PFI contract begins. Salix Homes is responsible for consulting with residents to find out what you want and working with the council to keep you up to date.
Q) How can we be sure that the current level of service delivered by Salix Homes will be met by the PFI contractor?
A) We are currently developing a document describing the required levels and standards of service you will receive from the contractor. This document will have targets that the contractor must meet. The contractor will be punished financially if the services they provide do not meet the standards.
Q) How can we be sure that the standard of service currently delivered by Salix Homes will be maintained up to the start of the PFI contract?
A) Salix Homes has a management agreement with Salford City Council and is monitored every month to make sure its performance meets the correct standard. The standard of service provided by Salix Homes in Pendleton will be the same standard as the rest of central Salford.
Q) Mulberry, Magnolia and Sycamore Courts aren't in the PFI programme, what is the future for these blocks?
A) These blocks will remain under the management of Salix Homes and will be brought up to the government’s ‘Decent Homes Standard’ in the next few years.
How PFI will affect council tenants and leaseholders
Q) Will tenants be certain to get a home if the PFI scheme goes ahead?
A) Yes, tenants will be assured of a home. Tenants will also have a greater choice of housing and can choose to rent from the council or a housing association or look at buying their own home under our affordable home ownership scheme.
Q) How would PFI affect tenants' rights?
A) There would be no change in status or rights of council tenants, including Right to Buy and Right to Manage (to start a Tenant Management Organisation).
Under a PFI contract, the council would still own the housing, but would lease the homes to another organisation to manage or deliver some services.
Q) Will my rent go up?
A) Current council tenants will remain with the council and the rents will be set by the council within government guidelines. The government is harmonising council rents and housing association rents so by 2012 tenants will be paying pretty much the same rent for similar properties in similar areas.
Q) Will people who move out of properties for redevelopment have to pay more for their bills and council tax?
A) Any changes in your bills will depend on where you move to and the type of property, for example, whether it is bigger or smaller.
Q) Do I have to become a tenant of a housing association (registered social landlord)?
A) Whilst new build homes within the PFI boundary will be for rent through a Registered Social Landlord (also known as a housing association) or for private sale, these will not be the only options available to you. You will also have the opportunity to remain as a council tenant if your home is being refurbished or if you move to a new council home if your home is going to be demolished.
The PFI proposals page can provide further information about what is happening in your area and the options available to you.
Q) How would PFI affect leaseholders?
A) The terms of the lease would remain the same with the contractor managing the lease on the council’s behalf. Usually the leaseholder would have to contribute to any improvement works to the property, carried out under PFI. Other PFI schemes have not charged more than £10,000 in any five year period, and have offered a loan to assist leaseholders. This is still to be confirmed by the council for the Pendleton PFI scheme. You would be advised of any potential cost prior to any works commencing where you live.
Q) My home is being refurbished - will I have to move out while improvements are done?
A) In nearly every case, you won’t have to move out. The contractor will carry out the work whilst you stay in your home and there will be minimum disruption to your everyday life whilst the work is being done.
Are homes going to be demolished?
Q) Will demolition be taking place?
A) The project includes elements of major refurbishment and remodelling of poorly designed housing, coupled with demolition and replacement new homes for rent and sale.
In developing our proposals, a key issue has been the need to ensure that Pendleton is seen as a great place to live and a place where you will find a choice of homes served by excellent neighbourhood services. What local people have told us during the consultations, is that there is a need for a much wider choice of housing if Pendleton is to become a popular neighbourhood.
The proposals developed have taken account of:
- the responses to the consultation to date
- an assessment of the affordability of the proposals across Pendleton
- what can be delivered within this area
- the need for all properties to meet the Decent Homes Standard as a minimum.
Following the consultation to date, we are proposing to demolish homes in the High Street area, and the Amersham Street and Athole Street area. Further information can be found by clicking on the estate proposals.
Q) If my house is to be demolished, where will I live?
A) If your home is going to be demolished, we will work with you to identify a new home that meets your needs and help you in your move to your new home. We will listen to you to find out what kind of new home you need, what type of property you would like to consider and where you want to live.
