New financial model 'will allow charities to compete with construction companies'

Cordale Housing Association poineers alternative to PFI

A Scottish housing association is pioneering a new financial model it believes will help charities to compete with construction companies for public building contracts.

Cordale Housing Association is bidding to build a school for West Lanarkshire Council in an arrangement it is calling a 'public community partnership'. Under the agreement, it will construct the building and rent it back to the council on a long lease.

The model is intended as an alternative to the private finance initiative and could allow more third sector organisations to get involved in government construction contracts.

"If an organisation like us carries out a project, it allows us to build something for local people and recycle the cash into helping the community," said Stephen Gibson, director of Cordale Housing Association.

Hugh Rolo, head of assets and investment at the Development Trusts Association, said ideas such as this could help retain more investment in local communities.

"The problem the third sector has at the moment is one of scale," he said. "We can't bid for the biggest contracts. But that will come in time."

Rolo said his organisation was keen for more charities and social enterprises to get involved in such contracts. "At the moment, private companies have almost withdrawn from the market," he said. "A lot of government regeneration managers are looking to the third sector."

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