£120m still needed to build waste incinerator (From Hereford Times)

£120m still needed to build waste incinerator

7:00pm Tuesday 1st January 2013 in News By Bill Tanner

An artist’s impression of the new incinerator planned for Hartlebury, which would take around 50,000 tonnes of waste from Herefordshire

PLANS for a £120 million incinerator pitched as the future for waste disposal in the county are on slow burn over cost concerns.

Herefordshire Council is to investigate “alternative financing” for the scheme fearing bank loans may not be the best value for money.

Worcestershire County Council, its project partner, is doing the same.

The move has prompted campaigners to call for the whole “high risk and speculative”

scheme to be scrapped. But both councils say they are committed to pushing the project through in the new year.

Set for Hartlebury, near Kidderminster, the energy-from-waste plant has a government backed go-ahead and is integral to a joint 25-year waste disposal contract signed by both councils.

Contractor Mercia Waste will build the PFI-funded plant to take some 200,000 tonnes of residual waste a year – around 50,000 tonnes of which will come from Herefordshire.

Without an incinerator – or fallback plan – Herefordshire Council faces millions of pounds in Government and European Union-imposed fines for sending waste to landfill.

Current landfill options are already close to capacity.

A report put to the council’s cabinet says the existing deal is based on relatively expensive bank debt financing and needs to be reviewed.

Other options could include institutional financing via bonds or a pension provider, or part-borrowing from the Government.

Campaigner Rob Wilden, of Herefordshire and Worcestershire Action Group, said local authorities should not be engaging in speculative high risk commercial ventures.

Both counties currently spend £39m a year disposing waste and landfill taxes are about to rise to £8 a tonne.

The total costs of the incinerator project are being kept under wraps for commercial reasons, but council chiefs have estimated the setting up alone will be about £120m.

Critics believe the total bill to taxpayers during the lifetime of the contract could reach £1 billion.

The decision of Herefordshire Council’s cabinet authorises senior council officers and the cabinet member for major contracts – Councillor Harry Bramer – to work with Worcestershire CC and Mercia Waste on alternative financing for the plant.

Residual waste from both counties goes to two landfill sites in Worcestershire, both of which will be full by 2023 if disposal continues at its current rate.

Based on an initial examination of the project model – and adjusting Herefordshire Council’s current budget to bring it into line with waste tonnage predictions – the average annual cost to both councils under current arrangements could be around £32m a year. This compares with an average cost to both councils of about £38m a year under Mercia’s proposals with the energy from waste plant.

The potential increase of around £6m a year equates to an increase of about £36 per tonne should landfill still be used as the main means of disposal.

Should that space be exhausted by 2023 then, on current estimates, the councils could be expected to pay rates similar to that proposed by Mercia, with a mark-up, and no controls or capacity guarantees.

The original PFI contract for the plant was awarded a grant to support the additional cost of private sector bank financing.

Due to inflation and other economic factors, that grant only supports about half of the level of debt that would be required by the project going forward.

Both councils have already been warned to be cautious about mixing different sources of finance in terms of the project procurement and the rules associated with PFI.

Comments(35)

megilleland says...
8:28pm Tue 1 Jan 13

Both counties currently spend £39m a year disposing waste and landfill taxes are about to rise to £8 a tonne.

I think you have the wrong tax figure for a tonne of landfill. You need to come up to date.

From letsrecycle.com:
"The Landfill Tax was brought into existence on October 1 1996 by then environment minister John Selwyn Gummer, which saw councils charged £8 per tonne of material disposed of in landfill.

This has steadily increased over time, due to the Landfill Tax escalator, and currently stands at £64 per tonne in 2012/13 for active waste. This is set to rise to £80 per tonne by 2014, with Chancellor George Osborne putting a floor under this figure until 2020. The current Landfill Tax for inert waste – such as building fabric and excavated earth – is £2.50 per tonne.

The Landfill Tax, and its escalated increase, is intended to drive councils and companies towards the development of recycling infrastructure by making the landfill disposal route a more expensive and unattractive option. This is, in turn, intended to help the UK meet its goals under the Landfill Directive".

