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Social PPP Housing in the UK Kevin Hanlon Director, 4ps December 2007

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Page 1: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

Soci

al P

PP H

ousi

ng in

the

UK

Kev

in H

anlo

n D

irect

or, 4

ps D

ecem

ber 2

007

Page 2: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

UK

Hou

sing

Mar

ket

•70

% o

f hom

es in

the

UK

are

priv

ate

•30

% a

re G

over

nmen

t soc

ial r

ente

d or

priv

ate

rent

ed

•A

lack

of p

rivat

e ho

uses

; ris

ing

hous

e pr

ices

; affo

rdab

ility

and

lack

of

soc

ial r

ent h

omes

are

acu

te p

robl

ems

in th

e U

K

•A

nnua

l priv

ate

hous

e bu

ildin

g is

abo

ut 1

80,0

00 u

nits

per

yea

r

•Th

e G

over

nmen

t prio

rity

is to

pus

h up

soc

ial h

ouse

bui

ldin

g w

ithan

£8

billi

on in

vest

men

t to

tack

le h

ousi

ng s

horta

ge o

ver 3

yea

rs

from

200

8/09

to :

•B

uild

at l

east

70,

000

affo

rdab

le h

ouse

s a

year

by

2011

•A

targ

et to

bui

ld 5

0,00

0 so

cial

hom

es a

yea

r

Page 3: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

Soci

al H

ousi

ng P

PP B

ackg

roun

d in

UK

•S

ocia

l Ten

ants

in th

e U

K h

ave

a rig

ht to

buy

thei

r hom

es. S

ales

sin

ce

1980

hav

e ex

ceed

ed 3

00,0

00 u

nits

gen

erat

ing

£45b

illion

. 75%

of t

he

proc

eeds

hav

e re

verte

d ba

ck to

Gov

ernm

ent w

ith 2

5% g

oing

to th

e Lo

cal

Aut

horit

y.

•S

ince

199

7 12

0+ a

utho

ritie

s ha

ve tr

ansf

erre

d th

eir h

ousi

ng s

tock

to

Priv

ate

Reg

iste

red

Soc

ial L

andl

ords

(RS

L), t

rans

ferr

ing

1mill

ion

prop

ertie

s.

•A

roun

d 98

Gov

ernm

ent L

ocal

Aut

horit

ies

have

opt

ed to

reta

in th

eir s

tock

m

anag

ing

857,

000

prop

ertie

s.

•To

dat

e PF

Iis

set t

o de

liver

: new

bui

ld fo

r ren

t4,4

73

prop

ertie

s,re

furb

ishe

d fo

r ren

t 15,

898

prop

ertie

s, re

furb

ishe

d fo

r le

aseh

olde

rs 2

,373

pro

perti

es, n

ew b

uild

for s

ale

2,75

8 pr

oper

ties.

Thi

s ha

s in

volv

ed in

vest

men

t of £

2.3

billi

on.

•Th

e H

ousi

ng C

orpo

ratio

n (H

C) i

s th

e G

over

nmen

t ‘qu

ango

’tas

ked

with

in

vest

men

t in

build

ing

new

soc

ial a

nd a

fford

able

hom

es. G

rant

isaw

arde

d by

the

HC

to R

SLs

. The

HC

inve

stm

ent p

lans

for 2

006/

08 a

re:

•£3

.1 b

illio

n in

mai

nstre

am p

rogr

amm

es (£

2.6

billi

on fo

r soc

ial r

ent;

£430

m

illio

n fo

r low

cos

t ow

ners

hip

and

£6 m

illio

n fo

r int

erm

edia

te re

nt,

prov

idin

g 60

,882

hom

es

•£4

64 m

illio

n on

13,

882

key

wor

ker h

omes

)

