Ditching Norfolk incinerator could lead to £90m bill, council report claims
PUBLISHED: 11:37 25 May 2013 | UPDATED: 11:42 25 May 2013
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Pulling the plug on the proposed Norfolk incinerator could cost the county council as much as £90m, council officers have warned ahead of a key vote on the plant’s future.
The potential multi-million bill if Norfolk County Council were to rip up the contract with Cory Wheelabrator for the energy from waste plant at King’s Lynn is revealed in a report drawn up by council officers.
It has long been known that there is a compensation clause capped at £20.3m in the contract, should the near-£600m plant fail to secure planning permission, but officers say the cost could be far higher if it collapses for other reasons.
The county council decided to grant planning permission last year, but secretary of state Eric Pickles called the issue in for a public inquiry.
That inquiry finished last week and a final decision on whether the plant should be awarded planning permission will be made by Mr Pickles in the autumn or winter.
But, in the meantime, councillors are set to vote on whether to abandon the contract in any case, which is why officers have put together a report outlining what repercussions that would create.
Officers say if the council chooses to pull out of the contract for other reasons than planning permission not being awarded, the costs could be significantly higher. While officers stopped short of putting a figure on what that bill would be, they said the £20.3m cap would not apply if the plant is not built for a reason other than planning permission failing.
However, officers said the £80m to £90m cost produced for Cornwall Council when considering abandoning its contract provides “a useful indication” as to the bill.
Officers say the full amount, including debt repayments, redundancy costs and lost profits, would have to be paid within 40 days and the money would have to come directly from council coffers, because the authority would not be allowed to borrow to cover the costs.
They also said withdrawal from the contract would lead to the loss of the £169m government Waste Infrastructure Grant for the incinerator.
The report points out it is unlikely these would be available for an alternative waste solution. Officers said there are 10 cases where a provisional grant has been withdrawn by the Department for Environment, Food and Rural Affairs (Defra) and no equivalent support has been offered to help affected authorities meet future waste costs.
The information is revealed in a report which has been drawn up by officers ahead of a key vote by all 84 councillors on whether the county council should press ahead with the plant.
That vote was secured after a motion put forward by Conservative John Dobson, a long-standing opponent of the Saddlebow incinerator plan.
The details of the potential costs will go to a meeting of the cabinet scrutiny committee on Tuesday, June 4, ahead of the full council vote on Monday, June 17.
The report also reveals that termination of the contract because of planning failure would, as well as the £20.3m compensation, leave the council facing the possibility of other costs associated with exchange rates and interest rates.
The council officers say that would add £11m to the council’s costs at current market rates, while it would also trigger the early repayment of public inquiry costs, between £1.5m and £2m.
Following the elections, the county council is run by an administration created through an alliance between Labour, the UK Independence Party and the Liberal Democrats.
The former Conservative administration’s cabinet had agreed to award the contract to Anglo-US consortium Cory Wheelabrator, saying the plant was needed to deal with Norfolk’s waste and would save £8m a year.
But the incinerator has been mired in controversy. In a poll organised by West Norfolk Council, 65,000 people said they were against the plant.
UKIP and the Green group at County Hall have made clear they want to stop the incinerator, while some Labour and Liberal Democrat councillors have been vociferous in their opposition to it. Among the Conservative group, Brian Long and Mr Dobson have also campaigned against it.
West Norfolk Council has been pursuing an alternative way of dealing with waste. Last year it became the first authority to sign a contract with a company called Material Works.
The borough’s black bin rubbish will be sent to the company, which will use anaerobic digestion to produce biogas from waste and turn rubbish into a type of plastic.