Letter from NLWA Managing Director to Sir Iain Duncan Smith about the NLHPP

The Rt Hon Sir Iain Duncan Smith MP

House of Commons

London, SW1A 0AA

12 April 2022

Dear Sir Iain 

I am aware that you have made highly critical statements about the North London Waste Authority in Parliament. You have also indicated that you have raised concerns personally with a number of Ministers about the North London Heat and Power Project.

The Authority has previously written to respond to issues you have raised, including pointing out some inaccuracies. Most recently the Authority Chair wrote to you on 10 February, following a Westminster Hall debate the previous day. We understand that subsequent to this you wrote in February to the Levelling Up Secretary and later raised issues at Business Questions in the House of Commons. I am writing to you now in the light of your letter to Mr Gove as I assume that an MP would wish to ensure that any comments reflect publicly available evidence.

You said that project costs have spiralled.

-    The position is that the project budget was established at £1.2 billion in 2019 and announced at that time. This followed best practice as advocated by the Infrastructure and Projects Authority and Public Accounts Committee. The project remains within this budget.

-    The Authority publishes approximately monthly on our website reports on progress. Almost £200 million has been spent so far including the completion of six contracts. Those contracts have been completed on time and within budget. This is despite having to deal with the consequences of Covid-19 which have caused significant increases to schedule and budget for other major projects such as Thames Tideway, HS2, Crossrail and the Northern Line Extension to Battersea.

You said that the project will deliver facilities which are much too large for north London’s needs and waste will need to be transported from across London and further afield to meet the demand.

-    The position is that publicly available analysis shows that the facility is sized to deal with the possible range of north London waste over the 40 year life of the new facility and that the facility would not depend on treating waste from any other authority. 

You said that there is a blatant conflict of interests given that the Labour chair of the Authority is on the board of LondonEnergy Ltd.

-    The position is that LondonEnergy Ltd (LEL) is wholly owned by the Authority.  Therefore there is a complete synergy of interests. It is normal in the corporate world for a parent organisation to be represented on the board of a subsidiary    

-    Preparation to maximise the benefit of new assets is being taken forward in an integrated way between the Authority as asset provider and LEL as asset operator. 

-    In 2021, to promote and enhance that integration, new board appointments were made. This included the chair and vice chairs of the Authority, namely Cllr Clyde Loakes (Labour, Waltham Forest), Cllr Rebecca Rennison (Labour, Hackney) and Cllr Peter Zinkin (Conservative, Barnet). You have named only one councillor and not referred to the position of others.  

-    All three councillors have declared the appointment on their relevant register of interests and report it at Authority meetings. Borough monitoring officers have responsibility for matters relating to the conduct of councillors. In the case of all three councillors, Borough monitoring officers have given dispensations confirming that there is no conflict of interest in their appointment. 

You said that there is a mismanagement of public funds. 

-    The position is that the Secretary of State for Business, Energy and Industrial Strategy gave approval for the Development Consent Order (DCO) which authorised the project. This confirmed that the case and the need for the project were justified, and all proper processes had been followed to authorise its development.   

-    The Treasury awarded the project £100m of reduced rate borrowing in 2019 under a competition for “Local Infrastructure Rate” funding. The Authority received the maximum award possible under the competition. The criteria for the award were local infrastructure projects that are high value for money. The competition was established as the Government recognised the importance of high-quality infrastructure for the long term benefit of the country.  

-    The project is being taken forward after an extensive options study and consideration of alternatives. The value for money is kept under review. If the project were cancelled, the alternative would involve transporting hundreds of thousands of tonnes of waste and paying whatever was needed to secure capacity (if available) at facilities — almost certain to have lower environmental standards — elsewhere in the south east or further field. In their decision making Members have taken into account that this would be a worse environmental and financial outcome for north London.

You said that the Authority is not complying with its best value duty. 

-    The position on value for money of the North London Heat and Power Project is described above. Information which shows that it represents the best value solution to the management of waste in north London is made publicly available and informed Members’ decisions. 

-    The position on the best value duty is that the Authority has had no qualifications to our accounts and our auditors have never raised concerns relating to the Authority’s financial management or accounts. 

-    The Authority’s levy is provided by boroughs who are extensively consulted on the Authority’s operation and plans – they have also not raised concerns about value, this includes recognising future levy forecasts taking account of the delivery of new assets. The cost of providing NLWA’s services is lower than for other comparable authorities. The Authority is successfully delivering its statutory obligations and reports performance regularly in Authority meetings open to the public.

As Managing Director I am politically neutral, serving an Authority with Members from multiple parties and boroughs. I understand that the project arouses strong feelings among some residents. Nevertheless it is in the wider public interest to ensure that, however contentious the issue, debate is conducted on the basis of accurate information. As an alternative to conducting dialogue through Government, the Authority would be happy to meet to respond to any concerns and clarify matters. This could be done with you or your adviser, and could include a visit to show the progress of the project to date.

I am copying this letter to the Ministers you mention in your 21 February letter, namely Ministers in the Department for Levelling Up, Housing and Communities, the Department for Business, Energy and Industrial Strategy, the Treasury, the Prime Minister’s Office, as well as the Lord President of the Council.  I will also be releasing this letter on the Authority’s website so that the facts I have outlined above are set out concisely on the public record. 

Yours sincerely 

Martin Capstick

Managing Director