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Salford’s PFI housing company makes £22m loss amid cladding funding dispute

An association-owned private finance initiative (PFI) housing management company has been hit with a £22m loss after being denied government funding to replace cladding on nine tower blocks.

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Salford (picture: Getty)
Salford (picture: Getty)
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The PFI contractor managing Salford City Council’s housing has made a £22m loss following a cladding dispute #ukhousing

Pendleton Together Operating Ltd (PTOL), which is responsible for maintaining the council-owned blocks in Salford, generated the loss for the year up to 31 March 2019, principally due a £17m bill to cover the cost of removing aluminium composite (ACM) cladding and other fire remediation work.

The figures in the accounts for the fire remediation work represent its estimated cost, not the amount spent so far.

PTOL is now waiting on a £28m loan from its owner, Together Housing Group, to meet these costs and move forward with remediation.

According to its latest accounts, the loan arrangements are “well advanced” and should be concluded by the end of the year.

This is the second year of heavy losses for PTOL, which lost £25.3m in 2017/18 largely because of a £22m bill for remediation work.


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Work to replace cladding on the blocks was halted when the government blocked Salford City Council from lending PTOL the money to fund the work.

The Ministry of Housing, Communities and Local Government said the council should be responsible for changing the cladding and so could not give another company the money to do it.

PTOL was also barred from accessing funding through the government’s £400m social housing ACM removal fund and the £200m private ACM cladding fund launched in May this year.

Cladding has only been removed from the lower storeys of eight of the blocks, while one block has been without cladding for one year.

Tom Miskell, chair of PTOL, told Inside Housing that Together Housing Group’s loan has in part been delayed because of the need to re-sign the PFI contract, to ensure the money will be spent on re-cladding.

He said the company has already appointed a project manager and issued invitations to tender to cladding contractors, which are due back in two weeks’ time.

PTOL estimates the cost of further remediation work will be £32.5m, which Mr Miskell says will include the replacement of fire doors in all nine blocks.

Salford City Council has also agreed to fund the installation of sprinklers in all the blocks.

Resident Graeme Lang said: “They’re all arguing who’s paying and who’s not and we’re just left in limbo…people are getting anxious and people are scared. People are frightened to go to sleep.”

A representative of the company said: “PTOL has always put resident safety at the forefront of what we do.

“Unfortunately, as a PFI scheme, PTOL was unable to secure any of the funding from government for the removal of cladding and an agreement with Salford Council to provide the necessary funding was blocked. PTOL is now completing the work to secure the necessary funding to remove and replace the cladding.

“We have advised residents that we anticipate cladding removal to begin early in 2020 and PTOL has already commenced a range of fire safety works in each flat.”

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