The threat of legal action has been raised following Defra’s decision to withdraw £217m of funding to waste treatment infrastructure last week, throwing three major projects into doubt.
As Labour accused the government of throwing the projects into chaos, councils affected held crisis talks and demanded a meeting with resources minister Lord de Mauley, reports LGC’s sister publication Materials Recycling World.
The authorities affected are North Yorkshire CC, City of York Council, Bradford MBC, Calderdale MBC, Halton BC and Mersyside Recycling and Waste Authority. See full details below.
The leader of one of the councils hit by Defra’s withdrawal of waste infrastructure credits said he would consider taking the government to court to recover loses if the project collapsed.
Tim Swift (Lab), leader of Calderdale MBC, one of the authorities involved in the Pennine Resource Recovery Facility which had £62.1m withdrawn, told MRW he feared the authority being liable for losses suffered by waste contractors.
He said all the councils involved were now seeking an urgent meeting with the minister and could demand financial assistance to cover the costs of any aborted projects.
MRW understands senior industry leaders also believe legal action by councils is now likely, although there are doubts as to whether it would be successful.
Nadeem Arshad, a partner at law firm Bevan Brittan, said while legal action following the withdrawal of waste PFI credits in 2011 had failed, action by councils in other areas such as school building PFIs had been successful.
“I think legal action by the relevant local authorities is possible. As for whether any legal action is successful, that is a more difficult assessment”, he added.
Former Defra and WRAP official Philip Ward, said he would assume the government had taken legal advice before withdrawing funding. “And any action between the authorities and the bidders will depend on whether the projects proceed or not and the terms of the bidding process”, he told MRW.
Defra announced the withdrawal of funding for the final three PFI waste projects yet to reach financial close last Friday after new analysis showed there would be sufficient residual waste treatment capacity to meet 2020 landfill diversion targets.
Cllr Swift said Calderdale was devastated and shocked by the announcement and suggested Defra “doesn’t fully appreciate that a great deal of money has already been committed” to the project.
He said he could not rule out legal action: “We are under an obligation to protect tax payers.”
Councillor Joe DeAsha, chair of Merseyside Recycling and Waste Authority which had £90m of funding withdrawn, said the authority was considering the implications of the announcement.
Allerton Waste Recovery Park.
Authorities: North Yorkshire and City of York councils.
A 320,000 tonnes development under a 25-year contract to treat of municipal residual topped up with commercial waste. Project includes a 20,000 tonne MBT, 40,000 tonne AD plant, an EfW incinerator, and a 50,000 tonne IBA processing plant. Councils claim the contract will save them £300m.
Cost: £1.4bn over 25 years.
Allocated Waste Infrastructure Credits (PFI credits) now withdrawn: £65m.
Pennine Resource Recovery Facility, Bowling Back Lane.
Authorities: Bradford and Calderdale councils.
Contractor: Pennine Resource Recovery consortium made up of Skanska, FCC Environment and AECOM.
A proposed MRF and EfW incinerator to treat 193,000 tonnes of residual waste from 20,000 homes over 25 years.
Cost: £300m over 25 year contract period.
Allocated Waste Infrastructure Credits (PFI credits) now withdrawn: £62.1m.
Merseyside and Halton Waste Partnership Resource and Recovery Waste Contract.
Authorities: Merseyside Recycling and Waste Authority and Halton.
Contractor: Preferred bidder yet to be revealed. Tenders received from Sita and Covanta.
Proposals to treat 450,000 tonnes a year of residual waste over 25 years include a plan by Sita for an incinerator in Teeside and by Covanta for a facility in Cheshire.
Cost: Over £1bn.
Allocated Waste Infrastructure Credits (PFI credits) now withdrawn: £90m.