Brighton & Hove City Council claims it is being prevented from recycling some materials because Veolia is refusing to alter the terms of its PFI waste disposal contract.
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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 (see comment below).
A waste disposal PFI contract between Brighton & Hove council, Veolia and East Sussex County Council 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 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,” 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”.
Comment from Brighton & Hove City Council
“East Sussex council manages the PFI contract with Veolia on behalf of Brighton & Hove council. Brighton & Hove does have a commitment to deliver materials to Veolia, as the contract has provided significant investment in a number of new facilities such as the Hollingdean MRF and the Newhaven energy recovery facility. The contract is complex, given the level of investment and commitment by the councils and Veolia to locally managing all of the waste created by residents in Brighton & Hove and East Sussex.
“The Hollingdean MRF is not designed to accept all plastics, but does accept some, along with a range of other materials for sorting.
“The councils and Veolia have considered options to further develop the facility, but at this time it is not possible. One of the reasons for this is that the facility has very limited space for expansion.
“The councils work closely with Veolia to ensure that the contract is performing well. Veolia currently exceeds contract targets for recovery and recycling. We also have ongoing dialogue with Veolia to improve the performance and efficiency of the contract, but these discussions are commercially sensitive.
“Defra is a key stakeholder and provides funding for the PFI contract. We have regular contact with Defra, which forms part of the governance structure for the management of the contract.
“Defra conducted a review of the contract in 2016 which highlighted that it was well managed and, following on from this, some additional work was carried out by Local Partnerships to identify potential efficiencies within the contract. However, this work and ongoing discussions are commercially sensitive.”
Veolia’s comment in full
“Our integrated 30-year waste management contract operates a network of strategically placed facilities which accept a wide range of materials. This type of contract is designed to deliver key infrastructure and work alongside the collection contractor to improve recycling and to reduce dependence on landfill. In East Sussex 93% of the materials we receive at our Material Recovery Facility is recycled into new products.
“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, Waste Electrical and Electronic Equipment. Carton and tetrapak recycling is also available at Brighton and Hove sites.
“Recycling can be improved by mass collaboration between designers, reprocessors, consumers and manufacturers who should be using more recycled content in their products. We all have a part to play to ensuring our resources are given a second, third or even fourth life.”
- This story was updated on 6 March to include comment from Brighton & Hove and on 7 March to include Veolia’s comment in full.