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Shock as £300m waste recycling plant scheme put in jeopardy
A £300 million, 25-year contract to deal with household waste across Bradford and Calderdale has been left in tatters after a shock eleventh hour Government announcement that credit funding is no longer available for the project.
Bosses at the two councils received the “unexpected news” from the Department for Environment, Food and Rural Affairs late yesterday afternoon that more than £60m in Private Finance Initiative credits available for the building of waste treatment plants had been withdrawn.
The credits had been vital to the affordability of the scheme – essentially subsidising the capital costs of the project.
The decision has been made only weeks before the contract was due to be signed with a consortium, Pennine Resource Recovery, which had expected to start construction of an energy-from-waste plant in Bowling Back Lane, Bradford, within months.
In a letter to the chief executives of both authorities, Lord de Mauley, parliamentary under secretary of state at DEFRA, says the Government has assessed the amount of residual waste treatment infrastructure required nationally to meet EU landfill directive targets.
As a result, he states: “Ministers have decided to withdraw the provisional allocation of waste infrastructure credits to the three remaining projects still in procurement” – one of which is the Bradford and Calderdale scheme.
The decision is expected to have a massive impact on the planned waste management project, which was intended to provide a long-term waste treatment solution for both councils from April 2016 and was expected to process 193,000 tonnes of council waste per year.
This would help to deliver at least 50 per cent recycling by 2020 and divert at least 90 per cent of waste away from landfill.
Bosses at Bradford now believe they will have to spend the next 12 months figuring out whether the deal can be re-worked, and possibly coming up with an alternative solution that meets the authorities’ needs.
It is estimated that the Council has already spent about £5m on the deal over the past five years, and Pennine Resource Recovery is thought to have spent double that.
Pennine Resource Recovery was appointed by the councils as the preferred bidder for the joint project a little more than a year ago and planning permission for the waste plant was granted last November.
The two councils and the firm had been working together to finalise the deal and the contracts were expected to be signed this summer.
Councillor Andrew Thornton, Bradford Council’s executive member for environment, sport and sustainability, said: “This is a massive blow that jeopardises the delivery of an important project which would have resulted in major long-term cost savings for council tax payers in both local authorities. We are currently assessing the impact of losing £62.1 million of PFI credits on the affordability of the project.
“The PFI credit contribution was intrinsic to the scheme and DEFRA has been involved every step of the way. The Government had not given us any indication that these PFI credits would not be available and we are just a few months away from starting construction on site.”
Bradford Council leader David Green said last night: “The Government has not consulted us or given us any prior notice of its decision. I will be seeking a meeting with ministers to ask them to explain their position.”
Councillor Tim Swift, leader of Calderdale Council, said: “We are shocked to hear of this decision today. It threatens the entire project, and the jobs and benefits it would bring to the people of Bradford and Calderdale. We are urgently trying to establish what this means for our local area.”
In addition Bradford Council revealed earlier this week that it was considering a new way of financing part of the contract through investing its own cash of more than £30m in exchange for a reduction to the charge per tonne of waste delivered to the new facility. This would enable savings of approximately £1m a year across the two councils.
When contacted by the Telegraph & Argus, Pennine Resource Recovery did not want to comment at this time.
The other two projects where PFI credits have been withdrawn are North Yorkshire and City of York, and Merseyside Recycling and Waste Authority and Halton