Councillors at Ealing in London have agreed to terminate a loss-making environmental services contract with Amey.
Negotiations are underway to end the contract by no later than July 2020, although it has not yet been decided if the new collection service will be taken in-house, delivered through a wholly owned local authority company.
The decision to review the end-date of the contract was agreed mutually with Amey.
The original 15-year deal was agreed in 2012 when Enterprise Managed Services was the lowest bidder for waste and recycling collection, street cleansing, household waste sites and grounds maintenance and associated services. Enterprise was subsequently acquired by Amey.
A confidential report on the viability of the contract considered at a council meeting on 20 March had been prepared by Eunomia Research and Consulting.
A paper put to the council’s cabinet committee said: “Amey does not consider the contract to be financially sustainable, and this is borne out by the independent verification undertaken by Eunomia Research and Consulting.”
Eunomia also concluded there were “no significant inefficiencies in the operation of the service by Amey that could be addressed in order to mitigate their losses without substantial changes in service standards”.
It went on: “The council’s service has, in effect, been subsidised by Enterprise Managed Services and then Amey since the contract start date in 2012. It is highly unlikely that a company in a further round of procurement would price on a similar basis to that seen under this contract.”
It was calculated that outsourcing the service would mean an annual turnover of £17.08m, bringing it in-house would be £16.97m while a trading company would be £16.36m.
“Further detailed analysis is needed to assess the implications arising from either of the options of bringing the services under council control, including employee implications,” the report said.
“In addition, further work is needed to assess options for the governance of a local authority company and the financing arrangements.”
Ahead of the decision, Amey had issued a statement saying it was proud of its record with Ealing, but the split was mutually agreed after both parties had reviewed the contract and the local situation.