Penalty threat over Allerton incinerator project (From York Press)

Penalty threat over Allerton incinerator project

8:24am Tuesday 12th March 2013 in News By Mark Stead, Political Reporter

TWO North Yorkshire councils could face financial penalties if they abandon a waste incinerator project which has lost £65 million in Government funding.

The warning has been issued by a City of York Council finance boss in the wake of the controversial withdrawal of private finance initiative cash for the £1.4 billion Allerton Waste Recovery Park, between York and Knaresborough.

The plant was due to be built and operated by AmeyCespa through a joint project by City of York Council and North Yorkshire County Council, but its future is now in doubt. The leaders of both authorities, together with their counterparts in Bradford and Calderdale – where Government funding has also been pulled for a similar scheme – have now asked for an “urgent meeting” with Environment, Food and Rural Affairs Secretary Owen Paterson over last month’s PFI decision.

The York and North Yorkshire councils say the incinerator, which was granted planning permission last year, is crucial for cutting their waste bills and would save £320 million in the long-term. Opponents have welcomed the decision by the Department for Environment, Food and Rural Affairs (Defra) and hope it will mean the councils radically rethinking their waste strategies.

The two authorities have already spent more than £6.5 million between them on the scheme.

A report by David Walker, City of York Council’s head of financial procedures, into the current risks facing the council, said: “There is a contractor liability risk to the authorities in exiting from the procurement for the Allerton scheme.

“In addition, scrapping of the plans may mean both authorities having to spend more on landfill taxes, depending on the time and acceptability of any new solution.”

The report said the York council would now “take time and review its options and alternatives” in attempting to recover as much of the withdrawn PFI funding as possible.

Any new business case for potential waste options will go before the city’s councillors later this year.

Defra has said the PFI funding was stopped because European Union waste reduction levels had now been met and the Allerton incinerator, together with the Bradford and Calderdale scheme and another on Merseyside, was no longer necessary. City of York Council leader James Alexander has described the decision as “shambolic” and suggested legal action could be considered.