The government has been slammed for paying out more than £200M to waste contractors before they have built key infrastructure.
MPs on the cross-party Public Accounts Committee described the private finance initiatives in question as “lax” and “poorly drafted”.
The Labour government signed PFI grant payment agreements with Herefordshire and Worcestershire councils in 1998, and Surrey council in 1999. Crucially, these local authorities – and thus central government – became liable for payments to their waste contractors when certain collection and recycling service levels were reached, regardless of construction of major infrastructure.
Committee chair Margaret Hodge said: “It is appalling that lax, poorly drafted PFI funding agreements to support the building of local authority waste processing plants have led to hundreds of millions of pounds worth of grants being made to three councils even though the main waste assets – such as incinerators – have not yet been built.”
In a report published today, the committee said the Department for Environment, Food and Rural Affairs needed to improve local authorities’ contracting capability, especially for PFI projects.
“It needs to be much clearer about the outputs and outcomes it requires when funding future waste projects, and ensure that it only pays for what is delivered,” said the report.
The government eventually renegotiated the deals in question, and insists it has tighter controls in place to prevent similar instances in the future.
A Defra spokesperson said: “Defra’s responsibility is to ensure public money is used appropriately and we were very clear in the advice we provided to these PFI projects, as the NAO has previously recognised.
“Due to factors at local level these projects could not proceed as planned.”