The National Audit Office (NAO) has today (17 June) published a report on its investigation into the “oversight” of three local authority PFI waste contracts by Defra.
The three contracts were entered into by Surrey County Council, by Norfolk County Council and, jointly, by Herefordshire Council and Worcestershire County Council.
All three projects have experienced significant delays stemming from a range of problems, including difficulties obtaining planning permission, complex commercial considerations, opposition from local groups and uncertainty over technology.
The NAO says 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.
The NAO says 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
Today’s report finds that Defra has given “good support and guidance” to the local authorities involved, but that the nature of the Department’s funding agreements with Surrey and Herefordshire and Worcestershire, which the Defra 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 NAO has not sought to conclude on the value for money of the three contracts as these matters are for local authorities’ auditors to examine. Nor does it examine the value for money of the overall Waste Infrastructure Delivery Programme managed by the Department.
The report sets out the roles and responsibilities of the parties involved in the three contracts and examines those issues over which Defra has direct influence or involvement.
Defra’s negotiations with Surrey to re-profile its funding support means Surrey’s cash flow in the three years 2013-14 to 2015-16 is expected to be lower than it would have been under the original agreement, although the total amount the Department will pay over the full term of the agreement remains unchanged. In 2011-12, Surrey established a sinking fund into which it deposited a proportion of the waste grant it had received. Surrey intends to use the fund to manage the temporary cash flow impact of the re-profiling of its grant.
Herefordshire and Worcestershire’s negotiations with the Department over their proposal to vary their contract led them to conclude that the best solution was to deliver their remaining infrastructure without funding support from the Department. The local authorities believe that by borrowing capital themselves rather than using private finance, as originally anticipated, they will generate sufficient savings to offset the majority of the £30m reduction in the Department’s funding.
In April 2014, Norfolk decided to terminate its contract with Cory Wheelabrator, at an estimated cost of £33.7m, as a result of the failure to secure planning permission and the reduction in value for money caused by delays. Norfolk has stated that the Department’s withdrawal of its funding support was also a factor in its assessment of the savings to Norfolk taxpayers from the project.
Today’s report will form the basis of a hearing of the Public Accounts Committee.
For the full report CLICK HERE