Communities and Local Government CommitteeSupplementary written evidence submitted by the Department for Communities and Local Government

Thank you for your letter of 12 June requesting clarification about the Housing Guarantees Schemes. On 31 January we launched an open and competitive process to procure a delivery partner or partners for the schemes. Government issued an invitation to tender inviting bids from organisations with the qualifications and experience to help deliver the schemes. Those tendering needed to demonstrate their ability to raise the necessary capital and lend it on to borrowers at the lowest possible cost, while controlling the risk to DCLG as guarantor of the debt.

As you know, we are running two separate guarantees schemes. This decision was taken for a number of reasons, including state aid regulations, the need to include different security requirements, and other practicalities associated with lending into two slightly different sectors. Our extensive market engagement confirmed that those involved in both the private rented and affordable housing sectors understood and accepted this approach. The Government has always reserved the right to provide direct guarantees to investors under both the affordable and PRS schemes.

The tendering period closed on 11 March, and we are currently at a commercially sensitive stage in our evaluation of the market response. It would be wrong to pre-empt the outcome of our evaluation and I cannot therefore comment on the response we have received or on our current timetable. However, I can confirm that we expect to make an announcement on delivery arrangements for both schemes very shortly.

I look forward to receiving the report on your inquiry in due course. I will of course let you know when we announce the outcome of the procurement process.

June 2013