Multi-million pound waste schemes for Vinci and Skanska have had PFI credits withdrawn, plunging their future into jeopardy and leaving councils in Bradford, Calderdale and North Yorkshire stunned.
Skanska and Aecom had been appointed as a joint venture to build a £170 million planned new waste treatment plant in Bowling Back Lane, Bradford which was expected to create 300 construction jobs and process 193,000 tonnes of council waste per year.
However the scheme is one of three that has had PFI credits withdrawn, in a move a Department for Environment, Food and Rural Affairs spokeswoman told CN was due to the government’s expectation that it will meet EU targets for reducing waste sent to landfill without the new waste recovery schemes and was already investing £3.6 billion in 29 waste infrastructure projects.
Skanska executive vice-president Roger Bayliss had hailed the Bradford scheme as an example of the contractor’s investment in infrastructure projects in an interview with CN last week.
A Skanska spokesperson said: “Skanska and its partners in Pennine Resource Recovery are naturally extremely disappointed by the Defra decision to withdraw waste infrastructure credits from the Bradford and Calderdale Waste Treatment project.
“The team is talking with the two councils about other options for this local waste management solution.”
Patrick Twist, infrastructure partner at Pinsent Masons, said: “Defra’s announcement to withdraw waste infrastructure credits to waste projects in Bradford, Merseyside and North Yorkshire will be greeted with dismay in the waste and construction industries.
“The Government had previously withdrawn credits from seven projects in 2010 but allowed these three to proceed. Defra has now determined that there will not be any need for the facilities to be developed in order for the UK to meet its targets under the EU Landfill Directive in 2020.
“The decision is backed up by a detailed paper comparing future demand and capacity. Whilst convincing in its own terms, the preamble to the paper makes a big point of the uncertainty of the projections on which it relies. Without Waste Infrastructure Credits the three projects are unlikely to proceed. It is difficult to reconcile this very late withdrawal of support by Defra with the Coalition’s stated commitment to investing in economic infrastructure and boosting the construction industry.”
Pennine Resource Recovery was appointed by the councils as the preferred bidder for the Bowling Back Lane project which was granted planning permission last year.
Bradford Council’s executive member for environment, sport and sustainability, Cllr Andrew Thornton said: “This is a massive blow that jeopardises the delivery of an important project which would have resulted in major long term cost savings for council tax payers in both local authorities. We are currently assessing the impact of losing £62.1 million of PFI credits on the affordability of the project.
“The PFI credit contribution was intrinsic to the scheme and DEFRA has been involved every step of the way. The government had not given us any indication that these PFI credits would not be available and we are just a few months away from starting construction on site.”
Meanwhile North Yorkshire county council is seeking an urgent meeting with the government following a decision by Defra to cut PFI credits for its Allerton Waste Recovery Park, to which Vinci was appointed as main contractor last year.
The council has stressed it wants to examine options to ensure the scheme goes ahead.
However council leader Cllr John Weighell said: “This announcement has come as a complete surprise to us. We have been repeatedly assured throughout the procurement process of Defra’s commitment to PFI credits. To be informed now, after the granting of planning consent and the decision of the government not to call in the planning application for a public inquiry, that the funding commitment is being withdrawn is frankly baffling and disappointing.
“We have undergone a lengthy procurement process of more than five years, and Defra has been closely involved in that process - even to the extent of providing a permanent liaison officer at senior level. At no stage in that period, during which there have been continuing assessments to ensure that the scheme remains viable, value for money, and necessary, has any issue been raised by the government. There have been repeated indications from government throughout this period that the scheme will be funded through PFI.”
A third scheme in Merseyside & Halton was yet to be finalised and was down to two bidders, but will also not receive credits.
A DEFRA spokesperson said: “We are investing £3.6 billion in 29 waste infrastructure projects. This will reduce the amount of waste sent to landfill, promote recycling and stimulate economic growth. We now expect to have sufficient infrastructure in England to enable the UK to meet the EU target of reducing waste sent to landfill. Consequently the decision has been taken not to fund the remaining three projects.
“This does not necessarily mean the three projects will stop. That will be a decision for the Local Authorities concerned. We will continue to provide commercial and technical advice to those projects that continue with their procurement process.”