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megilleland says...
8:30pm Tue 1 Jan 13

Apparently the council want us to recycle our waste yet all the street waste bins go directly to landfill.

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megilleland says...
8:42pm Tue 1 Jan 13

From moneyweek.com following the Chancellor's Autumn Statement.

And for all the talk of austerity, the chancellor is coming up with a crafty wheeze to keep spending, but in a way that stays off the government’s books. He wants to hugely expand the Private Finance Initiative (PFI).

Under PFI, private firms build schools and hospitals, then rent them back to the government. Two years ago, the number of deals being done was cut back, because PFI was often scandalously poor value for money.

However, under PFI Mark II, payments are set to be spread out over a longer period. This will allow the government to claim that it is still keeping spending low, regardless of what the long-term costs are. So as an accounting fiddle, it’s almost certainly too tempting for the government to pass up.

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megilleland says...
8:49pm Tue 1 Jan 13

Is this what the taxpayers of Herefordshire can expect? Remember we have three PFI schemes operating in our county - two in partnership with Worcestershire Couty Council.

King's Mill Hospital in Nottinghamshire, run by Sherwood Forest Hospitals NHS Foundation Trust, signed a PFI deal for the period 2005-2043, for a total cost of £976m.

But in figures obtained under a Freedom of Information request, the trust now believes PFI will cost it £2.05bn.

The information, obtained by BBC Radio Nottingham, shows the trust estimates the "mortgage" costs - paying back capital and other initial costs - to be £738m.

The service costs, for "ongoing maintenance, life-cycle replacements and facilities services" for the 38-year PFI period are estimated at £1.26bn. The original estimate for those service costs was £193m.

Conservative MP for Sherwood Mark Spencer said: "It is completely bonkers.

"We need to find out who signed the deal and who was going through the small print and what they were thinking of when they signed the deal.

http://www.bbc.co.uk
/news/uk-england-not
tinghamshire-2017372
7

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megilleland says...
10:35pm Tue 1 Jan 13

PFI and this also. I guess our council will be in there somewhere.

Councils have given pay-offs of £100,000 or more to 135 officials leaving their jobs in the past year, The Daily Telegraph has found.

Council tax payers are forced to keep on giving while councils across the country are dishing out money for compensation packages of up to £420,000 to former bosses. The pay-offs to the 135 officials followed several lucrative awards to council bosses the previous year.

Analysis of local authority accounts found that 10 executives received pay-offs of almost £3 million between them, on top of their salaries and pension chttp://www.telegrap
h.co.uk/news/politic
s/9774853/100000-pay
-offs-for-council-ch
iefs.htmlontribution
s.

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Dodo leDuck says...
7:16am Wed 2 Jan 13

Hi Meggieland, you seem to be the only commenter on this one so I'll chip in with my twopeneth to add a bit of balance to the discussion:

From a ducks point of view its all a load of rubbish.

Hows that?

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Ubique5740 says...
8:33am Wed 2 Jan 13

I accept fully that the Council must plan ahead but after reading posters comments about PFI, and the cost of parking at Hereford Hospital because of a PFI initiative - it just sends a shiver down my spine.
Beginning to think like Bobby47, "We are all doomed"

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bobby47 says...
10:36am Wed 2 Jan 13

God above. They're bloody relentless. One slice of madness after another.
We've no pigging money. I mean how difficult is this to decide upon.
If someone tapped on my door and said, 'Solar panels and or a loft conversion', I'd say, 'Im so very sorry but I have no funds you must try elsewhere'.
If they then continued to press me I'd race into the kitchen, find a soft leaded pencil and I'd attack them screaming, 'be away with you. We have no funds. Clear off or else I'll phone the Constable'.
I mean this ain't like some multi choice answer is it? We can either afford to have this or we can't and we bloody can't.
It'll be bloody decades before we can afford something like this and quite frankly, in decades to come, we won't need one because there will be nothing else left to burn or destroy.
These are the schemes of the mad and believe me I can spot madness from some way off.
This cannot be allowed to continue. This bloody Council Leadership have to go and go soon.

