The North West authority has announced it will submit a judicial review following the Defra decision, which the council executive is ‘confident’ it can win.
Defra originally pledged to provide investment through its waste infrastructure fund to help finance Lancashire’s two mechanical biological treatment (MBT) plants in Farington and Thornton, which began operations in 2010.
Both facilities were developed under a 25-year, £2 billion PFI contract signed between the Lancashire and Blackpool councils and Australian firm Global Renewables in 2007.
However, in August last year the councils announced they would be taking over ownership and responsibility for running the two sites after the long-term contract was mutually terminated (see letsrecycle.com story).
The councils had experienced problems with the two sites, when in February 2013 it was revealed that some 75% of the waste destined for treatment in 2012/13 had actually ended up in landfill.
Restructure
Both councils had been in the process of restructuring the financing of the sites, to jointly save over £12 million per year over the remaining 22 years of the contract.
But in December, Lancashire county council received notification from Defra of its decision to terminate the grant payments dated back to July.
A report submitted to the council’s executive scrutiny committee this week stated that the county council had “strong grounds” to challenge the decision by way of judicial review.
It added: “Although the council is confident of its case, these resources must be considered to be at risk and there is an amount set aside from the reserves to provide this cover for 2015/16.”
Councillor David Borrow, deputy leader of Lancashire county council, said: “Our recycling strategy is based on receiving this funding. Our lawyers have sought counsel opinion and they advise that we are entitled to it.
“We consider that we have strong grounds to contest this decision and will now challenge Defra’s decision. It could be a year before it is settled but we are pursuing it.”
Future
Commenting on the cancellation, Defra confirmed the council had issued a judicial review claim over the payment suspension in December 2014 – which is currently staid. It added there had not yet been a separate challenge over the decision to remove future government funding for the project.
A Defra spokesperson said: “Ministers have decided to remove central Government funding to the Lancashire County Council waste infrastructure project as they consider the project no longer meets the terms on which Defra agreed funding.”
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