Page 4: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

the

UK

PFI

pro

gram

me

to d

ate

•P

FI la

unch

ed in

199

2 in

the

UK

•P

FI c

over

s bu

ildin

g ne

w S

choo

ls; H

ospi

tals

; Was

te P

lant

s; H

ouse

set

c

•U

K s

ucce

ssfu

lly c

lose

d ov

er 7

00 d

eals

, ove

r £45

bill

ion

inve

sted

•R

epre

sent

s 10

-15%

of U

K c

apita

l inv

estm

ent p

er y

ear

•To

tal U

K P

FI in

vest

men

t lev

els

for 3

yea

rs 2

007/

08 –

2009

/10

£12

billi

on

•21

hou

sing

pro

ject

s si

gned

and

16

proj

ects

in p

rocu

rem

ent

•Fu

ture

fund

ing

£1.8

bill

ion

for H

ousi

ng fr

om 2

008/

09 o

ver 3

yea

rs

•S

tand

ard

Con

tract

s no

w e

xist

•M

arke

t wel

l dev

elop

ed

•V

FM a

nd A

fford

abili

ty c

ritic

al

Page 5: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

•Lo

cal G

over

nmen

t bid

s fo

r PFI

fund

ing

from

Cen

tral G

over

nmen

t

•A

ll P

FI/P

PP

pro

ject

s ar

e re

quire

d to

pro

duce

an

Bus

ines

s C

ase

•G

over

nmen

t Dep

artm

ents

app

rove

the

Bus

ines

s C

ase

for

prov

isio

nal f

undi

ng

•U

K T

reas

ury

has

a P

roje

cts

Rev

iew

Gro

up (P

RG

)whi

ch th

en

appr

oves

the

mon

ey fo

r the

Bus

ines

s C

ase

•P

roje

cts

with

Dep

artm

ent a

nd T

reas

ury

appr

oval

can

pro

ceed

to

proc

urem

ent

•A

ll P

FI/P

PP

pro

ject

s ar

e su

bjec

t to

Loca

l Gov

ernm

ent i

nter

nal

appr

oval

s

•A

ll P

FI p

roje

cts

prod

uce

a Fi

nal B

usin

ess

Cas

e fo

r Gov

ernm

ent

Dep

artm

ent a

ppro

val b

efor

e th

e m

oney

is re

leas

ed

UK

Gov

ernm

ent P

FI a

ppro

vals

pro

cess

Page 6: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

The

PPP

Proc

urem

ent P

roce

ss –

EU G

uida

nce

4 w

eeks

3 w

eeks

3 w

eeks

2 w

eeks

Clo

se

Com

petit

ive

Dia

logu

e an

d C

all

for F

inal

Ten

ders

(C

FT)

Fina

l Ten

der

com

plet

ed

2/4

wee

ks

Fina

ncia

l Clo

se

Con

firm

co

mm

itmen

ts,

final

cla

rific

atio

ns,

due

dilig

ence

&

appr

oval

s

6/24

wee

ks

Fine

tuni

ng, &

fin

al e

valu

atio

n.

Pre

ferr

ed B

idde

r se

lect

ed

6/8

wee

ks

+ 6

wee

ks1

wee

kD

escr

iptiv

e D

ocum

ent*

&

PQ

Q is

sued

on

rece

ipt o

f EoI

OJE

U N

otic

e is

sued

Pro

cure

men

t pr

epar

atio

n

Bid

ders

co

nfer

ence

&

com

plet

ed P

QQ

re

turn

ed

1st

Stag e

PRG Competitive Dialogue

Ope

n C

D: I

nvite

to

par

ticip

ate

in

CD

& S

ubm

it O

utlin

e S

olut

ions

(IS

OS

)

Initi

al d

ialo

gue

with

bid

ders

.

O

utlin

e S

olut

ions

su

bmitt

ed

Eva

luat

ion,

cl

arifi

catio

n &

di

alog

ue o

n O

utlin

e S

olut

ions

Eva

luat

ion

repo

rt &

app

rova

l of

shor

t-lis

t for

di

alog

ue o

n D

etai

led

Sol

utio

ns

Ref

inem

ent o

f pr

ojec

t do

cum

ents

Issu

e In

vita

tion

to

Sub

mit

Det

aile

d S

olut

ions

(IS

DS

)

Pot

entia

l fur

ther

di

alog

ue &

re

finem

ent o

f so

lutio

ns

Dia

logu

e an

d B

idde

rs s

ubm

it D

etai

led

Sol

utio

ns

13 w

eeks

10 /

12 w

eeks

Eva

luat

ion,

cl

arifi

catio

n,

dial

ogue

&

“neg

otia

te”

11/1

3 w

eeks

Asse

ss re

adin

ess

to c

lose

dia

logu

e

2 w

eeks

2nd

Stag e

PRG

PQ

Q e

valu

atio

n &

pr

e-qu

alifi

ed li

st

of b

idde

rs a

gree

d an

d ap

prov

ed

Page 7: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

The

Leed

s C

ounc

il PP

P U

nit

•Le

eds

Cou

ncil

has

its o

wn

PP

P/P

FI U

nit

•Th

e C

ounc

il ha

s a

team

of l

awye

rs, a

ccou

ntan

ts w

hom

man

age

PP

P p

roje

cts

alon

g w

ith a

dvis

ors

•Th

e P

PP

Uni

t bid

s fo

r cen

tral G

over

nmen

t Fun

ding

(i.e

. PFI

) for

P

PP

no

cent

ral f

undi

ng it

all

com

es fr

om th

e pr

ivat

e se

ctor

•Th

e P

PP

Uni

t man

ages

pro

ject

s an

d pr

ocur

emen

t (ho

usin

g,

scho

ols,

was

te) t

o fin

d pr

ivat

e se

ctor

par

tner

s an

d in

vest

men

t

•S

take

hold

ers

are

cons

ulte

d (p

ublic

, ten

ants

etc

)

