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Loss of government funding halts plans for new waste treatment plant
Posted on 19/07/11
Cabinet Office
Loss of government funding halts plans for new waste treatment plant
Plans for a multi-million pound waste treatment plant in Leicestershire are set to be halted following the impact of the loss of government funding.
The proposal is outlined in a new County Council report which says that the loss of 86.6million of PFI credits has made the project unaffordable.
The council had been working with bidders to create a new facility which would deal with up to 180,000 tonnes of household waste a year and would open in 2015.
However, the withdrawal of government funding support, plus proposed changes in national waste policy announced last month, means that it now makes more sense to explore alternative methods, says the report.
Richard Blunt, Leicestershire County Council's cabinet member for waste management, said: "We have one of the best recycling rates in the country and remain committed to driving down the amount of waste sent to landfill.
"Since we embarked on this project, the economy has shifted and there are planned changes in national waste policy. The financial climate has put huge pressure on public spending and the loss of the credits adds considerable costs to the project.
"Officers have assessed different ways of taking the project forward but the loss of the credits makes it financially unattractive to continue.
"We're on track to meet next year's landfill diversion target and will always strive to reduce, reuse and recycle as much as possible."
The report recommends selling land at Interlink Business Park Bardon which the council bought to support the project - this would be done when market conditions were judged to be favourable.
The cabinet meets to discuss the report at 2pm on Tuesday, 26th July.
Notes:
1) The County Council was awarded 86.6m of Private Finance Initiative credits in October 2008 and began its procurement process the following month. The Private Finance Initiative is a government scheme allowing local authorities to buy a service from a private sector company, rather than borrow money to build and operate its own facilities. The credits are a financial contribution towards the capital cost of the construction of the facilities. They are not a loan and are not repaid by the local authority. The local authority would meet the remaining capital cost, plus the operational cost, through payments over the life of the contract
2) The government withdrew the PFI credits last October as part of its Comprehensive Spending Review.
3) In June 2011, the government announced the outcome of its national waste policy review which includes an intention to remove the Landfill Allowance Trading Scheme (LATS) beyond 2012/13, meaning that local authorities will no longer need to meet any specific landfill diversion targets until 2019/20 .
4),The final two bidders (Osiris Consortium and Veolia) were shortlisted last year to bid for the contract to provide new waste treatment facilities.
5) As part of the procurement process, the County Council made sites at Bardon and Whetstone available to bidders. The council would retain the site it owns at Whetstone and seek to upgrade the existing household waste recycling site and waste transfer station. The council currently has no plans for a new treatment facility at Whetstone.
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