There are already some open space areas within Pendleton and we are looking at opportunities to build a range of new homes on these existing sites. The new developments, along with existing council and housing association properties, both in Pendleton and across the city, will provide new homes for people who need re-housing. If you are a council tenant you can also choose to move to a different council property within Salford, rent a property from a private landlord or housing association (registered social landlord) or buy a property through a shared equity scheme or an outright sale.
We want to keep the community together, so if you want to stay in the Pendleton area we will look at ways to make this possible. If you want to stay near to your current neighbours in the future we will aim to make this happen. We will be discussing your future housing in greater detail with you, as there will be a range of options available to you.
Q) My home is going to be demolished. What type of home will I be offered? Will it be 'like for like'?
A) We cannot guarantee rehousing on a ‘like for like’ basis. The system we use when offering people new homes is based on your needs. This is in line with the council’s allocations policy. We will listen to you to find out what type of property you would like and where you want to live and will work with you to find a suitable new home.
If you have not already made an appointment to discuss your housing needs, please call the Pendleton team on 0800 218 2000.
Q) Will we be entitled to any money if our homes are knocked down?
A) Each householder will be sent information about what will be happening to their home, and how the PFI developments will affect residents, tenants or leaseholders. Many of you are concerned if there will be any compensation packages.
All financial compensation packages will be developed in the next 18 months. At this stage we can tell you about Home Loss Compensation and Disturbance Allowances.
The following information should give you a brief overview of what you may be entitled to:
- Tenants will be entitled to a Homeloss payment, providing they have lived in the property for over 12 months prior to any demolition. This is paid on completion of moving. Currently, tenants receive approximately £4400 but this amount may change
- Homeowners and leaseholders will receive the market value of their property plus 10%
- A Disturbance Allowance will be available to tenants, homeowners and leaseholders. This covers all reasonable costs of removals and setting up a new home, for example, gas and electricity disconnections and carpet removal and fitting. We are also looking at other financial packages such as equity loans, but at the moment it is too early for these details to be agreed. We will keep you up to date on these allowances throughout the process
Q) How long will it take before I have to move out if my home is to be demolished?
A) It is anticipated that no major works will start in the PFI area until 2012. At the moment we don't have any specific timings when the works will start in each area of Pendleton - this will be developed and negotiated with the PFI developers during the procurement process.
Q) When will I be expected to move out?
A) Whilst the PFI contract does not start until 2012, some rehousing will take place before this so you may be able to move into a new home sooner. We will work with you to find out what you want to do and make sure you have plenty of time to prepare for your move.
Q) Why does Salix Homes need to carry out individual appointments with every household in the demolition area?
A) It’s really important that we get to understand your future housing needs in order to develop the re-housing plan. This will help us to find out about the demand for existing properties in Pendleton and also the types of properties that people will need in the future. If you have not yet discussed your housing needs, please contact Salix Homes to arrange an appointment.
Living in Pendleton during the redevelopment
Q) What will it be like living in Pendleton whilst construction work is going on - will it be like a building site?
A) By its nature redevelopment can be disruptive, although every effort will be made to limit the amount of disruption by carrying out the development in phases.
If you live in a house or flat that is going to be refurbished, it is unlikely that you will need to move out of your home as we will aim to cause as little disruption as possible.
If you live in a demolition area, we will make every effort to limit the amount of disruption, by carrying out the development in phases.
Q) What will be done first - and how will the order of works be decided?
A) The bidders have held a number of consultation events to listen to your thoughts and priorities and resident members of the steering group have been looking at the bidders’ proposals on your behalf. The programme of works will be determined through ongoing discussions with both bidders and will ensure investment is prioritised appropriately and takes tenants’ views into account. A formal handover will then place between Salix Homes and the successful PFI consortium. The council plans to have the contract signed in 2012 and there will be further consultation with the community once the succesful bidder has been selected. As soon as we know more information we will communicate this with you.
The bigger picture - wider regeneration of Pendleton
Q) How does PFI fit with the wider regeneration of Pendleton?
A) Pendleton is a focus of regeneration activity within the Central Salford area; it is included within the Manchester Salford Housing Market Renewal Pathfinder area, and Salford City Council and Salix Homes are currently working to deliver the Pendleton Private Finance Initiative and Pendleton Planning Guidance.
