Greenwich agrees to plug £21m hole

Councillors agreed a series of proposals to ‘find the remainder’ of the funding needed to press ahead with the £800 million regeneration of the Ferrier estate.

The scheme will see 1,900 homes on the estate knocked down and replaced with 4,000 new homes, 38 per cent of which will be affordable.

But at a meeting on Tuesday last week, councillors were told that the cost of decanting households from the estate had risen above initial estimates. It said the costs had increased as a result of valuation tribunal decisions on buy-backs from leaseholders.

A report by Mary Ney, chief executive of the council, states the original decant budget gave average buy-back costs as £75,000 per home and disturbance costs of £6,000 per home.

‘The revised cost estimates are now based on average buy-back costs of £149,700 and disturbance costs of £6,000 per property,’ the report states. ‘This has significantly increased the investment required.’

The increase means officers now think the council will need to spend £7 million a year for the next three years. The option for any reduction in costs ‘is marginal’, the report adds.

At the meeting the council’s cabinet agreed a four-point plan to meet all costs. The move will see it take on an additional £13 million of prudential borrowing - part-funded by increased housing revenue account efficiency savings of £650,000. It will also use capital receipts from a £4.5 million disposal of council property.

The council will also allocate £3.73 million of forecast resources yet to be allocated from the 2011/12 housing investment resources. This could prove controversial because the report states the money could be ‘allocated to cyclical repairs post the decent homes programme’ but instead it could be used to prioritise the decant programme in 2011/12.

Nick Russell, chair of the Ferrier Residents’ Action Group, said: ‘Obviously tenants are going to pay the price in maintenance.’

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