Rejecting Norfolk incinerator could leave council on brink of bankruptcy, warns finance chief
- Credit: IAN BURT
Councillors who will next week decide whether to scrap the Norfolk incinerator have been warned that rejecting a revised plan for the plant would be 'a financial step too far' and could leave the authority facing bankruptcy.
Papers were published tonight to inform next week's debate over the future of the incinerator at King's Lynn.
Defra announced last week it had cancelled the waste credits for the controversial plant. The previous administration at County Hall had agreed a contract with Cory Wheelabrator to run it.
Those credits would have been worth £169m over the lifetime of the plant, but campaigners say the withdrawal means now is the time to pull the plug on the plant, which 65,000 people in West Norfolk had opposed in a poll organised by the borough council.
The full county council will, on Monday, decide whether to agree a revised project plan for the plant. Officers say that rejecting that would trigger costs payable to Cory Wheelabrator of £28.9m.
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And Peter Timmins, interim head of finance, says, in a report which will come before councillors, that is 'a financial step too far.'
He said it would mean he would have to serve a section 114 notice on the authority - designed to prevent the authority doing something unlawful or facing the prospect of bankruptcy.
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He said: 'The reserves that are available for unforeseen events stands at £20.811m. 'However, the prescribed minimum level is £16m. Termination would take the council's reserves below the prescribed minimal level.'
Once that notice is served, he said, the council would have to resolve how to pay the costs within 21 days of the notice being issued.
He warned: 'The council would have to consider such measures to fund the payment, as a spending freeze, affecting contractors, both locally and nationally, emergency cuts to services, affecting residents and the depletion of reserves, down to the agreed minimum of £16m, requiring a plan to re-instate the funds over a short period of time.'
An independent review conducted by Jonathan Action Davis, QC, which will also be presented to councillors, concluded pulling out of the contract, or the Secretary of State deciding not to grant planning permission would both have 'onerous compensation clauses', but said he was 'not in a position' to determine the 'full scale' of them.
A financial expert's reports into the potential costs of withdrawing from the contract has yet to be published.
As reported. two senior Conservative councillors have accused the county's MPs of kicking the people of Norfolk in the teeth by lobbying for the waste credits for the proposed incinerator to be withdrawn.