Warning sounded as £740m waste project awaits decision

Margaret Hodge, chairman of the Commons Public Accounts Committee.

MPs on the Public Accounts Committee have urged Whitehall to play a bigger role in preventing councils losing out in complicated and costly PFI waste deals.

Their report comes as North Yorkshire County Council prepares to take a final decision on a controversial Allerton Waste Recovery Park.

The £740m project will tie the council into a 25 year contract to process 300,000 tonnes of waste a year.

The Government has already backed out of supporting the scheme as it would not meet European targets.

Councillors considering the plan later this month will do so with a strong warning from MPs on how similar contracts saw three councils hand over millions of pounds with nothing actually built.

Committee chairwoman Margaret Hodge said the Department for Environment, Food and Rural Affairs had to do more to ensure inexperienced council officials did not waste taxpayer funds.

She said: “Long PFI contracts that typically last 25-30 years may be inappropriate for the waste sector where technology is continually evolving and the amount of waste that will be produced in the future could be hard to predict.

“The Department has more work to do to improve local authorities’ contracting capability, especially for PFI projects, and ensure that they only pay for what is delivered in future without getting locked into long, inflexible contracts.

“It should act with far greater urgency when it has concerns about a project’s progress and support local authorities to negotiate PFI contracts that are better value for money for local taxpayers.

“The Department should balance the need to meet the EU target at minimum cost with making sure that its decisions serve taxpayers’ interests as a whole.”

Funding agreements with Surrey and with Herefordshire and Worcestershire council saw central government start paying grants to the local authorities as soon as the contractors began to deliver waste management services rather than waste management assets.

In Norfolk the council faced a £33m bill after the Government backed out of a PFI deal.