Housing minister Grant Shapps has promised to review the use of PFI for social housing after a report from the National Audit Office suggested they rarely provided value for money.
The NAO study found that 21 out of 25 PFI schemes required further central government funding prior to contractual close.
Two PFI projects, one in Islington covering 4,000 homes and another in Manchester involving 1,500, both cost £100m more than the £60m estimated in their outline business case.
The report also criticised the Department for Communities and Local Government for failing to assess whether the schemes represented value-for-money.
Amyas Morse, head of the National Audit Office said: “The Department for Communities and Local Government has pursued the PFI funding route for improving housing stock with only limited evaluation of the value for money of the programme. It should now carry out such evaluation.
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“The Department should assess, as a matter of priority, whether its current and planned PFI projects are delivering value for money. It should at the same time, assess all its past projects. This assessment should be based on hard numbers as well as qualitative factors.”
Housing minister Grant Shapps has now promised a review of PFI in social housing during the autumn's spending review.
He said: “This report is further independent evidence of the failure of the previous government to demonstrate value for money for the taxpayer.
“‘We can and must do better. Housing PFI plays a useful role in improving existing homes and providing new homes in areas of housing need, but we also have a responsibility to ensure every pound we spend is spent wisely because of the huge deficit in public finances we have inherited.”
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