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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.

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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.

"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."

Tim Burr, head of the National Audit Office


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