•Th

e C

abin

et in

the

Cou

ncil

appr

oves

all

proj

ects

•Le

eds

Cou

ncil

PP

P U

nit h

as m

anag

ed £

800

mill

ion

in p

roje

cts

Page 8: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

The

Swar

cliff

e Es

tate

PFI

in L

eeds

Page 9: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

Swar

cliff

e Le

eds

Page 10: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

Swar

cliff

e PF

I -Po

or H

ousi

ng

•In

nee

d of

inve

stm

ent a

nd re

gene

ratio

n

•2,

700

poor

non

-Dec

ent C

ounc

il ho

mes

•1,

300

owne

r occ

upie

rs -

50%

of t

he h

ouse

s

•P

opul

ar fa

mily

hom

es &

sta

ble

popu

latio

n

•P

oor l

ayou

t, ac

cess

& p

arki

ng

•P

oor q

ualit

y pu

blic

spa

ces

and

neig

hbou

rhoo

d ce

ntre

•11

unp

opul

ar h

igh

rise

bloc

ks

•E

mpt

y fla

ts; h

igh

turn

over

of o

ccup

ants

•S

ubst

ance

abu

se, c

rime,

ant

i-soc

ial b

ehav

iour

risi

ng

Page 11: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

Wha

t was

nee

ded

•H

ouse

s no

t fla

ts•

Dec

ent H

omes

•S

ecur

e ho

mes

•G

reen

Spa

ce•

Car

Par

king

•Fa

mily

pla

y ar

eas

•N

ew H

omes

•S

hops

•Im

prov

ed R

oads

Page 12: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

Why

PFI

/PPP

•S

igni

fican

t inv

estm

ent n

eede

d £1

00m

+ Le

eds

did

not h

ave

the

mon

ey

•U

K G

over

nmen

t pro

mot

es th

e pu

blic

and

priv

ate

sect

ors

wor

king

in

par

tner

ship

s

•U

K g

over

nmen

t offe

rs L

eeds

£79

mill

ion

in P

FI fu

ndin

g

•S

truct

ured

2 y

ear p

rocu

rem

ent t

o fin

d a

suita

ble

partn

er

•25

yea

r con

tract

bet

wee

n Le

eds

and

its P

artn

er

•P

rices

fixe

d; ro

bust

lega

l con

tract

s; ri

sks

trans

ferre

d to

priv

ate

sect

or

•P

artn

er: C

arill

ion

PLC

; Yor

kshi

re H

ousi

ng a

nd B

ank

of S

cotla

nd

Plc

Page 13: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

Typi

calP

FI s

truct

ure

Loca

l G

over

nmen

t

SP

V L

imite

dB

ank

Ope

rato

r/FM

Com

pany

Con

tract

or

Inve

stor

s

Cen

tral

Gov

ernm

ent

Dire

ct A

gree

men

tA

sset

s &

Ser

vice

s

Uni

tar

y

Pro

ject

Agre

emen

t

PFI

Cre

dits

(?)

