September 2 2014 Latest news:
By DAVID BLACKMORE
Wednesday, May 2, 2012
A committee of MPs has demanded a “radical” rethink of the Government’s Private Finance Initiative which could fund the building of a controversial incinerator in King’s Lynn.
Margaret Hodge MP, chair of the committee of public accounts, has branded the model for attracting private cash into public sector projects expensive and unsustainable.
It comes after environment secretary Caroline Spelman announced the approval of £91m in PFI funding to Norfolk County Council to go towards the cost of the proposed incinerator in Saddlebow.
Mrs Hodge said: “When a public authority chooses to fund a project using private finance it must be able to demonstrate that this was the best way to deliver real value for money for the taxpayer, not just a way to keep the project off the balance sheet.
“The current model of PFI is unsustainable. Time and again my committee has reported on problems with PFI, including the costly contracting process and the prospect of little risk being transferred but high returns being enjoyed by investors.
“Thirty year contracts are inflexible and don’t allow managers to alter priorities or change services that have become outdated. We have even seen evidence of excess profits being priced into projects from the start.”
She later added: “Private companies benefitting from taxpayer funded contracts must be transparent over the use of public money so that the public can be assured that value is being secured from the investment.”
West Norfolk council intends to challenge Ms Spelman’s decision to approve the PFI funding and has previously urged communities secretary Eric Pickles to call in the scheme so an independent inspector can have the final say.
The council claims Ms Spelman broke her own guidelines in awarding the money because there is not a “broad consensus of support” for the £500m incinerator. A poll carried out in West Norfolk saw 65,000 people vote against the building of the plant.
West Norfolk council leader Nick Daubney said: “The trouble with PFI is that it is a bit like finance systems, they have their uses but it does cost more and there is no doubt PFI costs the taxpayer.
“I’m not saying they don’t have their place but in terms of the incinerator, it’s the wrong thing to do. It makes no sense.”
Anti-incinerator campaigner Mike Knights said: “People have realised PFI funding is folly for a long time now but it is good people in government are flagging this up.
“The PFI for the incinerator is economic madness. Alternative technologies which other counties are using can deal with our waste for a fraction of the cost.
“To use the most expensive way to fund the most expensive technology is not right for Norfolk.”
Dr Chris Edwards, a senior fellow in the School of International Development at the University of East Anglia, added: “The PFI funding for the incinerator is ludicrous because incineration is more expensive than landfill and is environmentally worse.
“PFI funding just hides the debt. The public sector still needs to pay it but over a longer period and ends up paying more.”
Norfolk County Council awarded the contract to build the incinerator, known as the Willows Power and Recycling Facility, to Anglo-American consortium Cory Wheelabrator last year.
Anti-incinerator campaigners attempted to secure a judicial review into the process by which the county council agreed to award a contract to waste company Cory Wheelabrator but a High Court judge dismissed their attempt in December.
Bill Borrett, Norfolk County Council’s cabinet member for environment and waste, said: “The business case for the Norfolk project has been through an extremely long, detailed and thorough assessment by both Labour and Conservative governments, Defra and the Treasury.
“This showed it will deliver excellent value for money. Treating our waste using the Willows Power and Recycling Centre will save Norfolk council tax payers £200m over the lifetime of the contract compared with continuing to have to send it to landfill.
“This is one of the largest single grants that Norfolk has ever received for any project and I am very glad that it has been awarded.”