If you read the trade press, there certainly appears to have been a flutter of household waste recycling centre (HWRC) private sector contracts being brought in-house by councils. It makes a nice headline but is it a growing trend? There has clearly been a huge shake-up around what is considered best practice and best value for money.
The backdrop to all of this is, of course, the huge pressure that local authorities have been under to make savings. The Local Government Association reported that councils in England had to make cuts of £6bn between 2014 and 2016. It predicts a further £3.3bn funding cut in 2016-17.
HWRCs are popular with residents but can be a drain on resources. Public outcry over proposed cuts to HWRCs have forced some authorities, such as Angus Council, to think again. This leaves the question of how to fund centres if they are to be kept open, particularly as the Department for Communities and Local Government is intent on preventing councils from being able to charge residents from using such recycling centres (see box overleaf).
Due to the huge savings that councils must find, equally huge changes have had to be made. In the past, councils have tended to look outwards to private companies that are ‘experts’ in their fields to make savings and improve their services, so it is interesting to see the opposite argument now being employed by some local authorities.
We are going to have to make some riskier decisions than we have taken in the past
Phil Crossland, Leicestershire County Council
In the past six months or so, the London Borough of Hounslow and Middlesbrough Council and have both brought back recycling collections in-house. And Birmingham City Council announced that it would set up its own energy services company to take over the Tyseley energy-from-waste plant when its contract ends with Veolia in 2019.
However, it is not clear that councils are moving en-masse towards in-house services, and that includes HWRC sites, although some are considering it.
Earlier this year, Leicestershire County Council said that it might bring HWRC services in-house for all but one of its 14 sites. A report officers suggested such a move would save £290,000 a year. At a meeting to discuss the proposals, director of environment and transport Phil Crossland said: “We believe the proposal to bring the service in-house represents the best value and should give greatest flexibility to meet the service need.
“We are going to have to make some riskier decisions than we have taken in the past, and this isn’t a decision without risk. I think we can manage the service cost effectively.”
Warwickshire County Council is held up as being a beacon for its HWRC sites, including winning a National Recycling Award in 2015. It took its service in-house in 2010 and made a number of changes to save costs, including shortening opening hours.
The council then attached reuse shops to each of its nine recycling centres, and built them up so they were an attractive enough option to be competitively tendered out to charities. This meant that both the council and the charity benefits from running the service. The largest of the Warwickshire HWRCs is working so well that it is close to breaking even financially. A private company runs one HWRC and shop.
The site’s cost-competitive model should mean it will be left untouched when the council comes looking to make savings – because cutting the service will not yield much in the way of cutting costs. In fact, Warwickshire argues that if the remaining 1,056 recycling centres in the UK adopted the same model, it could generate £35m a year for cash-strapped councils. It adds that the model demonstrates the circular economy in action.
Yet while the service is working incredibly effectively, it is, strictly speaking, no longer an in-house service and is closer to what is termed a ‘Teckal’ company. Under this model, local authorities set up and run standalone companies, and award them services contracts without having to go through expensive procurement processes.
Adam Read, Ricardo Energy & Environment’s practice director for resource efficiency and waste management, argues that interest in the Teckal model is growing and will become more popular in the next few years.
In the report In, Out, In, Out, Shake It All About – municipal contracts and their future delivery models, Read argues that Teckal is “a hybrid that offers the benefits of lower pension contributions and private sector efficiency, alongside greater responsiveness and a reduction in the costs associated with procuring the provider”.
You will always get people who are opportunist or commercial businesses that will seek to fly-tip because of costs
Kerry Moore, Warwickshire County Council
But he also warns that local authorities may not be able to make proper cost comparisons between in-house, private and Teckal models, and that they often struggle to work out what a service will cost per household. He adds that service decisions can be politically motivated.
