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Housing

End of controversial privatisation deal sees 4,000 social homes brought back under council control

Hundreds of PFI deals struck during Tony Blair’s premiership are set to expire in the coming years and Islington Council has urged other authorities to follow its lead and end outsourcing.

A London council has brought the management of more than 4,000 social homes back in-house after a 16-year Private Finance Initiative (PFI) contract ended.

Islington Council struck a reported £420milllion deal with private sector consortium Partners for Improvement in Islington (Partners) in 2006 through the controversial and much-criticised PFI policy, which allowed private firms to provide public services.

But in 2018 the council indicated it wanted to bring the services back in-house following complaints from tenants and leaseholders, who accused Partners of not carrying out repairs and a lack of accountability. During a consultation in 2020, 91 per cent said they would prefer their homes to be managed by the council.

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Islington’s deputy leader and housing chief Cllr Diarmaid Ward said he was “absolutely delighted” the homes were back in the council’s hands and promised a “much closer” relationship with tenants and leaseholders.

He told The Big Issue: “I know a lot of residents have been very, very disappointed with Partners over the years in terms of complaints, repairs and customer care. I share an awful lot of those concerns.”

He added: “I would encourage all councils that outsourced during the PFI years to have a look at where they are now and see if they can make bringing them back in house work.”

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The contract that ended was the second deal struck with Partners, resulting in it managing and maintaining more than 6,000 social homes in the north London borough.

The first, signed in 2003, was the first of its kind in the country. It covers another 2,000 properties and runs until 2033. Ward said the smaller portfolio going forward would give Partners “an opportunity to get to know their residents and improve that relationship.”

PFI deals were a means of raising cash for capital investments by having private companies front the costs. They were introduced by John Major and championed by Tony Blair but have been heavily criticised for failing to deliver value for money.

In 2018, following the collapse of construction firm Carillion, then-chancellor Philip Hammond said the government would no longer be using the model. In February this year the government published guidance for authorities on how to handle the transition of services when contracts expire, with many of the 700 deals set to end from 2025.

Islington’s Labour council says it has an “in-house by default” policy and the PFI deals were struck by the Liberal Democrat administration at the time.

Partners was owned by a private sector consortium originally comprised of Bank of Scotland, United House Group and Hyde Housing Association, with Rydon Property Maintenance providing repairs and cyclical maintenance.

The now-defunct John Laing Infrastructure Fund (JLIF) bought out United House’s 45 per cent stake in both deals in 2012, and extracted at least £9million of taxpayers money offshore to Guernsey over the next six years, according to the Islington Gazette.

Previous estimates suggested Islington Council expected to pay Partners around £45million for the contracts in each of the last three years.

Islington North MP Jeremy Corbyn, who as Labour leader promised to “end the PFI rip off” and nationalise PFI contracts, backed the council’s move. He told The Big Issue: “I very much welcome the end of this very expensive exercise in outsourcing housing management in Islington, which is overwhelmingly supported by local residents.

“I am looking forward to seeing services returned to and run by our council more efficiently and at much less cost”.

Partners could not be reached for comment.

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