October 22 2014 Latest news:
Saturday, October 26, 2013
The future of the controversial incinerator proposed for King’s Lynn will be debated by the full council at Norfolk County Council on Monday. Councillors will vote on a recommendation to put to the controlling cabinet over whether to approve a revised project plan for the plant - or whether to reject it.
Rejecting it would break the contract and would trigger compensation, with council officers warning that will have grave repercussions and could lead to further service cuts.
Here, Toby Coke, UKIP group leader and David Harrison, Liberal Democrat and cabinet member for environment, transport, development and waste, explain their views on the choice before them.
The momentous decision by Norfolk County Council’s cabinet in March 2011 to authorise the signing of a legally binding contract for an energy from waste plant in King’s Lynn carried with it serious consequences.
Just how serious is laid bare in an independent report from PWC – handpicked by opponents of The Willows scheme - which puts the cost to the council of terminating the contract between £24.7m and, at worst, over £100m.
I am not a massive fan of incineration – and I voted against the proposal at our planning committee – but for an authority strugging to find savings of £189m over three years, the consequences of pulling out of the contract are clearly ruinous.
The figure hanging over us would be around £20 to 30m. It’s a crippling sum, in the region of what it costs to run our entire Fire and Rescue Service for a year.
Much loved and neeed services would have to be slashed, council workers would lose their jobs, and services to the public devastated.
I’ve seen various figures bandied around about how we could somehow find these sums from reserves, but we simply don’t have that sort of money squirreled away.
Abandoning the contract would spark payment of £20 to 30m within weeks of a decision to terminate, effectively bankrupting the council.
I’ve seen suggestions that the government will ride to our rescue, but this is the stuff of fantasy, given the disgraceful decision by DEFRA to withdraw a grant for the project worth £169m.
This means that the huge future savings which The Willows would have produced have now been denied to Norfolk residents. Cuts will now have to be made elsewhere.
Even without the waste infrastructure grant the project still offers good value for money. Compare that to the financial armageddon we face if the revised project plan is rejected.
I already know to my cost that the government is not offering any financial help, merely words of advice. To pretend otherwise is only offering false hope.
Meanwhile, West Norfolk Borough Council’s much heralded alternative of turning rubbish into plastic fence posts has not materialised.
I am very sorry that only on Monday will the full council meet for the first time to debate the merits of a project which has caused sincerely held concern.
I’m grateful to Toby Coke of UKIP for finally helping to make it happen and look forward to a constructive discussion ahead of the cabinet decision on Tuesday.
This grave situation is not of the making of the current Labour/Liberal Democrat administration, which is juggling huge cuts in government grant with an urgent need to improve children’s services.
We politicians now need to do what’s right for Norfolk.
I look forward to a reasoned debate on Monday, but the reality is that cabinet will have precious little room for manoeuvre when it comes to take its decision 24 hours later.
If the revised project plan is agreed on Tuesday, the final decision will then rest with the Secretary of State Eric Pickles, which is what many people have been asking for all along.
If rejected the compensation payable (prior to any form of negotiation) is exactly the same as if the Secretary of State for Communities and Local Government turns down planning permission for the project. It is capped at £20.3m plus approximately £5m of foreign exchange hedging losses.
Following the withdrawal of the Waste Infrastructure Credits (WIC) by DEFRA on October 18, it is now almost certain that the Secretary of State will turn down planning permission for the incinerator on or before January 14, 2014 on the basis that there is no national or local need for the Saddlebow incinerator, as EU landfill targets are and will be met without it.
There are other far cheaper options available, as clearly demonstrated in a report, published by Dr Chris Edwards, senior fellow of the UEA and a further report by Eunomia Research and Consulting validating Dr Edwards’s report. “Need”, at both national and local level is one of the main requirements for planning consent for projects of this kind.
It is, therefore, sensible for NCC to face the short term uncertainties now, rather than kick the can down the road a few months, only to face the same dilemma again.
Action that must be taken immediately following a successful debate to reject the revised project plan, which should have already been taken by the council, is to seek Treasury permission to capitalise the compensation, rather than it coming out of revenue.
This is only granted in exceptional circumstances, such as natural disasters or events completely out of the council’s control. The main reason for this is that any local government borrowing is added to the Public Sector Borrowing Requirement.
However, the government has withdrawn the incinerator’s subsidy, rightly so in my view, as in effect they would be borrowing £169m over 25 years to subsidise an otherwise totally uneconomic project and some of Norfolk’s MPs, notably Henry Bellingham, Norman Lamb and Elizabeth Truss have publicly stated they will lobby the Treasury to help Norfolk out of its predicament, but NCC has to help itself by instigating the requests.
NCC should be asking for permission to capitalise the compensation payment. If this is granted the £25m could be repaid over 20 years at 5pc interest. Depending how the loan was set up, the initial costs out of revenue would be £1.25m in both interest and capital repayment per annum. This £2.5m would be more than accounted for by cancelling the CW contract and switching to exporting our waste to Amsterdam.
Dr Edwards’s report states that there would be a saving to NCC of £83m over the 25 year life of the contract or £3.3m per year, after taking into account the £25m compensation, loss of energy income and the loss of the £169m subsidy.
Incinerator over capacity in Northern Europe and the US has led to both plant closures and falling gate prices. This, together with increased recycling taking more and more out of the waste stream, it is becoming increasingly obvious that tying Norfolk taxpayers into a 25 year fixed tonnage contract is a very bad deal indeed. This is before taking into account the estimated £165m of pollution costs, in the form of particulates, dioxins and related chemicals which would affect the lives of many of the people of West Norfolk.
Various reports were published on Tuesday evening by NCC, including two by the Interim Head of Finance. One of these entitled “Comparison of the Financial Outcomes of the Existing and Alternative Waste Disposal Proposals” is so factually wrong as to be meaningless. As far as I am aware he never bothered to contact either Dr Edwards or myself to verify what he was saying was correct. In another, blood curling statements about imminent NCC bankruptcy, although technically correct are purely designed to intimidate members into voting for the status quo. Unsurprisingly there were no suggestions as to possible ways forward should members vote to reject the RPP. I wonder why?
It must not be forgotten that 65,000 people in West Norfolk voted against the incinerator in a referendum held by West Norfolk Council in February 2011. This was totally ignored by NCC. Instead a telephone survey involving 1700 people throughout Norfolk, commissioned by CW and undertaken by COMRES, in which the questions asked of respondents were skewed to obtain the desired result and used by NCC in their submission to government to show “consensus” in order to obtain the £169m subsidy.
It is tragic that the democratic decision was ignored in the first place and even more tragic that democracy, for the first time ever, has a short term price tag of £25m.
Now is surely the time that all parties must come together, put aside political differences and recriminations and put an end to this affront to democracy.
In short, NCC cannot afford NOT to cancel this contract.