Regardless of the service model, many HWRCs are faced with reduced opening hours, as even the successful Warwickshire model has had to do. The prospect of cutting access has raised concerns that the result may be increased fly-tipping. Defra announced earlier this year that fly-tipping had risen for the second year running and costs local councils around £50m a year to clean up.
However, the jury appears to be split about the impact that closure or shortened hours may have. Kerry Moore, Warwickshire’s waste strategy and commissioning manager, says: “From memory, reduced opening hours did result initially in some increase in fly-tipping but quickly reduced as people got used to the new arrangements.
“You will always get people who are opportunist or commercial businesses that will seek to fly-tip because of costs. The price of scrap metal has an impact on levels of fly-tipping – metal will be picked up and dealt with illegally when prices are high – and we see more of it [being dumped] when the prices are lower.”
Hampshire County Council is also consulting on possible changes to its HWRC service. Rob Humby, executive member for environment and transport, says: “We believe that the majority of Hampshire’s residents are law-abiding people who would not carry out or condone illegal fly-tipping, although somepeople may not be aware of their individual responsibilities if a contractor is carrying out improvements on their home.
“One of the things we are doing to encourage responsible waste disposal is to introduce the facility for traders to dispose of material at most HWRCs in Hampshire on a charging basis, from later in 2016.”
When the option is to close a centre rather than allow a nominal charge to keep it open, that has struck us as being ridiculous
Kevin Bulmer, Oxfordshire councillor
Oxfordshire County Council has also been considering reducing hours or closing some of its HWRCs due to funding cuts. So far they have had a reprieve until next year. Councillor Kevin Bulmer says: “It isn’t an unreasonable concern that reduced hours might increase fly-tipping, but how big a problem it is I don’t know.
“I like to think that most people in my area wouldn’t fly-tip if they lost their local centre and would drive instead to their nearest one – but then you have the problem of more vehicles on the roads, which isn’t good for the environment.”
Bulmer has been vocal about the legislation that prevents councils from charging residents for using HWRCs. His argument is that a small charge trumps reductions in the service: “We have been under huge pressure for monetary costs and that means we have to make some hard choices, but then the Government want to micromanage certain things.
“When the option is to close a centre rather than allow a nominal charge to keep it open, that has struck us as being ridiculous. We want the Government to keep out of it. A bit more trust in local government wouldn’t go amiss. We are the ones delivering the Government’s savings at the moment.”
The leader of the county council has written to the Government on this issue but it has not budged on the issue. Bulmer says: “They said ‘no’ and it was very disappointing. This law wasn’t brought in that long ago, so I think they are reluctant to change it even though it might not be working well.”
As part of a wider consultation around the HWRC service, Hampshire has asked residents whether they would consider paying. Humby says: “Introducing a small charge would need a change in the law. But knowing whether Hampshire’s residents would support it as a way of keeping all their HWRCs open will guide me on taking the idea to local MPs and the Government.”
Warwickshire’s Moore, who is also vice-chair of the National Association of Waste Disposal Officers, says the organisation is currently surveying its members asking them to highlight any legislation that is proving to be a hindrance to making savings and efficiencies, or impeding goals around reuse or composting, for example. “We will pull this information together and put it to Defra,” she says.
So it does not seem as if there is a mass rush towards councils operating in-house HWRC service models, but we may see a move towards hybrid models. It also looks as if there will be growing calls for the Government to scrap the ban on charging.
Department for Communities and Local Government on HWRC Delivery
The Government has set out alternatives to charging and cutting opening hours at HWRCs in its National Planning Policy for Waste, including “developing more attractive cost tariffs for local businesses”.
A spokesman told MRW: “The Government is determined to boost recycling. Charging residents to use these sites is not the way to do that and could potentially lead to more fly-tipping and backyard burning.
“There are a number of cost-effective ways to keep HWRCs running, including changing opening times to meet demand and cracking down on businesses that fraudulently dispose of trade waste there.
“Councils will have nearly £200bn to spend during the course of this Parliament and should be providing the services that local people want to see.”