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Councils stop legal challenge over Defra’s PFI withdrawal

North Yorkshire County Council and City of York Council are remaining optimistic a major energy-from-waste (EfW) facility will go ahead, after it was announced they were halting a judicial review against Defra’s decision to withdraw PFI funding for the scheme.

AmeyCespa said it was still “fully committed” to the project.

A 25-year contract to build and run the Allerton Waste Recovery Park (AWRP) near Harrogate was awarded to AmeyCespa in December 2010. In February last year Defra overturned its decision to award the scheme £65m in Waste Infrastructure Credits.

In May 2013 North Yorkshire and City of York councils launched a legal challenge, which was due to be heard at the end of January 2014.

But after receiving legal advice the councils have concluded it would not be in the public interest to continue with the judicial review. 

A statement on behalf of the authorities read: “If the councils proceeded with the judicial review, and were successful, Defra would be required to repeat the decision making process but it is now clear that the likely outcome would be that Defra would reach the same conclusions and the funding support for the project would not be reinstated.”

David Bowe, corporate director for business and environmental services at North Yorkshire, said he believed that Defra made an “unlawful decision”.

“But it is clear from this and other recent decisions that Defra do not wish to continue to support projects of this type anymore,” he said. 

“We worked closely with Defra for many years on this project and feel very disappointed by the way they have conducted themselves but we now have to accept that the argument is not worth pursuing. 

“The loss of credits is a blow but it doesn’t mean the project is over. We are continuing to work with our contractor, AmeyCespa, to mitigate the loss of Waste Infrastructure Credits and complete the last details of the contract. The final decision on whether project remains affordable and value for money will be made later in 2014 when this work is completed.”

An AmeyCespa spokesperson said: “We remain fully committed to AWRP and to supporting York and North Yorkshire in managing their waste and recycling aims. Over the next coming months we will be finalising the details of the project.”

Fiona Ross, associate with law firm Pinsent Masons, said: “The councils have recognised that whilst Defra’s decision may have been made unlawfully, on the basis of procedural or perhaps even substantive error, the court will not substitute its decision for that of Defra.”

She said there was a risk Defra would make the same decision to withhold PFI money if it was forced to carry out the process again. “It is on this basis that the councils have decided not to proceed with the expensive litigation process - in practical terms it might simply get them nowhere.”

Ross added that market confidence in Defra’s commitment to the waste industry had been “eroded significantly” after announcements last year the department would be stepping away from waste policy.

She said: “The market’s confidence in Defra’s commitment to the waste industry has been eroded significantly, following statements made at the end of last year to the effect that they were stepping away from waste policy, as well as the removal of PFI credits and deep budget cuts to the Environment Agency. “

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