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Biomech says...
12:44pm Wed 2 Jan 13

From a tax payers pov, PFI is awful. However, as a businessman, I'm finding it increasingly attractive and something id like to look into :)

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TwoWheelsGood says...
12:48pm Wed 2 Jan 13

This Council are already engaging in speculative high risk commercial ventures - its time to stop! Just pay the fines for now - a whole lot cheaper than filling the pockets of private PFI financiers for the next 25 or 50 years. Something better will come along.

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bobby47 says...
2:23pm Wed 2 Jan 13

TwoWheels is right and if I say it's right it's likely it is.
Happy New Year.

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Vic Vomitello says...
3:21pm Wed 2 Jan 13

This council will not listen and persists in keeping in the dark about the true financial risks of its crackpot ventures. Why is the incinerator costs 'commercially sensitive'? They are not. Like the inflated costs of the Old Livestock Market they are merely politically sensitive. This council always ends up paying public funds, taken from the public to fund public services, to private companies for next to no return. Stop this madness for heaven's sake. Are they determined to make Herefordshire bankrupt before the next local elections?

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keithk says...
4:17pm Wed 2 Jan 13

There are 5 waste incinerators in the West Midlands region, all of which are short of local waste due to increased recycling and reductions in total waste. Two more are being built, both of which will be very short of local waste. It is total madness to add to the regional overcapacity by adding another burner. To make matters worst the PFI incinerator will cost around twice as much to use as the old existing non-PFI incinerators and recycling is even cheaper.

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megilleland says...
7:45pm Wed 2 Jan 13

Mike Nattrass UKIP MEP says that there is a scarcity of rubbish and an oversupply of incinerators in an EU-wide market screaming for more household waste to burn.

Mike asks why Councils are proposing even more surplus capacity by buying foreign built incinerators and importing them into the West Midlands region, including locations in Hartlebury, Worcestershire, and Four Ashes in South Staffs.

Some Councils, such as Walsall, which are wise to the waste management game, play this soft market by exporting their rubbish to incinerators in neighbouring authorities, such as Dudley, Stoke and Coventry, thereby avoiding the need to build their own incinerators.

Others are signing expensive monopolistic contracts with foreign incinerator manufacturers who import the entire plant and then extract a 25 year contract from the Council which guarantees an annual sum of taxpayers’ money to deal with their rubbish, estimated at approximately 200,000 tonnes per year. But do Councils understand the economics of this game?
http://www.ukipmep.o
rg/News/news_expensi
ve_rubbish.htm

There is a lot more to think about than just shoving it somewhere else.

Mechanical biological treatment (MBT) system is a type of waste processing facility that combines a sorting facility with a form of biological treatment such as composting or anaerobic digestion. MBT plants are designed to process mixed household waste as well as commercial and industrial wastes.

By processing the biodegradable waste either by anaerobic digestion or by composting MBT technologies help to reduce the contribution of greenhouse gases to global warming.

Usable wastes for this system:
Municipal solid waste
Commercial and industrial waste
Sewage sludge

Possible products of this system:
Renewable fuel (biogas) leading to renewable power
Recovered recycable materials such as metals, paper, plastics, glass etc.
Digestate - an organic fertiliser and soil improver
Carbon credits – additional revenues
High calorific fraction refuse derived fuel - Renewable fuel content dependent upon biological component
Residual unusable materials prepared for their final safe treatment (e.g. incineration or gasification) and/or landfill

Further advantages:
Small fraction of inert residual waste
Reduction of the waste volume to be deposited to at least a half (density > 1.3 t/m³), thus the lifetime of the landfill is at least twice as long as usually
Utilisation of the leachate in the process
Landfill gas not problematic as biological component of waste has been stabilised
Daily covering of landfill not necessary

It seems there is a lot of sense in the above being adopted, but I am not an expert.