Shar

e C

apita

l

Juni

or o

rSu

bord

inat

ed D

ebt

Con

stru

ctio

n C

ontra

ctO

pera

tion

/ Fac

ilitie

s M

anag

emen

t Con

tract

Loan

Agr

eem

ent

Cha

rge

Page 14: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

The

Inve

stm

ent M

ade

•1,

659

Cou

ncil

hom

es im

prov

ed

and

refu

rbis

hed

to D

ecen

cy P

lus

by 2

010

•94

3 Fl

ats

dem

olis

hed

•N

ew c

omm

unal

are

as, e

xter

nal

envi

ronm

ent &

com

preh

ensi

ve

rene

wal

s

•£1

50m

inve

stm

ent o

ver 3

0 ye

ars

with

£79

mill

on fr

om U

K c

entra

l G

over

nmen

t in

PFI

mon

ey

•P

lann

ed m

aint

enan

ce fo

r 25

year

s

•C

aret

akin

g, c

lean

ing

& g

roun

ds

mai

nten

ance

•Te

nanc

y m

anag

emen

t via

the

ALM

O

•Th

e D

evel

opm

ent A

gree

men

t

•35

0 ne

w h

omes

for s

ale

•10

0 ne

w h

omes

for s

ocia

l ren

t; 40

fo

r sha

red

owne

rshi

p

•N

ew ro

ad la

yout

& c

onne

ctiv

ity

•La

ndsc

apin

g &

env

ironm

enta

l w

orks

•3

play

are

as

•G

uara

ntee

d m

inim

um p

rice

•P

rofit

sha

ring

on in

crea

ses

in la

nd

valu

es

•E

co H

omes

Page 15: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

Now

in 2

007

•To

wer

blo

cks

dem

olis

hed

•H

omes

bei

ng re

furb

ishe

d

•60

new

hom

es c

ompl

eted

•Th

e ar

ea h

as c

hang

ed fo

r the

be

tter

•S

atis

fact

ion

leve

ls a

re u

p

•C

rime

& a

nti-s

ocia

l beh

avio

ur

dow

n

•N

ew h

omes

are

pop

ular

•E

mpt

y ho

mes

at 1

% &

turn

over

low

•Jo

int w

orki

ng e

stab

lishe

d be

twee

n Y

orks

hire

Tra

nsfo

rmat

ions

and

Le

eds

Eas

t Sou

th E

ast H

omes

Page 16: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

2007

Dev

elop

men

t of E

co H

omes

and

C

omm

unity

Fac

ilitie

s

•40

Soc

ial E

co H

omes

•G

over

nmen

t Prio

rity

to re

duce

C

O2

emis

sion

s in

the

UK

to m

eet

EU

and

Wor

ld T

arge

ts

•S

hops

•D

octo

rs S

urge

ries

•N

ew R

oad

Link

s

•C

hild

ren

Pla

y A

reas

Page 17: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

Leed

s PP

P EA

SEL

Reg

ener

atio

n of

G

ipto

n

Page 18: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

EASE

L Le

eds

PPP

•£1

.8 b

illio

n P

PP

(No

Gov

ernm

ent F

undi

ng li

ke P

FI)

•Jo

int V

entu

re P

PP

Com

pany

bet

wee

n Le

eds

City

and

Bel

lway

H

omes

Plc

•R

egen

erat

ion

of G

ipto

n w

hich

has

11,

000

hom

es

•A

16

ha a

rea

to b

e cl

eare

d

•1,

000

soci

al h

omes

to b

e de

mol

ishe

d

•5,

000

new

hom

es to

be

built

with

pro

fits

bein

g in

vest

ed in

the

rege

nera

tion

of G

ipto

n

•15

yea

r pro

ject

Page 19: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

Leed

s PP

P C

halle

nges

•P

rocu

rem

ent T

imes

cale

s

•S

kills

and

Exp

ertis

e

•R

esou

rces

•V

FM

•Th

e ch

alle

nge

of m

anag

ing

25 y

ear c

ontra

cts

•P

lann

ing

•V

alue

for M

oney

and

Affo

rdab

ility

•Fu

ndin

g

•A

dvis

or c

osts

Page 20: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

Con

clus

ion

•P

PP

ver

y po

pula

r in

UK

•M

ajor

ity o

f Hou

sing

in th

e U

K in

the

priv

ate

sect

or

•V

ery

few

soc

ial h

omes

bui

ld o

ver t

he la

st te

n ye

ars

•S

igni

fican

t Inv

estm

ent $

billi

ons

in im

prov

ing

exis

ting

soci

al h

ouse

s m

ade

by th

e U

K g

over

nmen

t ove

r the

last

ten

year

s

•N

ew fo

cus

is to

bui

ld m

ore

soci

al a

nd a

fford

able

hom

es

•La

nd li

mite

d an

d pl

anni

ng a

con

stra

int a

nd b

eaur

ocra

cy

•C

osts

esc

alat

ing

in b

uild

ing

hous

es (r

aw m

ater

ials

, wag

es e

tc)

•La

ck o

f bui

ldin

g fro

m p

rivat

e se

ctor

priv

ate

hom

es a

s th

ey m

anag

e pr

ofits

Page 21: Social PPP Housing in the UK Kevin Hanlon Director, 4ps ...siteresources.worldbank.org/PPPILP/Resources/7-Kevin.pdf · Social PPP Housing in the UK Kevin Hanlon Director, ... All

Con

tact

det

ails

Kev

in H

anlo

n

Proj

ects

Dire

ctor

, 4ps

kevi

n.ha

nlon

@4p

s.go

v.uk

Tel:

0774

7 44

1787