Two senior Defra officials have been questioned by a parliamentary committee over the department’s waste PFI policy, with the need for energy-from-waste plants coming under intense scrutiny.
The Public Accounts Committee (PAC) grilled Defra’s permanent secretary Bronwyn Hill and Colin Church, director of resource, atmosphere and sustainability over a National Audit Office (NAO) review of Defra’s awarding of three PFI contacts.
While the NAO concluded that Defra had given good support and guidance to the local authorities involved, Surrey, Norfolk and, jointly, Herefordshire and Worcestershire Councils, the PAC MPs strongly criticised the department’s strategy.
There was particular concern about Defra paying PFI credits to the councils for hitting targets, such as recycling rates, even though infrastructure had not been delivered. This happened in Surrey, for example, where for the first 15 years of the contract Defra paid a total of £124m even though not all of the planned facilities had been built.
“We have learnt our lessons,” said Hill, “We have changed the way we do these contracts, so there are much tighter conditions on the local authority about what happens to the money, and what triggers penalty or payments.”
MPs also challenged the withdrawal of PFI funding to Norfolk’s Kings Lynn project, arguing the move triggered the collapse of the project and left the local authority with a £33.7m compensation bill.
Hill maintained that the project stalled because of a delay in planning permission, an issue in which Defra cannot intervene.
The funding was withdrawn because a failure to meet a planning permission deadline triggered a review of the project and, in line with a national capacity assessment, Defra decided an extra incinerator was not needed to meet landfill diversion targets. In line with the EU landfill directive, the UK has set a target of landfilling only 35% of biodegradable waste by 2020 on a 1995 baseline.
MPs also questioned Defra’s commitment to long and costly EfW developments.
They argued that in light of the improvement in recycling and falling waste arisings, locking large sums into credits for waste incineration did not constitute value for money for the taxpayer.
Chair Margaret Hodge repeatedly asked whether that was a “sensible policy”, and suggested a better alternative would be exporting waste to those countries, such as Germany and the Netherlands, which have a surplus of capacity.
Hill said there was a “portfolio” of options to treat waste, and energy from waste was one of those, being a better solution than landfill.
Church said that the support that Defra gave to the developing of the EfW market with the PFI scheme was essential for the development of the sector and to ensure the meeting of the landfill diversion targets.
“If we haven’t given the market, the construction firms and the waste operators the kind of certainty we did, the [EfW plants] would not have been built.
“Before we started this process we were getting about one [EfW plant] a year and we would not have met our targets.”