Bungled PFI deals force Government to shell out hundreds of millions on unbuilt waste disposal plants

The mistakes were made in the early days of Tony Blair’s government, when councils were encouraged to pay private firms to help them meet European targets for waste disposal (Getty)

Hundreds of millions of pounds of Government have been paid out for new eco-friendly waste disposal plants that were never built, because of loosely worded contracts drawn up by civil servants.

The mistakes were made in the early days of Tony Blair’s government, when councils were encouraged to pay private firms to help them meet European targets for waste disposal, under Private Finance Initiative (PFI) deals. But the way contracts were drawn up meant that contractors had to be paid as soon as they started handling waste, whether or not the new assets were built.

A £740m contract signed by Surrey County Council hit problems because two sites were considered for a new incinerator, but local objections meant neither received planning permission. After 15 years, and over £200m in Government grants, Surrey’s waste is still being disposed outside the county.

A similar £680m contract in Herefordshire and Worcestershire was supposed to include a new energy-from-waste facility, but that was never built.

More recently, in 2012, Norfolk signed a £582m contract that was also supposed to include an energy-from-waste facility, but which never received planning permission. Cancelling the contract has cost Norfolk council taxpayers over £33m.

A report published today by the Commons Public Accounts Committee blames civil servants from the Department of Environment rather than the county councils. The committee’s chair, Margaret Hodge, 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.”