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PFI deals ‘restricting local authority recycling rates’

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Newham LBC has said its “expensive and inflexible” PFI deal is preventing it from improving its household recycling rate, currently the lowest in England, LGC’s sister title Materials Recycling World reports.

Newham is part of the East London Waste Authority (ELWA), which has a 25-year PFI contract with Renewi – formerly Shanks – to collect and dispose of around 121,000 tonnes a year of waste.

Newham’s household recycling rate is just 14.1% and the council has abandoned recycling targets.

In a letter to resources minister Therese Coffey, Newham mayor Sir Robin Wales (Lab) blamed the PFI contract and “ongoing Government funding cuts” for the authority being unable to boost its rate.

The letter, dated 30 August 2017, was released under a Freedom of Information request from MRW. It was issued in response to Ms Coffey’s request for information on why the council’s recycling rate was so low.

Sir Robin wrote: “…the contract presents a major obstacle when it comes to recycling performance due to restrictions on what materials can be collected separately, the overall cost of the waste levy and the lack of any financial incentives for the council to invest in achieving higher recycling rates.

“Newham is tied to ELWA by statute and must deliver all its waste to that authority. Having been encouraged to adopt this approach by central Government, we are now caught in an expensive PFI contract where we lack the choice, flexibility and savings opportunities through recycling solutions that many other authorities are able to exercise.”

In all, Ms Coffey asked 34 poor-performing local authorities last summer to explain their low rates, including fellow ELWA member Barking & Dagenham LBC.

A response from Barking & Dagenham’s leader Darren Rodwell (Lab), dated 24 August 2017, said the waste disposal contract with ELWA and Shanks/Renewi lacked a differential gate fee for recycling and domestic waste. The contract runs until 2027.

Cllr Rodwell said: “Unfortunately, we are bound by a contract that currently charges £125 per tonne for waste and recycling disposal, making ELWA one of the most expensive levy rates for recycling in London.”

ELWA’s payment to Shanks in 2016-17 was £58.8m. There is £538.6m left to be repaid on the PFI contract, as of March 2017. The Government will contribute around £85m of PFI grant funding during the contract’s life span.

Part of the PFI deal was to build infrastructure such as the Jenkins Lane bio-MRF.

Brighton & Hove City Council has also blamed an inflexible PFI deal for restricting recycling. In its letter to Ms Coffey, the council said its PFI contractor for waste disposal, Veolia, recycled only those materials for which there is a guaranteed end market.

The letter said: “While other councils can and do recycle these kinds of materials, the Brighton & Hove council [sic] is contractually obliged under the terms of the PFI agreement to provide all waste materials, whether residual or recyclable, to Veolia.”

Brighton indicated it was reviewing the 25-year, £1bn PFI contract in conjunction with the Treasury-backed Local Partnerships and Defra.

Waste PFIs have come under intense scrutiny since the Greater Manchester Waste Disposal Authority terminated its contract with Viridor-John Laing in August 2017. The authority said the contract’s termination has saved £77.7m.

ELWA and Renewi have been approached for comment.

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Readers' comments (1)

  • Local Pension Funds or the Public Works Loan Board might find it an attractive option to buy some of these out.

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