The National Audit Office says in its Managing The Waste PFI programme report that the delays could mean councils being hit with fines of a combined£366m and that the credit crunch is exacerbating the problem.
It criticises the Department for Environment, Food and Rural Affairs for responding too slowly to the challenges of the 1999 EU directive for councils that includes cutting the amount of biodegradable waste by 50% on 1995 levels by 2013.
However, it expects authorities to be able to meet a 2010 target for a 25% reduction on 1995 levels.
The report said that PFI deals were expected to account for around 80% of the new waste management infrastructure coming into operation by that date, but that the risk margin for debt finance was higher than on other PFI deals and they took up to nine years to become operational.
Edward Leigh MP (Con), who chairs the Commons Public Accounts Committee, said that only two PFI waste plants had so-far come into use, and that council tax payers would end up bearing the cost of fines running into “several hundred millions” if the 2013 targets were missed.
He said: “Defra is starting to make progress in pushing forward more projects and in developing the PFI market for such projects - but the programme is being held back by the difficulty of raising private finance in the present financial climate and problems in obtaining planning permission.”
Paul Bettison (Con), who chairs the Local Government Association’s environment board, agreed “many barriers” remained to building the required plants, and criticised the government for its stance on refunding money raised through landfill tax credits.
He said that landfill tax now took an average of£90 a year came out of council tax revenue from Band D properties, and that the money could be better spent as an alternative to PFI funding.
“I really do think that we could meet the targets for 2013 if that money was put in an account for each local authority to bid for with their individual recycling projects,” he said.
“I’d rather see the money going on local infrastructure than on paying EU fines when targets are not met.”
The government is proposing to offset any fines the EU levies for missed targets by charging councils by charging councils£150 for every tonne of biodegradable waste sent to landfill above the 2013 targets.