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ESA backs outsourcing as half of council waste contracts up for grabs

The Environmental Services Association (ESA) has called on councils to tender waste management contracts competitively rather than use in-house options, as research reveals that nearly 50% of contracts will expire by the end of 2019.

According to BDS Marketing Research, which examined around 2,200 contracts across waste collection and disposal authorities in the UK, nearly 650 contracts will soon be up for renewal.

There has been a trend of councils dumping commercial partners to take services in-house or to set up their own trading arm. East Cambridgeshire Council recently ended its relationship with Veolia to set up East Cambs Street Scene (pictured), wholly owned by the council.

But the ESA warned that projected savings through avoiding procurement costs, not paying for an operator’s profits and benefits from setting up Teckal trading arms were “often an illusion”, and that competition brought down costs and stimulated innovation.

A report published by the association argued that councils could insulated themselves from “unforeseen costs and gain greater certainty over their budgets” by transferring risks to the private sector.

ESA executive director Jacob Hayler said: “We recognise that many local authorities are concerned about locking themselves into inflexible arrangements for up to 10 years for their waste services.

“But we believe that competitive tenders – open to both private and publicly owned service providers – can be used to protect councils from changes in future legislation in the most affordable way.”

Speaking to MRW last month, Larac chair Carole Taylor, who is recycling co-ordinator at Pendle Borough Council, said there was “definitely a shift towards councils taking services in-house”. 

She added: “Everybody is trying to save money. But some authorities do not have the means to buy the bin wagons and provide that service themselves. They may want to do so but they don’t have the depots or the land.

“My authority has always been in-house and, fortunately for us, we have been able to make the cuts asked of us. We couldn’t have done that if we still had a contractor partner.”

BDS Research said Veolia currently holds the largest number of local authority contracts, at nearly 200. Suez, FCC, Biffa and Viridor each have more than 110 contracts.

BDS Research director Andy Sales said these companies accounted for almost a third of all contracts: “However, the market is still very competitive with around 300 companies represented.

“Their activities are varied with some focusing on one treatment or disposal method, collection-only businesses or multi-discipline waste-management organisations operating at national, regional or local level.”

Readers' comments (1)

  • I'm more concerned with in-house Council operations offering commercial waste services at a loss, not to mention actively promoting the VAT loophole. If Councils want to complete with the private sector it must be on a level playing field where all costs are transparent.

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