OPPONENTS of the incinerator plan pitched as a future for the county’s waste say their stance is vindicated by a parliamentary report that slammed the project’s PFI deal.

MPs have turned the heat on an incinerator  criticising the near  £90 million paid to the project so far - without the facility being built at Hartlebury, Worcestershire.

Released yesterday (Wed), the findings of parliament’s public accounts committee question the basis of  government grant funding for the incinerator and its future in a sector where technology is continually evolving.

The energy from waste incinerator is integral to a joint 25 year waste disposal contract with West Mercia Waste signed by Herefordshire Council and Worcestershire County Council.

Today, It’s Our County (IOC), called the report a “damning critique” of a waste contract that fell short of  delivering value for public money.

In an initial response, Herefordshire Council said that it was “pleased” to help with the study that led to a report bringing the work of a government department to account - and not that of the local authorities involved.  

As one of the  PFI authorities contained in the report, the council said it was "inappropriate" to comment further.

Issues identified in the committee report echo those raised within the council over the contractual commitment to the incinerator.

Councillors, with IOC members prominent amongst them, claimed that committing to the incinerator within an expensive - and now acknowledged as the poorly constructed - PFI made no sense without the proper investigation of  alternative and emerging technical solutions.

The prevailing view is that such solutions have shifted significantly over the course of the PFI with council’s no longer expected to be “‘intelligent customers”  in procuring complex, once in a generation, contracts.

 “Over the last 15 years we have passed on £90m of DEFRA’s PFI credits to the current contractors for an incinerator which didn’t exist. Late in the contract we have now committed to build an old-style incinerator just when 21st century solutions coming forward,” said IOC leader Cllr Anthony Powers.

“In doing this, we’ve financed the deal in a way which means we take on all the risk of the debt and get saddled with ownership of the white elephant incinerator in 2023, while ceasing even to qualify to receive these further government credits,” he said.

The energy from waste incinerator is integral to a joint 25 year waste disposal contract with West Mercia Waste signed by Herefordshire Council and Worcestershire County Council.

An initial capital cost for the project is reported to be more than £160 million, but opponents claim ongoing maintenance will at least double this over the 25 years  while the cost using PFI funding could triple.

In February, Herefordshire Council passed a 2014-15 budget committing the council to paying £40m for the  incinerator at Hartlebury, Worcestershire, over three years.

The budget strategy estimated council borrowing as increasing by £50.8 million over 2014/15, pushing the overall debt up to £218.2 million, including £11 million borrowed over the year for the incinerator.

Ahead of the vote, the incinerator, one of the biggest funding commitments the council has made,  was heavily criticised as wasteful itself in terms of cost and based on technology already close to outdated.

Citing the Herefordshire-Worcestershire contract as an example, the Commons public accounts committee found PFI contracts of  25-30 years are “inappropriate” for the waste sector where technology is continually evolving with the amount of waste in  hard to predict.

Funding agreements for early PFI waste deals were “poorly drafted”  by the then Department for Environment, Transport and the Regions (DETR)  and “too lax” in requiring payments for key assets that had not been built.

As such, the committee found that the funding agreement signed with Herefordshire and Worcestershire councils highlighted the “shortcomings” of early PFI projects, with payments to the council aligned with payment made by the councils to the contractor.

Grant payments started as soon as the councils started to pay the contractor, with the government, through either the DETR or its successor the Department for Environment, Food and Rural Affairs (DEFRA),  legally committed to making grant payments ever since.

In December 1998, the DETR signed a funding Herefordshire Council and Worcestershire County Council for £143 million and the payment of related grants started shortly after.

The terms of the original funding agreements did not allow central government to stop payment or alter the payment terms in the event that key capital assets were not delivered.

Since its creation in 2001, DEFRA  has had responsibility for overseeing these grants and did not review the agreements until 2011.

Terms with Herefordshire and Worcestershire councils were not successfully renegotiated until 2013, resulting in a £30 million cut in total funding.

The process of renegotiation was time-consuming. In the case, of the Herefordshire and Worcestershire DEFRA confirmed to the committee that it took them six months to approve the new funding approach the councils were proposing.

With contractor apparently unwilling to fund the incinerator, the councils were left considering using the rate income generated from the populations of both counties to cover the cost of the contract.

At the end of the 2013-14 financial year, both councils had received nearly £90 million for an incinerator plant that had still to be built.

Committee chair Margaret Hodge MP said it was “appalling” that “lax, poorly drafted” PFI funding agreements for waste processing plants  had led to hundreds of millions of pounds worth of grants being paid to councils to three councils without the main assets being built.