[quote]Mike Nattrass UKIP MEP says that there is a scarcity of rubbish and an oversupply of incinerators in an EU-wide market screaming for more household waste to burn. Mike asks why Councils are proposing even more surplus capacity by buying foreign built incinerators and importing them into the West Midlands region, including locations in Hartlebury, Worcestershire, and Four Ashes in South Staffs. Some Councils, such as Walsall, which are wise to the waste management game, play this soft market by exporting their rubbish to incinerators in neighbouring authorities, such as Dudley, Stoke and Coventry, thereby avoiding the need to build their own incinerators. Others are signing expensive monopolistic contracts with foreign incinerator manufacturers who import the entire plant and then extract a 25 year contract from the Council which guarantees an annual sum of taxpayers’ money to deal with their rubbish, estimated at approximately 200,000 tonnes per year. But do Councils understand the economics of this game? http://www.ukipmep.o rg/News/news_expensi ve_rubbish.htm[/quote] There is a lot more to think about than just shoving it somewhere else. [quote]Mechanical biological treatment (MBT) system is a type of waste processing facility that combines a sorting facility with a form of biological treatment such as composting or anaerobic digestion. MBT plants are designed to process mixed household waste as well as commercial and industrial wastes. By processing the biodegradable waste either by anaerobic digestion or by composting MBT technologies help to reduce the contribution of greenhouse gases to global warming. Usable wastes for this system: Municipal solid waste Commercial and industrial waste Sewage sludge Possible products of this system: Renewable fuel (biogas) leading to renewable power Recovered recycable materials such as metals, paper, plastics, glass etc. Digestate - an organic fertiliser and soil improver Carbon credits – additional revenues High calorific fraction refuse derived fuel - Renewable fuel content dependent upon biological component Residual unusable materials prepared for their final safe treatment (e.g. incineration or gasification) and/or landfill Further advantages: Small fraction of inert residual waste Reduction of the waste volume to be deposited to at least a half (density > 1.3 t/m³), thus the lifetime of the landfill is at least twice as long as usually Utilisation of the leachate in the process Landfill gas not problematic as biological component of waste has been stabilised Daily covering of landfill not necessary[/quote] It seems there is a lot of sense in the above being adopted, but I am not an expert. megilleland

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megilleland says...
7:58pm Wed 2 Jan 13

It reminds me of when I had a hotel north of Leominster and I inherited a sewage system that discharged illegally into a water course. The Environment Agency couldn't help except by recommending that I install a mechanical treatment system for which I was quoted £25,000 in 1988. I looked around for new alternative systems and eventually built a reed bed system for £900 which produced waste water cleaner than found in the stream we were discharging into. Maybe the council needs to do a bit more homework rather than throw the problem of waste disposal to those companies whose PFI funding methods are a licence to print money.

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WYSIATI says...
7:59pm Wed 2 Jan 13

PFI is a scandal - and it's scandal because it has been used as cover for pretending that we can keep Govt spending down but insist on more services - so they came up with a wheeze to get the capital off the books to replace with on-going costs - a mortgage if you like.

Of course, the private sector love it - and price accordingly - guaranteed income and no risk - what's not to like.

The Govt can borrow much cheaper than anyone else - and now cheaper than ever. But instead of using that ability to reduce costs and properly invest in capital goods that are of value to society they cop out for political expediency and put it on PFI.

Net result - taxpayers get less to pay now - much much more in the end - it's all on the never never and it's scandalous.

Now the waste. Herefordshire as a very rural council with relatively few people and little waste - very expensive to collect, hard to get any economies of scale.

The writing's on the wall and there are legal obligations to meet for diversion from landfill. The council could ignore all of that as some people would like but that will result in huge fines and serious embarrassment. And it will only cost more to get out of the situation eventually.

Is an incinerator the right solution? Depends on the amounts. No question you can't realistically recycle everything (you can technically but you wouldn't want to pay for it - and we lack markets for many "recycled" materials. Every waste management option comes with real costs and real environmental impacts - you can have more or less but you can't have none.

