County council has to find £3.4m in three days as waste contract terminated

A county council last week formally terminated a £600m waste contract, with the settlement costs coming in at the higher end of expectations and a sum of £3.4m having to be paid within three working days.

Norfolk said it had initially set aside around £30m to settle various elements of its contract with Cory Wheelabrator in relation to the project for an energy from waste plant at Saddlebow near King’s Lynn.

The decision to axe the scheme was taken in April, with the authority blaming a failure to secure satisfactory planning permission.

Norfolk said the amount initially set aside was mainly to cover Cory Wheelabrator’s claimed costs, and its share in the public inquiry. This came to around £21.9m for both.

It was also intended to cover hedging arrangements that were subject to long-term interest rate and overseas exchange rate fluctuations. (Much of the equipment for the project would have come from Europe, making the price of the euro and the Swiss franc relevant to the project)

The costs of these arrangements were quoted in a range between £4.4m and £12.7m when the decision to end the contract was taken last month.

Norfolk blamed a combination of “the subsequent strength of the pound and reducing long term interest rates” for giving a fixed final settlement figure of £11.836m.

“The council has to pay this element within three working days and will now begin to scrutinise Cory Wheelabrator’s claimed costs,” it said.

“Although the final figure cannot be identified until July, [this] news means that the overall sum required is now around £33.7m – an increase of £3.4m on the recent projections.”

A recommendation from Norfolk’s Cabinet is to be considered by full council on 27 May.

George Nobbs, the council’s Leader, 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.”

Steve Morphew, Cabinet member for Finance, added: “More bad financial news is the last thing we needed, but we are already working out how best to protect the people of Norfolk.”