Extra £3.4m added to Norfolk incinerator compensation bill
17:52 16 May 2014
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An extra £3.4m has been added to the bill accrued for pulling the plug on the proposed Norfolk incinerator, with the county council leader meaning that will inevitably mean further cuts are needed.
The county council voted by 48 votes to 30 to terminate the contract for the proposed incinerator at King’s Lynn at an extraordinary meeting last month.
At that time, the estimated cost of cancelling the contract was put at about £30m, including £20.3m to Cory Wheelabrator - the company which would have built and run the controversial Saddlebow plant.
Those costs included public inquiry costs of £1.6m and estimated interest rate related costs of £8.36m, which includes what are know as hedging costs.
It is those costs which have increased, now standing at £11.86m, with council bosses blaming the increase on the strength of the pound and reducing long term interest rates.
They have to be paid within three days.
Although the final figure cannot be identified until July, the hedging cost increase means the council will have to spend £33.7m, on top of what they had already paid for the site and for procurement costs.
And county council leader George Nobbs said that was likely to mean more pain for an authority which recently announced £167m of cuts to help plug a £189m funding gap.
He said: “This final figure for the ‘hedging’ element of the contract is more than we would have hoped it would be, but it has to be found, and will be found. None of this has been easy but the county council will cope and come through this.”
The council had already built up a compensation war chest of £19m and had identified £3m from underspends. Further savings which have been identified come from other underspends; £1m from cash which had been set aside for organisational change; £290,000 clawed back from the Icelandic banks; a £500,000 contribution from the council’s arms-length company Norse and £700,000 from the sale of council property.
Officers had also recommendied two options as to how to save the final £1m. One option would take £900,000 from highways maintenance and spend £140,000 less on library books.
The other would make up the missing £1m or so from about half of the money from council tax on second homes which the county council currently gives to district councils.
That suggestion has angered leaders of some of the district councils, including West Norfolk, Breckland, North Norfolk and Broadland.
Broadland District Council leader Andrew Proctor had accused the county council of punishing the districts to tackle the county’s financial problem, while Tom FitzPatrick, North Norfolk Council leader, said losing the money would hamper efforts to tackle rural isolation.
The council had already spent £1.76m on the land where the incinerator was due to be built. West Norfolk Council has approached the county council to buy the site.
But, at a cabinet meeting this week, Steve Morphew, cabinet member for finance, corporate and personnel, said no decision had been made on whether to market the site for sale.
Full council is due to consider a recommendation from cabinet about the costs of terminating the contract on Tuesday, May 27.
An update on the implications from the latest development will be given to councillors at that meeting.
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