The Planning Guidance document provides the planning framework required to take forward the regeneration of the Pendleton area in the future. The Planning Guidance supersedes the Pendleton Area Action Plan and builds upon the work that had been carried out to date upon this project.
The Pendleton PFI is being developed alongside Planning Guidance, and will provide the investment required to bring council owned homes within Pendleton up to the Decent Homes Standard.
Changing processes from Pendleton Area Action Plan to Planning Guidance
Q) Why has the Pendleton Area Action Plan changed to Planning Guidance?
A) The council’s aim has always been to have a plan for the area that will support the Pendleton PFI bid. It became apparent that the 'Area Action Plan' and the 'Pendleton PFI' bid were not on the same timetable. The council decided to progress the plan for Pendleton through Planning Guidance as this is a much shorter process. This guidance still seeks to provide a clear way forward for the development and regeneration of the Pendleton area over the next 15-20 years. As a result the plan is now back on track and will be ready to go with the PFI bid as a key supporting document.
Q) What’s the difference between an 'Area Action Plan' and 'Planning Guidance'?
A) Very little. Both documents look the same and set out the same intentions for the future regeneration of Pendleton - for its housing, shopping, environment, schools and transport. Both have been prepared in exactly the same way with significant community involvement and have the same supporting documents. There would have been a public inquiry chaired by an independent planning inspector for the Area Action Plan but that part of the process would have taken an extra year, endangering the Pendleton PFI bidding timetable. At the end of the process the Planning Guidance will be adopted by the council and used to assess planning applications for the area.
Q) Will the change from 'Area Action Plan' to 'Planning Guidance' affect the outcome?
A) No. Residents, businesses and other stakeholders should be reassured that the change is more about changing processes and not the end result. The council is still committed to the large-scale regeneration of Pendleton in accordance with the wishes of the local community.
Q) Has the council wasted money in changing the process?
A) No. Both the plans need the same information so all of the work, materials and information gathered during consultations will be used for the Pendleton Planning Guidance. The shorter planning guidance process will save the council some money though this was not the reason for the change from an Area Action Plan.
Q) Can you give examples of the changes to Pendleton?
A) Some of the things that may happen in the area are changes to the type of family housing, changes to road, cycle and pedestrian routes and changes to the way open spaces are used. Nothing has been agreed yet so there are no concrete examples we can give at this stage.
Q) What difference will it make to people who live in the area?
A) People who currently live in the area will see better and improved housing and facilities and this will offer a long term future for the current and future residents of the area.
Q) With all the redevelopment in the area, will there be better policing in the area?
A) The Pendleton Planning Guidance addresses crime through improvements to the physical environment. We are working with a number of agencies, including 'Safer By Design', to ensure future developments are designed to minimise crime and the fear of crime in the area. Greater Manchester Police have a member on the Pendleton Steering Group and are able to feed information into the group to ensure crime and safety issues are heard.
Please visit the who's involved pages.
Q) Can I request copies of leaflets and questionnaires in another language?
A) Yes. If your first language isn't English and you have problems understanding the information, you can request the leaflet or questionnaire to be translated into your language. We want to communicate with all residents who live in Pendleton and overcome any barriers that prevent people understanding what is happening in the area. Please contact us if you require information in another language.
Q) Why should we bother telling you what we want when in the past nobody has taken any notice of us?
A) You may feel that in the past your views have not been listened to, however, this is not the case. All your views and feedback will be used to plan future developments in Pendleton as the process we are going through for both PFI and Planning Guidance requires us to show the government how the community have been involved.
We are working to improve how we feedback to you, to show you how your views have been considered. It is very important that you tell us what you want as the plans that are developed for Pendleton Planning Guidance and PFI will shape how Pendleton will look for the next 30+ years.
Q) How can we check that what you are telling us is true?
A) You can contact the Pendleton team on the Salix Homes freephone 0800 218 2000 for information relating to the Pendleton Planning Guidance and PFI.
If you are a council tenant, you can contact the Independent Tenant Advisors TPAS who provide free, independent advice about PFI. Call freephone 0800 731 1315 and ask for Kevin Farrell, Independent Tenant Advisor or email info@tpas.org.uk.
You can also write to Kevin Farrell, at TPAS, 5th Floor, Trafford House, Chester Road, Manchester, M32 0RS.
This page was last updated on 18 August 2011
