Calderdale Council PFI waste incinerator – financial & business info is exempt from public disclosure

On March 12th 2013 I sent a Freedom of Information request about the Private Finance Initiative-funded waste incinerator to Ian Hughes, Head of Democratic and Partnership Services at Calderdale Council. As of yesterday, I still hadn’t received a reply.

Public bodies are supposed to reply to Freedom of Information requests within 20 working days.

But since it turns out that, under the 1972 Local Government Act, local authorities are legally entitled to withhold crucial information from the public, what’s the point?

Today, after chasing up the FOI request yesterday with Calderdale Council, I have received the reply, along with an email saying that the Council originally sent it to me on June 4th.

The Council really needn’t have bothered – it turns out that for most of the questions I asked,

“disclosure…could affect the Council’s negotiations with PRR and similarly PRR’s negotiations with other potential lenders.”

(PPR is Pennine Resource Recovery, the company that was scheduled to run the waste incinerator for Bradford and Calderdale Councils.)

Cabinet minutes of 8th May 2013, that the Council sent me along with its FOI reply, show that the public was excluded from the discussion of the PFI waste incinerator.

At that meeting, Calderdale Cabinet decided to pull out of the waste incinerator “procurement” unless Defra reinstates the £62.1m PFI/Waste Infrastructure credit that the contract depends on.

My FOI request to Ian Hughes sought answers to questions about the proposed waste incinerator, that Calderdale Council and Bradford Council were planning to pay for with Private Finance Initiative (PFI) funding – until Defra withdrew the PFI funding early in 2013. By then there were already enough waste incinerators in the pipeline to meet EU requirements for diverting waste from landfill.

Calderdale Council’s reply to my FOI request shows that:

  • As of May 2013, Calderdale Council had spent £537k in respect of procurement costs for the PFI waste incinerator. The procurement was carried out jointly with Bradford Council.
  • The risk of further losses would need to be assessed should the Council decide to pull out of the contract.

In what universe does it make sense to take on a £64.6m PFI debt that will cost a total of £773.2m to repay?

PFI projects allow public bodies’ borrowing debts to be left off the accounts.  So by partnering with private sector investors, PFI projects appear to make public sector projects more affordable. But they are hugely expensive in terms of the resulting debt repayments.

For instance, Calderdale Royal Hospital cost £64.6m, paid through a Private Finance Initiative scheme. It will end up costing Calderdale and Huddersfield NHS Foundation Trust a total of £773.2m. This year, repaying that PFI debt is taking about 10% of NHS Calderdale Clinical Commissioning Group’s annual budget –  £24m out of a total budget of £256m. And PFI repayments increase each year.

Calderdale Council gave the go ahead to the waste incinerator project on the understanding that it would be funded by Defra’s

“provisional allocation of £62.1m PFI/Waste Infrastructure Credit “

That’s comparable to the £64.6m PFI scheme funding for Calderdale Royal Hospital, so presumably the PFI debt repayment would cost Calderdale and Bradford Councils something close to £773.2m over the 25 year life of the proposed waste incinerator? I shall try and find out.

Did Calderdale Councillors understand this when they voted for the PFI waste incinerator?

Because PFI projects leach so much public funding into the profiteering private equity companies that fund the PFI schemes, it’s important to know what information about PFI costs and risks Calderdale Councillors had access to, when they decided to go ahead with the PFI waste incinerator.

However, here my FOI request yielded zilch. Calderdale Council has withheld financial info on the grounds that

“disclosure… at this stage could affect the Council’s negotiations with PRR and similarly PRR’s negotiations with other potential lenders.”

And the Calderdale Council Cabinet 8th May 2013 MInutes show that the public was excluded from the discussion of the Joint Waste Treatment Project with Bradford, on the grounds that this item of business involved the likely disclosure of “exempt” information as defined in Section 100 A(4) of the the Local Government Act 1972, Paragraph 3 – Financial and Business Affairs.

Equally, the written report from the Director, Economy and Environment that formed the basis for Cabinet’s discussion of the waste incinerator project, is also not available for public inspection, on the same grounds that it is “exempt” from public disclosure.

Why is it ok to withhold info from the public about how our money is being spent?

Why is it ok to exclude the public from knowing how its money is being spent? After all, we are the ultimate investors in all these schemes. A public company would never get away with treating its shareholders like this – so why can local government?

Why did the original report to Council not identify PFI funding as a risk?

The 8th May 2013 Cabinet Minutes record only the upshot of their secret deliberations. The Minutes note that the Council had made its  original decision to go ahead with the PFI waste incineration scheme on the basis of Defra’s

“provisional allocation of £62.1m PFI/Waste Infrastructure Credit “

This begs the question of why the original report recommending that the Council should go ahead with the PFI -funded waste incinerator did not identify the arrangements for PFI funding as a risk – the report only identified the possibility of failure to obtain planning permission as a significant risk.

The May 8th 2013 Cabinet Minutes also record  decisions to:

  • discontinue the procurement of the Waste PFI Project if a reinstatement of the Credits cannot be secured in a reasonable timeframe and subject to reasonable conditions;
  • seek further discussions with DEFRA to better understand the basis of, and rationale for, the decision to withdraw the Credits;
  • authorise the Head of Democratic and Partnership Services to commence legal action against DEFRA’s decision to withdraw the Credits allocated to the Project (or any element thereof), subject to further discussion with DEFRA and review of prospect of success.
Judicial review

In May 2013, Calderdale Council, along with its Bradford Council partner in the proposed waste incinerator, announced that it is seeking a judicial review of Defra’s decision to withdraw PFI funding.

In light of the Council’s failure to consider the risk associated with PFI schemes in general, and Defra’s “provisional allocation” of PFI/Waste Infrastructure Credit in particular, when it decided to go ahead with the PFI waste incinerator, maybe the Calderdale Public should seek a judicial review of Calderdale Council’s decision to go ahead with the waste incinerator scheme in the first place.

Non committal answers to FOI questions about cost savings – a crucial justification for the PFI waste incinerator

My FOI request also includes a number of questions about how the Council estimated the cost savings associated with sending the area’s waste to the PFI -funded waste incinerator, which was to be “procured” from Pennine Resource Recovery Ltd (PRR).

These estimated savings were a crucial  justification for proposing to spend pots of our money on the incinerator’s construction.

Calderdale Council’s answers to the FOI questions were non-committal, not to say evasive. For example:

  • “no agreement has been reached at this stage”
  • “The report assumes” – without explaining the basis for the assumption
  • “Disclosure of our assumptions at this stage could affect the Council’s negotiations with PRR and similarly PRR’s negotiations with other potential lenders.”
  • “charges…will only be determined on financial close of the contract” with PRR
  • “The actual saving will be determined on financial close”
  • “Certainty on the respective rates would only be reached once agreement has been reached with PRR.”

Right of reply

Any Calderdale Councillors who wish to comment or put their side of the story are of course most welcome. The more information about this that’s out in the public domain, the better.

Updated 22 August 2013

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