A flagship waste funding agency has handed out just a quarter of the value of loans it has pledged to companies since it was launched, MRW has learned.
Publication of the London Waste and Recycling Board’s (LWaRB) accounts, ahead of a board meeting on 16 May, laid bare the challenge the body has faced in getting loans out the door since it was created in 2008.
The balance sheet reveals that just two loans worth a total of £5.2m have been handed out in the last four years. This is compared to over £20m of loans the board is committed to lending, providing projects hit certain key targets (see below for further clarification).
Securing funding for waste projects has repeatedly been cited as a key obstacle to the UK hitting its ambitious waste management targets for the end of this decade.
LWaRB head of finance James Lanman told MRW that projects were required to hit a series of “prudent” milestones to secure cash and that speeding up the process was down to factors “out of our control”.
He added: “It is in everyone’s interest for the process to happen as quickly as possible but we are constrained by circumstances.
“We do not want to let the money go before projects have hit certain milestones. We need to be acting in a prudent and commercial way.”
LWaRB has also signed about £15m of grant agreements to non-commercial entities and invested £18m of equity into the London Green Fund.
Market sources told MRW the challenges were “understandable” but that progress had been “slow” in getting loans out - and that speed was of the essence.
“When you consider that there are shovel-ready projects which are good to go, the figures suggest LWaRB has been slow in getting money out,” said one senior industry figure.
Another projects expert told MRW: “It is far more difficult to satisfy criteria for loans than for grants. Maybe they could loosen the funding criteria, although it’s hard to make a judgement and they must obviously be prudent.”
The board, set up in 2008 with a £60m budget designed to boost recycling in the capital, was embroiled in a spat with waste management firm Bywaters last year.
Bywaters was awarded a £4.5m loan to build a second MRF at its site in east London in October 2010 but LWaRB subsequently withdrew the funding in January 2011 with the board stating the scheme had failed to meet certain milestones.
LWaRB in numbers
Since it was set up LWARB has handed out £5.15m on two loans (Biossence received £4.5m and London Re-use Limited received £645,000 of funding).
Other notable commitments include £15m of grant funding to 33 non projects run by non-commercial entities and an £18m equity investment into the London Green Fund.
It has £38m cash balances, much of which has already been earmarked for a raft of projects.
The board is also investing £4.6m in an Efficiencies Programme working in partnership with WRAP, IESE, and Local Partnerships.
The latest news follows LWaRB chairman James Cleverly’s decision to quit the board, as exclusively revealed by MRW.
The London Assembly member for Bexley and Bromley has been appointed chairman of the London Fire and Emergency Planning Authority and the two positions are not compatible, his office said.
It remains unclear who is the frontrunner for the role but further clues may be on offer following the LWaRB’s first board meeting under the new mayoral term this week.
Cleverly will remain in post at the LWaRB until a replacement is appointed, a process expected to be completed “by the summer”, his office told MRW.
Clarification (added 17 May):
LWaRB has since contacted MRW. The exact figure of loans allocated to date is £20.9m.
This is broken down as:
- Allocated and contracted: £5.2m (Biossence and LRL)
- Allocated (not yet contracted): £15.7m. This is for several large scale infrastructure projects – Orchid (£4m), Biossence (an additional £4.4m), TEG (£1.9m), Confidential AD project (£3m), Greentech plastics reprocessing (£1m), Confidential plastics reprocessing (£1.4m).