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City criticises waste contractor over PFI deal

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Brighton & Hove City Council claims it is being prevented from recycling some materials because waste contractor Veolia is refusing to alter the terms of its PFI waste disposal contract, LGC’s sister title Materials Recycling World reports. 

As revealed exclusively by MRW following a freedom of information request to Defra, the council is in part blaming its poor recycling rate – which in 2016-17 stood at 27% – on a restrictive £1bn PFI deal.

In a letter to resources minister Therese Coffey last summer, the council said Veolia took only “limited types of materials” for recycling, including some types of plastic, because it cannot find a guaranteed end market.

But under the PFI agreement, the council is required to provide all residual or recyclable material for disposal by Veolia.

The letter said other councils were not restricted by their contracts and added: “We have raised this anomaly with Veolia on a number of occasions, but they are not willing to change their position on this.”

The letter indicated that the council was reviewing the PFI contract in conjunction with the Treasury-backed Local Partnerships and Defra. Brighton & Hove has confirmed to MRW that the review is ongoing, but declined to reveal further details due to commercial sensitivity.

A waste disposal PFI contract between Brighton & Hove council, Veolia and East Sussex CC was signed in 2003. Brighton & Hove estimates its remaining PFI payments amount to £223m, covering the rest of the contract term to 2033.

Payments totalling more than £124m have made since 2003, and in 2017-18 the cost to Brighton & Hove was £12m. Annually, the council gets around £1.5m in PFI credits.

A Veolia spokesperson said the PFI contract delivered the infrastructure needed to “accept a wide range of materials”.

She added: “In addition to our original contractual requirements, we have added the following waste streams at our household waste recycling sites; books, DVDs, household batteries, mobile phones, paint, printer and toner cartridges, timber and waste electrical and electronic equipment. Carton and Tetrapak recycling is also available at Brighton & Hove sites.”

Brighton & Hove has three PFI contracts, covering waste disposal, schools and a library.

Responding to questions on PFIs at a council meeting on 1 February, deputy chair of the policy, resources and growth committee Les Hamilton (Lab) said the council had “robust arrangements” in place to secure value for money with the PFI contract.

He said all three contracts were currently being reviewed.

“Due to the availability of PFI credits [grant] and the terms of PFI contracts, refinancing with council funding [which would necessarily involve borrowing] is not normally a viable option,” Cllr Hamilton said. “However, other elements of the contracts, including insurance, cover, income and activity assumptions, performance penalties and the specifications of services, can be considered ans as such are periodically reviewed.”

Green councillor Phelim MacCafferty recently called for the PFI contract with Veolia to be renegotiated. He told local media that PFIs “rip off the taxpayer”.

A Brighton & Hove council spokesman said the contract, which East Sussex manages, is “complex” and added it has an “ongoing dialogue with Veolia to improve the performance and efficiency of the contract, but these discussions are commercially sensitive.”

 

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