Defra had to hand over money for two PFI waste projects even though proposed infrastructure failed to get off the ground, according to a report published today by the National Audit Office.
And, the NAO found crucial documents missing or non-existent along with a lack of clarity over facts and figures. The study examined three county council projects: Herefordshire/Worcestershire and Surrey which received money without infrastructure and the recently abandoned Norfolk scheme.
Commenting of its finding theAudit Officesaid: It was clear from correspondence received by the NAO that there was a lack of clarity over both the facts and figures relating to these three projects, and the roles and responsibilities of the parties involved.
Todays report finds that the Department has given good support and guidance to the local authorities involved, but that the nature of the… funding agreements with Surrey and Herefordshire and Worcestershire, which the Department inherited from predecessor departments, made it difficult for it to withdraw or amend its financial support to these contracts, even when significant infrastructure had not been delivered as planned.
The report is a facts and figures analysis of three PFI projects covering Surrey; Norfolk; and Herefordshire and Worcestershire. It does not make comment on the success or other aspects of the PFI support with the report now to be scrutinised by the Public Accounts Committee.
This is likely to see officials concerned facing a grilling from MPs as to whether the projects involved provide value for money, and whether the councils and Defra handled the processes competently.
In its report the NAO, did report favourably on the way Defra managed the funding process. And, with reference to the three PFI waste projects, it concluded:
a. All faced a range of problems including local opposition, complex commercial considerations, and questions over technology.
b. Defra cant intervene on planning control which lies with DCLG, but it did offer advice.
c. For Surrey and Herefordshire/Worcestershire, Defra inherited funding agreements which meant it had to pay out even if significant infrastructure had not been delivered. Until 2012-13 Defra made grant payments for both contracts in full.
Herefordshire & Worcestershire
The NAO did take a swipe at Herefordshire and Worcestershire for the lack of original documentation about the business case for its 25-year contract signed in December 1998 with Mercia Waste Management for 680 million. Mercia is a joint venture between FCC and Urbaser.
And, the report reveals that the pair of councils were promised grant payments of 243 million and were given 89.5 million to 31 March 2014. But, proposed infrastructure, including an autoclave and energy from waste plant, was not built and the counties agreed contract changes with Mercia on 21 May 2014. The councils are switching to prudential borrowing and do not need substantial PFI funding so payments will reduce.
Surrey
In the case of Surrey where SITA subsidiary SITA Surrey has a long-term contract the report says that the contract was awarded in June 1999 at an estimated 740 million value but this could turn out to be worth from 666-897 million.
Originally there were two energy from waste plants planned and Defra committed to pay 204.7m. For 15 years Defra paid in full, even though not all the facilities were built. 214 million was paid to Surrey up to 31 March 2014 but this has now been reduced ahead of construction of a gasifier planned for Shepperton.
Norfolk
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The Norfolk energy from waste project has been in the news continually this year with the county pulling out of its 582 million contract signed in 2012 with Cory Wheelabrator. The National Audit Office report says that funding was revoked by Defra for the scheme as planning was not secured in line with the timetable for the project.
The study notes that Norfolk chose not to lengthen its timetable. There is also discussion of the fact that after Defra input, the county switched from MBT to energy from waste as its residual waste solution.
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