Press Release - Department for Environment, Food and Rural
Affairs: Managing the waste PFI programme
14 January 2009
The Department for Environment, Food and Rural Affairs has
recently made considerable progress in increasing the number and
size of local authority projects to procure new waste treatment
facilities under the Private Finance Initiative (PFI). But,
according to a National Audit Office report today, the Department
was initially too slow to respond to the 1999 EU Directive setting
Member States a timescale for reducing the amount of waste sent to
landfill, with few new PFI waste facilities being built.
Local authorities have also experienced delays in completing deals
and bringing the projects into operation. If the 2013 target to
reduce landfill waste in England is missed because new PFI projects
coming into operation are delayed by a year or more, the resulting
EU fines could run into several hundred millions of pounds. In only
two of the new waste infrastructure PFI projects developed since
the 1999 EU Directive have all planned assets been constructed,
although local authorities have finished construction of a range of
other waste treatment plants outside the PFI programme.
After its slow start, Defra moved ahead by setting up the Waste
Implementation Programme in 2003 and developed this further in 2006
by establishing the Waste Infrastructure Delivery Programme to help
local authorities in the procurement of waste facilities. This has
accelerated the rollout of new, larger projects and developed the
market, encouraging more contractors to bid for these
projects.
Through the latter Programme, Defra has improved its oversight of
projects and the support it provides for local authorities. It has
developed guidance on reducing project delays and achieving better
deals and has placed experienced commercial staff in local
authority procurement teams. The Department has also improved its
scrutiny of authorities’ project plans. The NAO recommends that the
Department should also increase its oversight of projects after
contracts have been awarded.
Meeting the 2013 target for landfill reduction in England remains
challenging, however, and depends on whether new facilities, both
within and outside the PFI programme, can be brought into operation
in time. It takes from five to nine years to develop PFI waste
projects and bring new facilities into use. There have been delays
during procurement in PFI projects, averaging 19 months against
original timetables, because local authority plans need to be
improved to get central government financial support. Further
delays have occurred because of problems in obtaining planning
permission. Current problems in the financing markets also mean
that projects currently in procurement face difficulties in
obtaining private finance.
Tim Burr, head of the National Audit Office, said
today:
"Defra is doing a lot to accelerate the
programme of new waste treatment facilities being procured through
private finance. But, at the rate at which projects are being
delivered, England is at risk of missing the 2013 EU landfill
reduction target, leaving the UK open to the possibility of fines.
The Department will need to work hard with local authorities to
achieve the planned programme of new waste treatment facilities,
particularly now when private finance is difficult to
raise."
Notes for Editors:
- Local authorities are responsible for deciding how to manage
waste in their areas. They can choose to invest in new
infrastructure, and choose how this investment is financed. Defra
holds the overall responsibility for meeting the EU landfill
targets. Defra issues financial support (in the form of PFI
credits) to those authorities who use PFI to procure their waste
infrastructure projects.
- by 2010 to reduce the weight of BMW landfilled to 11.25 million
tonnes per annum (75% of BMW landfilled in 1995);
- by 2013 to reduce the weight of BMW landfilled to 7.5 million
tonnes per annum (50% of BMW landfilled in 1995); and
- by 2020 to reduce the weight of BMW landfilled to 5.25 million
tonnes per annum (35% of BMW landfilled in 1995).
- Press notices and reports are available from the date of
publication on the NAO website, which is at www.nao.org.uk. Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
- The Comptroller and Auditor General, Tim Burr, is the head of
the National Audit Office which employs some 850 staff. He and the
NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
All enquiries to Phil Groves, NAO Press Office: Tel: 020 7798
5339
Mobile: 07770 678 477