Council defends King's Lynn incinerator compensation clause
PUBLISHED: 17:41 05 November 2010
Archant © 2010
Norfolk County Council could face a compensation bill of up to £20m if a planned waste incinerator does not go ahead, it has emerged.
A contract is likely to be signed early next year between the council and its preferred bidder, Cory Wheelabrator, for a controversial “energy from waste” plant at Saddlebow in King’s Lynn.
However, the wisdom of signing such a deal was called into question last night after it emerged the council would be left with a hefty bill should its own planners fail to give the project the green light.
It would mean that when the deal is signed, county councillors could be left in the awkward position of knowing that if they turn down the incinerator at the planning stage, the authority could be faced with a £20m compensation bill.
While Norfolk County Council has defended the compensation clause, saying it was normal practice, North West Norfolk MP Henry Bellingham called for the authority to “go back to the drawing board” with its plans on waste management.
He said: “I think it is very important before they get into any contractual obligations they consult the borough council and make sure they are going to be supportive and they have proper consultation with the local community.”
Joel Hull, project director for Residual Waste Services for Norfolk County Council, said the planning process was entirely independent from the contract process and such a clause would not impact on any potential decision.
He said: “The developer will submit the planning application, not Norfolk County Council’s Waste Disposal Authority, so it will be an external planning application.”
He said that there was plenty of evidence that planning committees had turned down similar waste treatment planning applications either in line with, or against, officers’ recommendations.
The King’s Lynn scheme would see a purpose-built energy from waste plant capable of treating 170,000 tonnes of black bin waste built on the Saddlebow industrial estate, and also capable of processing a further 90,000 tonnes of commercial waste.
Members of Norfolk County Council’s environment, transport and development overview and scrutiny panel approved a recommendation to select Anglo-US waste firm Cory Wheelabrator as the preferred bidder for the £169m project last week.
Supporters believe that the incinerator will not only help tackle the county’s waste mountain, but will also be able to produce energy which could provide power to 36,000 homes.
In documents seen by the EDP it said the county council could be liable to compensation costs capped at £20.5m if planning permission is not obtained “despite the contractor using reasonable endeavours”.
This compensation includes bid development costs of £5.5m, bank arrangements fees of £4.8m, planning costs of £1.5m and sub-contractor breakage costs of up to £1m.
Other financing costs include commitment fees, rolled up interest and letter of credit costs, which increase from £0.5m in May 2011 to £8.5m in September 2012.
In total these costs increase from £12.8m in April 2011 to £21.3m in September 2012 and compensation for them is capped at £20.5m.
Mr Hull said: “It is entirely conventional for waste projects like this, that if a contractor has used all its reasonable endeavours and yet has failed to achieve planning permission and the contract is then abandoned, that the public sector pays compensation.
“But it would still only be payable after alternative plans had been fully considered and these had also failed or been rejected.
“The potential amount of compensation would depend entirely on what stage the development had reached in the overall process but it could be in excess of several million pounds at the planning and permitting stage.”
Mr Hull said that if developers’ proposals, which are based on using modern, safe and well-proven technology that is widely used in the UK, Europe and elsewhere are in line with planning and permitting policies and meet all the material requirements of the planning and the regulatory authorities there should be no reason for it to ultimately fail or for the contract to be abandoned.
“But, clearly, at the end of the day, it will be for elected councillors to decide”, he added.
But anti-incinerator campaigner Mike Knights, who believes the incinerator could pose a risk to people’s health, said:
“It will guarantee millions of pounds of Norfolk tax revenue goes in to the pocket of a multi-billion dollar US corporation regardless the future planning decision.
“At this time a compensation clause can and should be deleted. If it is included and agreed by councillors it will only serve to prejudice the outcome of planning. It is likely this project will be abandoned as they have been in other counties. Norfolk’s taxpayers should not be forced to pay.”
Mr Bellingham said that the county council should look at newer more modern technologies and rethink their recycling strategy.
“I think the county council should go back to the drawing board and look at alternatives, particularly recycling.
“Quite frankly Norfolk’s ambitions for recycling are pathetic.”
He said that elsewhere in Europe recycling rates had gone up 80pc and he was worried that there would not be enough waste to put in the incinerator.”
He added that he was worried that if they were able to increase levels of recycling they could be left in a position where waste was coming from outside the county to be incinerated.
In Cornwall, the council could face a crippling £30 million bill if an appeal hearing decides to uphold their planning committees decision to reject the St Dennis incinerator scheme.