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.

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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“Thirty year contracts are inflexible and don’t allow managers to alter priorities or change services that have become outdated.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.”

12 comments

  • I am sending Margaret Hodge Dr Edwards report. I am sure she will be very happy to see his estimate of Cory Wheelabrators operating profits, if memory serves approx £26.2 m per year, gained from the pockets of Norfolk Taxpayers! This scandal will come back to bite NCC on the backside.

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    Joy, King's Lynn

    Thursday, May 3, 2012

  • Councillor Borrowitt and his pals seem more like the reckless spenders Brown and Balls who got our country in such a mess!

    Report this comment

    Norfolk and Good

    Wednesday, May 2, 2012

  • Can anyone seriously tell me what Bill Borrett actually does these days, given that he seems to have become nothing more than a voice for the waste lobby? He is now nothing short of a joke - even central government says that he is clinging to a hopelessly outdated financing model which will ultimately cost the taxpayer megabucks.... what a sad man.

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    User Removed

    Wednesday, May 2, 2012

  • Margaret Hodge badly needs to read Dr Chris Edwards' damning February 2011 report on the Saddlebow incinerator project and why it doesn't make economic sense even with a £169m bribe from Defra. (Bear in mind, that is also taxpayers' money.)

    Report this comment

    John Martin

    Wednesday, May 2, 2012

  • Nice to see Councillor Borrett's maths is still great. How many reports now have shown that the Incinerator will not save the amounts claimed? When will NCC wake up to the facts. Surely now they have to, If you haven't seen it already the NCC's OWN independent report (available on the NCC website!) showed the incinerator is in the wrong place, the wrong technology being used and the carbon footprint will be bigger than claimed. It completely condemns the idea!

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    davidh2183

    Wednesday, May 2, 2012

  • No political party will stop PFIs - Gormless Broon and his sidekick Ed Ballsup loved them as a way of fiddling the government debt figures, and the Tories love them as it's a risk-free way of making billions of easy money for their big business mates!

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    Norfolk and Good

    Saturday, May 5, 2012

  • Daniel. Good point. Palm Paper will have a financial advantage over their competitors through NCCs actions. I wonder if NCC had talks with them as an inducement to move to Norfolk. We will build an incinerator for you and supply subsidised energy. This is why NCC are focused on incineration. Technology has moved on. MBT AD would now be a better choice energy for waste as Saddlebow is in a flood zone. MBT is designed for areas of flooding. No toxic ash.

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    THE TRUTH IS OUT THERE

    Thursday, May 3, 2012

  • When is everyone going to realise that this government spends money like a drunken sailor on shore leave. See elsewhere in the EDP the plans for a Police Commissioner (no doubt a Tory if they get their way) with ten little helpers (see brackets above) at a huge cost to the public. And this in every single police force in Great Britain. You don't think they are going to even give the value of PFIs a single thought when they are chucking money around at everything they mistakenly think will enhance their power?

    Report this comment

    alecto

    Thursday, May 3, 2012

  • All Governments from John Major onwards have passively accepted the Treasury line "that PFI is the only game in town" thus mortgaging the future at enormous extra public expense.The reason is that PFI schemes are "off the books" which means not counted by the rules of the EU,an excuse used to pay the bankers a very tasty premium out of our money which is costing the country an estimated £200 billion.No wonder these same investors paid the political parties very well in donations to keep it.A brave Government would rip the contracts up and start again.

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    Peter Watson

    Saturday, May 5, 2012

  • The sad fact is Norfolk County Council were aware the public did not want their waste incinerated as far back as 2006. Recycling was the preferred method. One point worth making is, will Palm Paper be advantaged financially over their competitors by NCC PFI credits. The answer is yes. They will not have to build their incinerator that they have planning permission for. They will use subsidised energy from CW incinerator. Is this legal.

    Report this comment

    Daniel Williams

    Thursday, May 3, 2012

  • A committee of MPs has demanded a “radical” rethink, and that is what should have happened over Great Yarmouth’s failure of a Outer Harbour, then perhaps after all these years the Borough and County would be reaping the benefits instead of the liabilities. Remember when you vote tomorrow just who signed away all our port assets and near £20million grants that was supposed to bring prosperity to the region. Vote for those that have NOT run our Cabinet then you will perhaps get a sensible Cabinet

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    John L Cooper

    Wednesday, May 2, 2012

  • This is nothing new. The audit commission looking into early PFI contracts like the N&N and Durham hospital, called them 'unsustainable and bad value for money'. Ms Spelmann and Eric Pickles will now have to make a decision whether their localism agenda was just an eyewash or for real, because this project will cost millions more on security and policing if they take the wrong decision.

    Report this comment

    ingo wagenknecht

    Thursday, May 3, 2012

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