Agenda item

[Report of the Director for  Housing and Growth. To be introduced by the Cabinet Member for Housing and Estate Renewal.]

This decision is to award a contract to install a new permanent district heating system and works to provide temporary heating system until the permanent system is operational.

The Cabinet Member for Housing & Estate Renewal introduced the report which related to the medium-rise blocks on the estate that had failed a test relating to blocks with piped gas. It was noted that the only way to fully mitigate this risk was to remove piped gas to the blocks entirely. Homes for Haringey had already started the work to achieve this, and this report recommended the approval of a contract to carry out the next stages of the work.

Following questions from Cllr Dennison the subsequent points were noted:

• Regarding the discrepancy between 1.4 and 6.12 of the report, the latter paragraph was intending to indicate the lead in time from January 2018 to October 2018 for fitting temporary boilers.

• The Council would be providing financial assistance to residents who found their heating bills were higher as a result of the use of temporary boilers (as temporary boilers were oil fired which was more expensive than gas). It was the Council’s intention to make sure that residents were not worse off during the period of the temporary boilers. By phase 3, when gas boilers would be replaced by a district system, the Council would be acquiring gas at block prices and this would decrease the prices for residents.

Following consideration of exempt information:

RESOLVED

1. To approve the direct award of the works contract at an estimated value of £12.6m to Engie LTD (formerly Keepmoat LTD) through the LHC framework (N7 – workstream three) for the works required to install and commission a temporary heating system across Broadwater Farm and latterly install and commission the full energy system.

2. To approve as required by Section 1 – Financial Regulations paragraph 5.23 (b) the virement of £3.210m from the HRW leaseholder acquisition budget to the Broadwater Farm heating scheme.

3. To approve as required by Section 1 – Financial Regulations paragraph 5.23 (b) the virement of £4.008m from the Building Regulations Review budget to the Broadwater Farm heating scheme.

4. To agree the budget of £13.0m for the Broadwater Farm heating scheme.

5. To agree not to seek to recharge leaseholders their proportion of the cost of these capital works linked to the provision of temporary heating systems and the full energy centre upgrade.

6. To note that unrecovered leaseholder charges will be no greater than £2m.

Reason for decision

The nine medium-rise blocks on Broadwater Farm (Croydon, Debden, Hawkinge, Hornchurch, Lympne, Manston, Martlesham, Rochford, and Stapleton) have failed structural tests for Large Panel System buildings with piped gas. A gas leak and explosion in one of these blocks could lead to progressive collapse of the building and significant loss of life.

The following steps have been taken to mitigate the risks arising from the findings of

the structural test

• The replacement of gas cookers with electric cookers in 464 flats in nine medium rise blocks (the remaining flats already had electric cookers)
• The installation of gas interrupter valves in all the 728 flats in nine medium-rise blocks which will switch off the gas if a leak is detected

To mitigate the risk more fully, piped gas must be removed from the blocks entirely. Heat and hot water will be supplied to the medium-rise blocks initially through temporary boilers installed at the foot of each block. These blocks will then be connected to a renewed estate-wide district heating system. The temporary boilers need to be commissioned before the end of October 2018, as this is the date the gas provider has said that it will switch off gas to the blocks.

Although a tenth block, Kenley, does not have piped gas and is served by a district heating system, the system at Kenley will also be upgraded as the works to the medium rise blocks will require the disconnection of the Kenley pipework.

In April 2018 a design and enabling contract was let to progress design of the new heating systems and essential enabling works, such as the erection of scaffold, the removal of redundant pipework and the forward order of Heat Interface Units.

The design is now sufficiently progressed to award the works contract. A direct award is being made as there is insufficient time to run a mini-competition. A direct award is permissible under the terms of framework selected. The proposed contractor - Engie – is ranked 2nd on the framework. The contractor ranked 1st has been approached and they have formally declined the offer to undertake the work.

Legal Services has advised as to recoverability of the costs of these works from leaseholders through the service charge provisions in their leases. Although the level of leaseholder charges depends on individual calculations for each leasehold property, it is likely that this will lead to approximately £2m of leasehold charges being unrecovered.

Alternative options considered

It is not an option to do nothing, as the blocks do not currently meet building regulations and the works are therefore essential to more fully mitigate the risks identified. The works also need to be completed by the October deadline that the energy suppliers have set for the removal for the gas supply to the blocks. If the work is not completed before the end of October, then alternative accommodation may need to be provided for the 728 households living in the medium-rise blocks.

Homes for Haringey could have run a full procurement process instead of using the LHC framework. This was discounted as there was not enough time to undertake a full procurement exercise to meet the end of October deadline for completing temporary works.

Homes for Haringey could have run a mini-competition using the LHC framework. This option was discounted as there is not enough time to run a mini-competition to meet the end of October deadline for completing temporary works.

Homes for Haringey could have delivered the project in-house, but Homes for Haringey do not have the necessary skills in-house to make this option viable.