UK Affordable PPP Problem: “One Of Our ‘P’s Is Broken”

Incompetence? Bad Faith? Obsessive fealty to shareholders?  Whatever the reason, local United Kingdom councils are starting to finger one of the ‘P’s in their Affordable Housing Public Private Partnerships as an intolerable fly in the ointment.

The ‘P’ for ‘Public’? That’s them — the councils. They’re not fingering themselves for their growing exasperation. ‘P’ for Partnership? Nope, not the problem. Budding council solutions to their exasperation may still include partnerships.

Councils have a growing sense that ‘P’ for ‘Private’ may be the insurmountable obstacle to developing mixed income housing projects that include a meaningful amount of affordable housing.

Why is this of interest outside the UK?

The broken ‘P’ in Public Private Partnerships exists in other countries. Top American CEO’s tacitly admitted the problem at a conference this past year.¹

Like seniors without flu shots, UK councils are particularly vulnerable to ‘viability assessment disease’² that so often infects private partners part way through affordable housing projects. For a classic example of the problem, consider a recent housing project in Caerphilly, Wales. The mixed income development was slated to have 40% affordable housing until the dreaded viability assessment disease reduced it to 7%, a seemingly typical result. Read more in the Caerphilly Observer: Just 25 Out Of 350 Homes Will Be ‘Affordable’ In New Development

Not terribly surprising that some councils are looking to rid themselves of the broken ‘P’. There are a range of possible solutions, including a return to UK council practice of developing and building housing ‘in-house’ rather than relying on partnerships.

However, faced with the cost of developing in-house expertise,³ still others are looking at another partnership model, not with private enterprise but with council-owned non-profit development corporations. Read more about one in THE READING CHRONICLE: Housing Crisis Could See Council Set Up Its Own Housing Company

1. Business Roundtable, a group of very large companies called a press conference announce that in addition to being about shareholder profits, business has responsibilities to the environment and to the public. Try: U.S. Corporate Leaders Swing Left To Fix ‘Frayed’ American Dream
2. Try: UK Affordable Housing Viability Assessments: Can Developers Abuse The Privilege?
3. For a cautionary tale in this regard, try: Beijing Rains On The Affordable Public Housing Parade