Agenda item

Report by Director of Communities, Economy and Transport.

9.1 The Head of Transport and Operational Services introduced report and the Waste Team Manager gave a presentation on the background to the Waste PFI Contract for waste disposal. The presentation covered the key aspects of the contract, which are summarised below.

The Contract

9.2 The Waste Contract is a joint contract with Brighton and Hove City Council (BHCC). It is in the operational phase where all facilities have been constructed and are in use. The total cost of the contract is around £40m per annum, of which ESCC pays £26m per annum. The contract was let against a background where there was a drive to reduce waste and landfill through European Union regulations. Landfill tax was beginning to increase (it now costs now £90/tonne) and there was only one remaining landfill/land raise site (at Pebsham) in East Sussex.

Facilities

9.3 Under the terms of the contract a range of facilities were constructed. They include:

·          3 waste transfer stations;

·          A materials recovery facility (MRF) for sorting waste at Hollingdean;

·          A composting facility for food and green waste; and

·          The Energy Recovery Facility (ERF) at Newhaven

In addition, the contract provides 12 Household Waste Recycling Sites (HWRS) in East Sussex and 2 in Brighton and Hove. The HWRS at Maresfield, Crowborough and Pebsham are new sites provided under the contract.

Management of Waste

9.4 Over 90% of residual waste (i.e. black bin waste) goes to the ERF at Newhaven and only 5% goes to land fill. There are only three other Local Authorities nationally that perform better in terms of landfill avoidance. The ERF generates enough electricity for 25,000 homes and ESCC gets an income share from the sale of electricity and the disposal of commercial waste. The materials recovery facility, which takes all of Brighton & Hove’s recycled waste, is not currently at full capacity. The composting facility at Woodlands takes green and food waste and the resulting compost sold to farmers and is also for sale at HWRS sites.

Contract Payments

9.5 The contract payment system is complex, but predominately waste disposal is paid for on a per tonne basis. This includes a base payment, a supplement for recycling, energy production, beneficial use and landfill tax. If more waste is recycled, the cost of waste disposal will be reduced. It is worth noting that a 0.5 % increase in waste will result in an additional £100k cost per annum. ESCC does get income from the contract in the form of Private Finance Initiative (PFI) credits from the Department for the Environment, Food and Rural Affairs (DEFRA) and benefits from sale of recycled materials and electricity.

Waste Collection Authorities

9.6 ESCC is the Waste Disposal Authority and is responsible for the disposal of all domestic waste delivered to it by the Waste Collection Authorities. The Waste Collection Authorities, which are the five District and Borough Councils in East Sussex, are responsible for household waste collection.

9.7 Four of the five Waste Collection Authorities in East Sussex have worked together to let a Joint Waste (collection) Contract, operated by Kier. The Waste Team works closely with Kier to maintain minimum levels of waste required by the waste disposal contract. ESCC also works closely with the District and Borough Councils who can retain recycled materials. ESCC has a statutory duty to pay a subsidy to them for any recycled materials that are retained. The recycling credit payments are currently around £3m per year in total.

Contract Review Work

9.8 ESCC entered into a Memorandum of Understanding (MOU) with DEFRA to explore better ways of working, and last year DEFRA carried out a contract review. They concluded that the Waste Contract was well managed; the contract management team and governance were good; and our understanding if the contract, record keeping and document control systems were good. DEFRA made four recommendations, which were to:

·          Sign off the deed of variation and ensure value for money.

·          Identify and follow up savings opportunities.

·          Further strengthen contract management by developing contract manual.

·          Keep the Waste Team well resourced.

9.9 This led to another piece of work with Local Partnerships, who were commissioned to look in detail at the savings opportunities in the contract. Local Partnerships have undertaken a detailed review of PFI contract which will be completed by the end of June 2017.

Scrutiny Work

9.10     The Committee discussed the work that had been undertaken so far on the Waste Contract. It had previously agreed to wait until the contract review had been completed, before deciding whether to establish a Scrutiny Review Board to examine the savings opportunities and options. The Committee were concerned that if the department could not achieve the savings target in this area, then it would have an impact elsewhere.

9.11     The Assistant Director, Operations confirmed that the report on the review of the Waste Contract was due to be completed by end of June, so if the Committee were minded to set up Board, work could commence in July. The Committee agreed that it wished to establish a Scrutiny Review Board to look at this matter further, and would like to visit waste facilities as part of the Review.

9.12     The Committee RESOLVED to establish a Scrutiny Review Board to examine the waste contract operational savings review, comprised of Councillor Darren Grover, Councillor Barry Taylor, Councillor Godfrey Daniel and Councillor Richard Stogdon.