Binding people into contracts that require certain volumes of waste - dangerous if clauses require deliver or pay.

As so often it needs some seriously switched on negotiators and long spoons to sup with the private sector - not sure we've got those and not sure that the politicians want them either - far more advantageous for some to see public money being funnelled into the pockets of private industry.....

PFI is a scandal - and it's scandal because it has been used as cover for pretending that we can keep Govt spending down but insist on more services - so they came up with a wheeze to get the capital off the books to replace with on-going costs - a mortgage if you like. Of course, the private sector love it - and price accordingly - guaranteed income and no risk - what's not to like. The Govt can borrow much cheaper than anyone else - and now cheaper than ever. But instead of using that ability to reduce costs and properly invest in capital goods that are of value to society they cop out for political expediency and put it on PFI. Net result - taxpayers get less to pay now - much much more in the end - it's all on the never never and it's scandalous. Now the waste. Herefordshire as a very rural council with relatively few people and little waste - very expensive to collect, hard to get any economies of scale. The writing's on the wall and there are legal obligations to meet for diversion from landfill. The council could ignore all of that as some people would like but that will result in huge fines and serious embarrassment. And it will only cost more to get out of the situation eventually. Is an incinerator the right solution? Depends on the amounts. No question you can't realistically recycle everything (you can technically but you wouldn't want to pay for it - and we lack markets for many "recycled" materials. Every waste management option comes with real costs and real environmental impacts - you can have more or less but you can't have none. Binding people into contracts that require certain volumes of waste - dangerous if clauses require deliver or pay. As so often it needs some seriously switched on negotiators and long spoons to sup with the private sector - not sure we've got those and not sure that the politicians want them either - far more advantageous for some to see public money being funnelled into the pockets of private industry..... WYSIATI

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megilleland says...
8:10pm Wed 2 Jan 13

This was the company that helped me out. Dr Rick Hudson the principal worth at least a hundred councillors.

http://clementine.ac
tive-ns.com/~cressw0
1/pages/case-studies
/the-marsh-country-h
otel.php

Of course when it isn't your money (ie taxpayers/council tax) it is easy to spend it and keep on spending when things don't work out. I say enough of this approach and back to the drawing board. Oh I forgot, to get out of the contract there is a massive cancellation fee!

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mr.dig says...
11:58pm Wed 2 Jan 13

recycling? where have the paper banks gone?
sainsbury's/morrison
's and leo's have gone

i give up,i just burn the paper now and make smoke,so if you are up by wyevale and see smoke ,it may be me....

inshallah...........
.

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Biomech says...
1:57am Thu 3 Jan 13

PFI is only a scandal if they don't let me invest :)

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SchizTroll says...
5:20pm Thu 3 Jan 13

Dodo leDuck wrote:
Hi Meggieland, you seem to be the only commenter on this one so I'll chip in with my twopeneth to add a bit of balance to the discussion:

From a ducks point of view its all a load of rubbish.

Hows that?

tired. pathetic. not funny. infact total fail. as usual. lets face it dudulick, your attempts at wit are never going to come off. so don't bother eh.,

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Biomech says...
5:44pm Thu 3 Jan 13

Dude, top tip, if you're going to troll, don't include the word "troll" in your username :P
Amateur mistake

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Mrfade says...
6:49pm Thu 3 Jan 13

What a shame those councillors in Hereford and Worcestershire ( predominantly Tory) who say there is only a choice between incineration and landfill are so badly informed.

There is an over capacity of incineration, falling waste, and much better cheaper options being used where councils do not apparently abdicate responsibility and are not dictated to by their contractor.

At least in Hereford there is a strong, if minority opposition, and even they have not been privy to ‘details’ surrounding this project. Why is it all so secret? This is taxpayers money.

Many councils are paid £26 per tonne for their recyclable materials, which offsets collection charges. ( See WRAP gate fees) This can then be sold for between £100 to £800 per tonne. Glass is less valuable but can still be used in any number of ways. Even if it is £1 per tonne it is still £137 less per tonne than burning. However it seems that in Hereford and Worcs we pay the contractor who also keeps the profit. Apparently the more we recycle the more we pay, hence makings recycling expensive.

