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Waste firms question Defra savings drive

Ministers have been warned against rigid target setting in their bid to squeeze retrospective savings from large waste contracts.  

Defra officials are in the midst of picking apart Sheffield City Council’s £26m contract with Veolia to find savings for the public purse that could be replicated elsewhere in the sector, as MRW exclusively revealed last month.  

Industry leaders said they accepted ministers’ desire to re-evaluate spending in times of austerity.

But they cautioned that the nature of waste private finance initiative contracts would preclude “broad brush savings”.

Veolia executive director Robert Hunt told MRW: “Unlike other PFI contracts, waste projects are predicated on heavy capital expenditure and difficult timings due to planning issues. 

“It would be wrong to set artificial targets or have a didactic approach as each project is separate, discrete and tailored to meet specific local and long-term needs.”

He said there were innovaitve ways of making savings.

“Veolia has had positive and constructive discussions with a number of clients with a view to seeking win-win arrangements which preserve the fundamental elements of the project.”

SITA public sector commercial director Paul Gavin said his company had also been working with customers to find savings.

“Our only concern is the approach of some to seek broad brush savings, irrespective of the circumstances or the service specification,” he said.

“If customers want the same, sometimes more, for less, this simply doesn’t work unless you are in the type of industry that makes significant profits.

“What you can’t do is arbitrarily force contractors to generate savings that don’t exist, as this would not be sustainable.”

The Waste Infrastructure Delivery Programme, a joint initiative between Defra, Local Partnerships and Infrastructure UK, is currently examining the Veolia-Sheffield contract (MRW, 23 March).

Findings are expected in the coming weeks and could have substantial ramifications for the waste sector, which has been a major recipient of funding through the much-maligned PFI programme.  

 

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