MPs on the Public Accounts Committee (PAC) have delivered a damning verdict on Defra’s handling of local authority PFI waste projects.
Committee chair Margaret Hodge said it was “scandalous” that Norfolk County Council had been left with a £33.7m compensation bill after PFI funding was withdrawn from the Cory Wheelabrator energy-from-waste project in King’s Lynn.
She also criticised deals made by the then Department for Environment, Transport and the Regions with Surrey, Herefordshire and Worcestershire councils as being “lax and poorly drafted”.
The PAC began an inquiry earlier this year, with MPs grilling top civil servants including Defra’s permanent secretary Bronwyn Hill and Colin Church, director of resource, atmosphere and sustainability.
It found that grants worth £213.5m had been paid to local authorities over 15 years without any significant construction being carried out. It recommended that other forms of support should be considered as 25- to 30-year PFI deals “may be inappropriate for the waste sector where technology is continually evolving”.
Hodge said: “It is appalling that lax, poorly drafted PFI funding agreements to support the building of local authority waste processing plants have led to hundreds of millions of pounds worth of grants being made to three councils even though the main waste assets – such as incinerators – have not yet been built.
“Funding agreements with Surrey and with Herefordshire and Worcestershire councils signed by the old Department for Environment, Transport and the Regions, meant central government started paying grants to the local authorities as soon as the contractors began to deliver waste management services rather than waste management assets.”
She added: “It’s scandalous that taxpayers in Norfolk have been left in the lurch and landed with a bill of around £33.7m because the Department withdrew its funding for the Norfolk waste plant in October 2013. This decision was a contributing factor to the council’s decision to cancel the contract the following year.
“The Department judged that the Norfolk plant was no longer needed to meet the 2020 EU landfill target, and yet it was fully aware of the likely compensation costs that would be incurred when it decided to withdraw funding.”
The report is in stark contrast to a National Audit Office (NAO) which found that Defra “gave good support and guidance” to Surrey County Council, Norfolk County Council and a joint venture between Herefordshire Council and Worcestershire County Council.
A Defra spokesperson said: “Defra’s responsibility is to ensure public money is used appropriately and we were very clear in the advice we provided to these PFI projects as the NAO has previously recognised.
“Due to factors at local level these projects could not proceed as planned. We continue to support the delivery of infrastructure to divert waste from landfill and are on track to meet these targets.”
The Environmental Services Association (ESA) said it was disappointed with the committee’s findings.
ESA’s economist, Jacob Hayler (left) said: “It is a shame that the Public Accounts Committee has decided to take examples of challenges at specific projects and apply them more generally as criticisms of the waste PFI programme.
“The majority of the failings identified by the report in fact don’t relate to PFI at all, but are part of the continuing difficulties created by the planning system for developing new infrastructure.
“The waste PFI programme has, along with other Public Private Partnerships, been hugely successful at bringing forward investment in new residual waste infrastructure and has transformed the UK from a landfill ‐ dependent nation to one which is fully on course to meet its obligations for landfill diversion.”