There are currently no plans to connect this incinerator to the national grid, no opportunity to utilize the heat due to the rural location, leading to a potential loss in revenue of over £100 million. No business case or copy of the contract is available.

Neither MPs Jesse Norman nor Bill Wiggin will become involved in any way to protect the taxpayer on this issue, and seem content to let us all pay for a huge white elephant.

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SchizTroll says...
7:56pm Thu 3 Jan 13

Biomech wrote:
Dude, top tip, if you're going to troll, don't include the word "troll" in your username :P
Amateur mistake

ooh thanks for the tip there biomech. Didn't realise I'd be giving the game away. Duh. (have you ever heard of irony?)

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SchizTroll says...
7:56pm Thu 3 Jan 13

Biomech wrote:
Dude, top tip, if you're going to troll, don't include the word "troll" in your username :P
Amateur mistake

ooh thanks for the tip there biomech. Didn't realise I'd be giving the game away. Duh. (have you ever heard of irony?)

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SchizTroll says...
7:57pm Thu 3 Jan 13

Biomech wrote:
Dude, top tip, if you're going to troll, don't include the word "troll" in your username :P
Amateur mistake

ooh thanks for the tip there biomech. Didn't realise I'd be giving the game away. Duh. (have you ever heard of irony?)

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Ubique5740 says...
8:06pm Thu 3 Jan 13

SchizTroll - think you have tried to make a point or 3!

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Biomech says...
8:58pm Thu 3 Jan 13

Lol, s/hes not very good at this Interweb malarkey is s/he.

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Mrfade says...
11:08pm Thu 3 Jan 13

No, but s/he'll still be paying for the incinerator.

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Dodo leDuck says...
3:54am Fri 4 Jan 13

I believe that shitz is someone such as Andrew Warmington or another fellow named McVicar (something like that) who both had a real go at me simply because I am an innocent duck.

They are just bullies.

All I want to see is a real out of town supermarket in Ledbury.

They could both use it - I bear no malice.

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Dodo leDuck says...
4:21am Fri 4 Jan 13

Take a look at the Ledbury Reporter.

Shitz seems to be suffering from a bit of over excitement.

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SchizTroll says...
7:10am Fri 4 Jan 13

Yeh thats right women are rubbish with buttons and technical things. Glad theres blokrs around like u biochem . Specially for "professional" advise. What line you in? Draincleaning?

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SchizTroll says...
7:19am Fri 4 Jan 13

Burning midnight oil duduflick? 4 oclock in the morning? Got nuthin better than obsesing about trolleys and checkouts? Worried bout the price of doritos? Get. A. Life sad person n!!

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Dodo leDuck says...
7:33am Fri 4 Jan 13

Yes Mr. Shitz, I was so excited by all your support for my ideas that I couldn't sleep.

I expect Bongarwiran was just as elated as I was to see we have such a dedicated fan as the world famous shitz.

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Dodo leDuck says...
7:46am Fri 4 Jan 13

I say, Mr.Shitz it seems no one knows if you are male or female.

At first, I assumed you were male because most of your ideas were quite positive, I then started to use the "it" definition (neither fish nor fowl idea) when replying to some of your most welcome messages but I realise that may be viewed as somewhat impolite.

In order to clarify if you are male, female or indeterminate, can you make your next posting a) stupid if you are male, b) really stupid if you are female or c) intelligent if you hold the middle ground so to speak.

That way we will all know how to correctly address you.

Thank you for your attention.

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bobby47 says...
6:43pm Fri 4 Jan 13

We were once a force to be reckoned with and now...we just call oneanother names.
I don't beat myself up everyday ranting about this bloody Council leadership to be a part of this. This ain't what I had in mind.
Me? Im done. Retired. Happy New Year.

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£120m still needed to build waste incinerator (From Hereford Times)

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