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Sixth council ends ties with Kier

Torbay Borough Council is expected to set up a company to replace a joint venture with contractor Kier, which would make it the sixth council in a month to end ties with the company.

The council pays £10.9m a year for waste, street scene, vehicle and building management operation to TOR2, which is owned 80.01% by Kier and 19.99% by Torbay.

The contract expires in July 2020. A report going to the council next week said it should not be extended because “there are some key elements of the original joint venture concept which have not been as expected”.

It added that TOR2 “has not generated a dividend as was expected…[has] not improved recycling rates at a sufficient pace and is unlikely to achieve the target recycling rate of 50% (or above) by 2020”.

The report went on to note “poor performance has been highlighted in relation to waste collection, which led to a vote of no confidence from Brixham Town Council”.

It said that delivering the services through a local authority company “would allow the council the absolute control and flexibility to review future delivery of services and consider private sector suppliers for the services or parts thereof”.

Shared services could be established in the future, the report added, but time did not allow this option before the contract ends.

Cheshire West & Chester Council last week voted to establish a council-owned company to deliver its waste services after Kier said it wished to end the contract.

A Cheshire West & Chester paper noted that Kier had said it would leave the waste market after problems on its contract, while another in East Sussex landed it with an extra cost of £35m in 2016.

Hastings Borough Council and Rother and Wealden district councils appointed contractor Biffa this month to replace Kier after a mutual decision to terminate their joint contract early.

Eastbourne Borough Council had been part of this contract but has set up South East Environmental Services to handle its work in-house.

Kier’s 2018 annual report said it would reduce exposure to the waste market as existing contracts ended, and it did not list waste among nine other industries as “our key market sectors”.

A Kier spokesperson told MRW: “We continue to be committed to delivering a quality waste management service for all our contracts in the industry. We are a responsible contractor that continues to serve more than 500,000 households each week, with client and customer satisfaction at the heart of our reliable service.”

In a separate development, the company’s chief executive Haydn Mursell stood down with immediate effect this week.

MRW’s sister title Construction News reported that he had been under pressure since Kier announced a £250m rights issue in November, which saw its share price plummet 40%.

In a trading update, Kier said it was on track to meet previous expectations for the year to June 2019.

This article first appeared on Local Government Chronicle

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