As more and more local authorities seek PFI funding for long-term waste treatment contracts, the Department has had to abandon its “first come, first served” policy of applications being made at any time of the year.
” The increased number of applications expected over the next two to three years clearly demands a more structured approach. “
– John Burns, Defra
Local authorities will now have to apply within award rounds that will start every six months, as is the case for PFI schemes run by other government Departments.
They will also have to submit “Planning Health” statements with their proposals, although details of this requirement has not yet been made clear.
Surge
The new system is Defra's way of controlling the flow of new waste PFI projects, to make sure the growing waste management industry can handle the work being offered by local authorities.
Defra is expecting a surge in requests for PFI assistance for waste contracts up to 2010/11, to support the anticipated 11 billion of new waste treatment infrastructure needed to meet European landfill targets.
Under its Waste Infrastructure Delivery Programme (WIDP), the Department has around 280 million in PFI credits available each year for waste management projects, although the Department is hoping to secure more PFI waste funding through this year's Comprehensive Spending Review.
Writing to local authorities to explain the new system, the director of the WIDP, John Burns, said: “To date Defra has invited each local authority to submit an Outline Business Case to its Waste Implementation Programme (WIP) at a time of the Authority’s choosing. This system has worked satisfactorily until now but the increased number of applications expected over the next two to three years clearly demands a more structured approach to ensure all applications are dealt with promptly and on a consistent basis.
“Therefore following the practice adopted by other Government departments managing a programme of PFI schemes we have decided to adopt of system of PFI credit award rounds,” Mr Burns added.
Applications
Applications for waste PFI credits are a two-stage process, with local authorities first submitting expressions of interest for PFI funding, and later submitting a more detailed outline business case, which must be approved by Defra before PFI credits are committed.
After a transitional arrangement for the five projects already awaiting approval for their Outline Business Cases (Essex, Norfolk, Cheshire, Merseyside and North Yorkshire), the first award round this year will see expressions of interest from local authorities accepted until the end of March 2007.
The next award rounds will take place up to the end of September 2007 and then up to the end of March in 2008.
The new procedure will still require projects to meet the existing eligibility criteria published by Defra in May 2006. The Department said its priority for approving projects “will focus on a number of criteria including scale, deliverability, readiness and environmental objectives”.
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Planning Health
In a further change to the waste PFI application procedure, councils or local authority partnerships will have to submit “Planning Health” checklists along with their proposals for PFI contracts.
Further details on what these checklists will entail is to be included in guidance promised by Defra by the end of March 2007.
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